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October 12, 2016

Oculus leases big R&D space in Redmond office park

Puget Sound Business Journal

Marc Stiles

Virtual reality headset maker Oculus Rift is expanding in a big way on the Eastside.

The company has leased a large amount of office/industrial space at Willows Commerce Park II in Redmond, according to a new report by commercial real estate company Kidder Mathews. The 100,400-square-foot office is larger than the combined volume of Oculus' Seattle office in Sodo and a second space a half mile from Willows Commerce Park II at 9845 Willows Road N.E.

Oculus' motivation for leasing so much space was unclear. Officials of the company were not immediately available, and a real estate broker who worked on the deal, Paul Jerue of the Broderick Group, declined to comment. The new Oculus office is near the headquarters of competitor Microsoft (Nasdaq: MSFT), which makes an augmented realty headset called HoloLens.

The expansion by Oculus Rift, which Facebook (Nasdaq: FB) owns, is an indicator of how the Puget Sound region in general and the Eastside in particular, have become center of the growing virtual and augmented reality industry.

In addition to Microsoft, Bellevue-based video game company Valve is working on VR product called HTC Vive, and the region is home to startups VRcade and Atomic VR. Earlier this year, Valve leased more than 147,000 square feet of office and warehouse space in Kirkland.

The industry in general is seeing huge growth as evidenced by what happened at January's International Consumer Electronics Show in Las Vegas. Before the show, MIT Technology Review reported that the number of VR exhibitors was expected to be 77 percent higher than the number in 2015.

Jason Bloom, a broker with Kidder Mathews, said it's his understanding that Oculus will do research-and- development work at Willows Commerce Park II. Of the 100,400 square feet, 12,000 is warehouse space, according to Bloom, who said Oculus' lease runs through July 2025. Oculus is in the two-story Building A, which totals 186,775 square feet, according to Officespace.com.

He thinks Oculus elected to expand in Redmond because lease rates are less there than in Seattle, where Oculus has a 51,000-square-foot facility. A half a mile from Willows Commerce Park is Oculus' other facility, which Bloom says measures 25,000 square feet.

For the full story, go to Puget Sound Business Journal.

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