Kemper Freeman plans $1 billion face-lift for downtown Bellevue

Kemper Freeman is at it again.

Roughly two years removed from opening Lincoln Square, the veteran mall developer is embarking on an estimated $1 billion, five-year renovation that will overhaul Bellevue Square, add 351 rooms to the nearby Hyatt Regency hotel and install upscale fashion boutiques.

		Meryl Schenker / P-I
	Developer Kemper Freeman rides the escalator at Lincoln Square, one of three Bellevue properties that he's upgrading and expanding over the next five years.

When the dust settles, Freeman said another 2.5 million square feet will have been developed, and the crown jewel will be "The Bellevue," home to luxury shops, a five-star hotel and fine dining.

Freeman, one of the Eastside's most influential businessmen, said bringing luxury stores to Bellevue has "been a work in progress for 20 years" and luxury retailers who previously passed over the Northwest are changing their attitudes.

"We have had customer demand for a long time," said Freeman, chief executive of Kemper Development Co. "In the past, (luxury retailers) thought we just had the grunge look and did not have time to buy fancy clothes because we were out kayaking and climbing Mount Rainier."

The makeover of Freeman's Bellevue Collection -- a mix of retail, office and condominiums at Bellevue Square, Bellevue Place and Lincoln Square -- comes as rival developer Schnitzer West is building a 1.6-million-square- foot upscale retail project just a few blocks away near Meydenbauer Center.

The competition, called The Bravern, will include luxury retailer Neiman Marcus as the anchor tenant, a collection of 30 to 40 stores, office space, condominiums and restaurants. The project, named after brave, risk-taking entrepreneurs, is under construction and set to open in September 2009. Other retailers have not been named.

While The Bravern isn't slated to open for two years and Freeman's boutiques haven't even broken ground, they are being planned at a time when many national retailers are concerned about a downturn in consumer spending.

High gas prices and a sluggish housing market, which makes it more difficult to take equity out of homes, hurt retail sales in April before they rebounded slightly in May.

Despite the concerns, high-end stores such as Seattle-based Nordstrom have said demand continues to increase for luxury items, and Barneys New York last week opened at Pacific Place in downtown Seattle to have a bigger location and more prominence.

Those backing the Eastside retail projects say there is a pent-up demand for luxury stores in Bellevue, where the average family household income exceeds $100,000.

"We pursued upscale based on the research we found in the marketplace," said Tom Woodworth, senior investment director for The Bravern. "The good news is the market is deep and strong, as evidenced by the response we are getting to retailers on our site. Sales will bear out that there is enough room in the market."

Woodworth said additional evidence that Bellevue is a hot market for luxury retail is the decision by Dallas-based Neiman Marcus to open its first store in the Seattle area.

The retailer has said Schnitzer was developing a superior location for a unique shopping environment.

"Neiman Marcus is the pre-eminent upscale retailer. You don't recruit Neiman Marcus. They make their own decision," Woodworth said. "If they don't see a great location for a store, they don't locate in that market."

Freeman said The Bellevue, a retail collection on Bellevue Way Northeast between Northeast Sixth and Northeast Fourth streets, is slated to open in 2009, and it will include 130,000 square feet of street-front luxury retail.

Freeman declined to disclose the names of tenants, but he envisions The Bellevue rivaling other high-end retail destinations such as Fifth Avenue in New York, Newbury Street in Boston or Rodeo Drive in Beverly Hills.

While the emphasis is on luxury stores, Freeman says there are other projects in the works.

Last week, a sky bridge connecting Lincoln Square to Bellevue Place opened, and Eddie Bauer began moving its headquarters from Redmond to Lincoln Square. The offices at Lincoln Square also will house some of Microsoft's employees. Other work includes: