Second tower at Bravern converting to apartments

The developer of the high-rise, luxury Bravern complex in downtown Bellevue announced Thursday it is converting the second of the project's two recently completed 33-story residential towers from condos to apartments.

The first tower was converted in April. Developer Schnitzer West said at the time that there was too much supply, but not enough demand, for high-end condos in downtown Bellevue.

Schnitzer sounded that theme again in its Thursday announcement. "It has become evident that a structural shift has occurred in residential demand from owned to rental housing," said Dan Ivanoff, founder and managing member.

The two towers can be converted to condos again if the market shifts back, he added.

About 65 percent of the 236 apartment in the first, southern tower are leased, Schnitzer said. Rents in the northern, 215-unit tower will start at $1,550, it added.

The Bravern development, one of the Eastside's most ambitious projects ever, covers most of the block just west of Interstate 405 between Northeast Sixth and Northeast Eighth streets and 110th and 112th avenues Northeast.

In addition to the two residential towers, the complex includes two office towers and a 305,000-square-foot luxury retail center anchored by the Northwest's only Nieman Marcus store.

The office towers are fully leased to Microsoft. Schnitzer sold them last month to Principal Real Estate Investors of Des Moines, Iowa, for $410 million.

The residential towers have been more problematic for Schnitzer. Only about one-quarter of the 451 units had been pre-sold to condo buyers before the real-estate market collapsed, and Ivanoff acknowledged this spring that at least some of those sales were unlikely to close.

What's more, units in two competing downtown Bellevue high-rise condo projects have been selling slowly.

Apartments are another story. Rents are rising and vacancies declining, both in the Seattle area and nationally, as demand increases — especially in close-in neighborhoods, according to several recent reports.

Young "echo boomers" are getting jobs and entering the rental market, said Jonathan Miller of the Urban Land Institute, a growth think tank. Another factor: people who once owned or might have bought homes are renting instead.

The institute singled out multifamily rental housing as the most attractive sector for commercial real-estate investment in 2011 in a forecast released earlier this week.

In downtown Bellevue, Avalon Bay Communities is nearing completion of a 400-unit apartment project on Bellevue Way Northeast. Su Development broke ground earlier this year on an 80-unit complex on Main Street.

Su also has said it hopes to start construction next spring on the first phase of a two-tower, 266-apartment project on 106th Avenue Northeast

Speculation that Schnitzer would convert the second Bravern tower to apartments had been mounting in recent weeks. Months have passed since the building was completed, but county records indicate no sales had closed. Presale buyers will have their contracts terminated and their earnest money returned, Schnitzer said.

In addition to the Bravern, Schnitzer last year converted its nearly finished, 204-unit Equinox condo complex in Seattle's Eastlake neighborhood to apartments. It is one of at least four recently built Seattle projects that have made the switch.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com