Microsoft plans expansion into Seattle

Microsoft, the software giant whose growth over the years has consumed a huge chunk of Redmond, is scheduled to "unveil future plans" about its Seattle expansion at a press conference in South Lake Union on Thursday.

It would be the company's first significant presence on the west side of Lake Washington, not counting office space occupied by companies Microsoft has acquired here — most recently Pioneer Square-based aQuantive.

In a brief statement today, Microsoft said it will talk to the media at the South Lake Union Discovery Center, the show room for Vulcan Real Estate's extensive condominium developments in the neighborhood.

Vulcan, the multifaceted investment company of Microsoft co-founder Paul Allen, has at least 764,000 square feet of office and commercial space either completed, under construction or contemplated in the neighborhood.

A commercial real estate source, speaking on condition of anonymity, said he's heard Microsoft is interested in space at 2201 Westlake, the mixed-use development Vulcan is building at the intersection of Westlake Avenue and Denny Way.

In November, Vulcan began work on a 12-story office tower there that will have 302,200 square feet of "sustainable, productive office space" when it is completed in 2009, according to Vulcan Real Estate's Web site.

Vulcan has not announced a tenant for the office building — which will eventually be complemented by 135 condos and 25,000 square feet of retail — a risky proposition in the real estate business known as building "on spec" in reference to the speculative nature of the investment.

At the time construction began, Vulcan indicated it is targeting a large tenant.

"We see the economy continuing to create new jobs," Vulcan Vice President Ada Healey said at the time. "And if you look across the Seattle market, there are many options for small users — less than 10,000 or 15,000 square feet — but few options for large users."

Vulcan has several other South Lake Union properties in the works that could be on Microsoft's radar.

To fill an immediate need, Microsoft could grab the remaining 100,000 square feet of space at the nearly complete Westlake/Terry Building, at 320 Westlake Ave., N., where Group Health has its new corporate headquarters.

Longer term, Vulcan has more projects along Terry Avenue North on the drawing boards. Interurban Exchange II, IV and V are contemplated as life sciences or office buildings with the potential for a combined 342,000 square feet of rentable space.

Microsoft isn't commenting ahead of its announcement Thursday morning.

The company's appetite for real estate has seemed insatiable lately. Its real estate strategy is playing out against the backdrop of a battle with Google and other tech companies for top technology talent in the region.

Google, which is expanding its offices in both Fremont and Kirkland, offers employees a choice of destinations, so those living in Seattle can dodge the often-brutal commute over Lake Washington.

Microsoft has been working on several fronts to ease the space crunch on its main Redmond campus. The company has more than 35,700 employees in Washington — up 7 percent from a year ago and not including an uncounted work force of temporary and contract employees and vendors.In early 2006, Microsoft announced a three-year plan to expand its Redmond campus by a third, adding about 3.1 million square feet of space in new construction and acquired buildings.

In April, Microsoft announced a huge real estate deal in Bellevue. It announced plans to lease 1.3 million square feet of top-flight commercial office space in two high-profile projects under development by Schnitzer West.

The circumstances surrounding that announcement — a press conference in a developer's offices called the day before — were similar to what the company has on tap for Thursday.

Seattle Times business reporter Amy Martinez contributed to this report. Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com