Microsoft to Buy Office Space
By Kim Peterson, The Seattle Times
Jan. 19–Microsoft is expanding its presence in Redmond by buying a six-building office campus from insurance company Safeco, which is planning to consolidate its operations in Seattle in 2008.
Microsoft agreed last week to buy the property for $209.5 million, according to a regulatory filing by Safeco on Wednesday. But there won’t be a big employee migration anytime soon. The sale is expected to close in the latter part of the year, and Safeco employees will likely remain on campus for at least two more years.
The sale doesn’t include the lot containing Safeco’s data center, which the company plans to continue operating on the site. Safeco said it expected a pre-tax gain of $29 million on the sale.
Safeco said in April that it would expand its headquarters in Seattle’s University District and move about 1,350 employees there from Redmond. The company had been operating in those two locations, but decided to consolidate after Symetra Financial, the life insurance and investment group it sold in 2004, moved from Redmond to Bellevue.
That left some prime space — about 730,000 square feet — up for grabs in Overlake, an area fairly maxed out when it comes to office capacity. About 2,300 employees worked on the campus when Safeco was in full operation there.
Microsoft has added about 1,400 jobs in Puget Sound every year for the past three years. As of June 30, the end of its fiscal year, the company employed nearly 62,000, including about 28,000 in the area.
In its filing, Safeco said it reserved the right to cancel the deal before mid-April because uncertainties remain surrounding its planned office project in Seattle. Safeco plans to begin construction soon on a new building across the street from its University District location, which currently holds 1,600 employees.
The company is hoping to finish the building by 2008, but the project is still in the permitting phase with the city of Seattle.
When the sale completes, Safeco will lease back from Microsoft about 550,000 square feet of office space and 70,000 square feet of warehouse space for up to three years. Essentially, that means Safeco employees will stay in Redmond until the University District building is finished.
Plans are for Microsoft employees to move into the now-vacant building previously occupied by Safeco’s life-insurance and investment group, probably even before the sale is complete. According to the filing, Microsoft will lease a 218,000-square-foot building on the campus starting Feb. 1. The lease would end when Microsoft officially becomes the property owner.
Microsoft would not disclose Wednesday its plans for the property. In a statement, the company said the deal was consistent with its long-standing interest in preserving “future growth options” in the Redmond-Overlake area.
The company has been purchasing land in the area over the past several years. Last May, the Redmond City Council approved an agreement in which Microsoft would expand its headquarters by about 2.2 million square feet in the next two decades, including about 16 new buildings. That’s enough space for about 10,000 to 12,000 employees.
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