Microsoft's proximity to Gates no longer key factor

Microsoft is expanding from its Redmond base into office buildings in Seattle, Bellevue and other corners of the region partly because workers no longer believe they need to be as close as possible to Bill Gates' office, a top company real-estate official said Wednesday.

Instead, managers are focused on where it makes most sense for their teams to be, Bob Kaplan told a commercial real-estate crowd.

For instance, he said, part of the online-services team is moving to South Lake Union this year to be near downtown advertising firms. And the Zune digital media-player team is locating in Pioneer Square to be closer to Seattle's creative core.

"It's not all going to be on [the Redmond] campus anymore," said Kaplan, Microsoftt's senior group manager for Puget Sound development. "You're going to see a broader geographic strategy than we've seen in the past."

For the first half of the decade, when the company wasn't growing that fast, it had a Redmond-centric focus, Kaplan said. That's why the proposed Issaquah Highlands satellite campus was scaled back, then postponed.

"The thinking was, 'I want to be as close to Bill Gates' office as I possibly can,' " Kaplan said.

Since 2005, Microsoft's payroll has soared, and it has struggled to find enough space for new workers.

Meanwhile, Gates this summer will leave day-to-day work at Microsoft to spend more time with his foundation.

The company occupies 11.3 million square feet in the Seattle area, Kaplan said, most of that on the Redmond campus. It plans to move into 3.1 million more square feet over the next two years.

Some of that is company-owned, such as the 1-million-square foot West Campus under construction in Redmond. But a big chunk is leased long-term, including 1.3 million square feet in two complexes being built in Bellevue.

Microsoft's employment growth probably will moderate, Kaplan said, but even if its space needs increase just 2 percent a year, that still would generate significant local demand.

Two percent of Microsoft's current office space would be about 300,000 square feet annually, more than the Smith Tower.

Leased space will remain a significant part of the company's real-estate portfolio, Kaplan said. Issaquah Highlands remains in the plans, he added, but there is no timetable for development.

"What will drive any slowdown is the ability to get people to come here," Kaplan told the luncheon meeting of Commercial Real Estate Women Seattle. The region's high cost of living already is deterring some prospective employees, he said.

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