Microsoft plans to move out of an office building on 434 Kirkland Way, located just south of Parkplace in  downtown Kirkland, next April. By then, MRM Capital Manager Joe Razore hopes to either have a new tenant or City Council-approved amendments that would allow his company to redevelop the property to mixed use, residential and retail to create greater cohesion with Parkplace. Critics of the request claim that it would go against the city’s pre-established vision for downtown and significantly diminish its capacity to offer office space for a daytime employment population.

The Kirkland Planning Commission will take public comment on June 25 concerning MRM’s private amendment request (PAR) that, if ultimately approved by the council, would allow them  to build more residential space from the current limit of 12.5 percent of the gross floor area.

Right now, the 74,000-square-foot property contains a one story office building. It was formerly occupied by Bungie Studios, creator of the Halo video game series, from 2004 to 2010. MRM Capital has owned the property since 2005.

According to Razore, Microsoft is the only tenant currently occupying the building. While getting a new tenant is an option, he said they believe making it residential would put the property to more efficient use.

“It’s obvious that there is a higher, better use for this site,” Razore said. “It’s drastically underutilized right now. Though the building is great, you’re not maximizing the development potential.”

The original PAR submitted in 2011 would have allowed the company to build more residential space and up to eight stories or 100 feet, whereas current zoning allows for a height of 67 feet or five stories, with the intention of having retail on the ground floor if they were able to build residential above.

Discussion on the PAR in 2012 were ultimately tabled, then eventually postponed so it could be included as part of the city’s update to the Comprehensive Plan. Last year, city staff examined the PAR as part of potential updates to the Central Business District (CBD) encompassing the property. There was another delay, however, after Touchstone, the original owner of Parkplace located north of 434 Kirkland Way, decided to sell the property. In response, MRM requested they put the PAR on hold until the fate of Parkplace became clearer.

Talon Capital, the new owner of Parkplace, began the process to reboot the redevelopment plan in November. In February, the council approved several changes to zoning at Parkplace and amended the Kirkland Parkplace Master Plan and Design Guidelines to reflect the smaller project, which reduced the overall size by 34 percent and the amount of office space by 50 percent from the original master plan. The project’s first conceptional design conference was held on May 18.

“Now that there is a plan in place for Parkplace, they understand the context of development in the area and can make an educated decision on what should be allowed on our site,” Razore said. “As Parkplace grows up we think we should grow up with it.”

During a Planning Commission study session on March 12, MRM withdrew its request for an eight story height limit based on feedback from the community, according to Razore.

“We listened and revised our plan accordingly,” he said. “We want everybody to enjoy this.”

Instead, they requested that the code be changed to allow six stories instead of the current five, but still maintain the 67-foot height limit, as office floors are taller than residential floors. Although Razore said redevelopment plans are very preliminary at this point, he said MRM’s new plan is to have five stories of residential on top of the retail ground floor.

“By providing a strong anchor that will kind of help activate that part of what I call the local entrance to Parkplace,” he said.

If the PAR were approved, MRM would provide numerous public amenities as part of the project, including 10 percent of residential dedicated to affordable housing, a minimum of $10,000 worth of public art, and convert a current 20 feet access easement that serves as an entrance to Parkplace into a promenade that would allow better pedestrian access to Peter Kirk Park and the Kirkland Performing Arts Center. The improvements would also include a 2,000 square foot open public plaza on Kirkland Way intended for use by the Kirkland Performance Center.

“It’s about activating that entrance, and this will help do that,” he said.

These public amenities, Razore said, will help not only connect Parkplace as a whole, but open up more access to the other side of Kirkland Way for pedestrians who have to share the narrow easement with vehicles.

“It won’t feel like Kirkland Parkplace stops at the northern boundary line of our property,” he said. “It should just flow all the way through to Kirkland Way.”

Although members of the Planning Commission have expressed interest in maintaining some office space on the property by possibly recommending the height limit be raised to 80 feet if office space is included in the redevelopment, Razore said office space would not be compatible within their project vision for various reasons.

“That kind of goes back to the overall size of the site,” he said. “We haven’t found a way to make it make sense to have office, retail and residential all in a site our size.”

Razore said that they are looking to develop based on a long-term vision for the property.

“We try not to say ‘What’s in demand today?’” he said. “We like to look at it in 10-year increments. This is something we’re going to have in our family for a long, long time.”

MRM’s desire to build residential instead of office has met with opposition from some in the community, including Ken Davidson of Davidson Serles & Associates, which owns the Emerald Office Building on 520 Kirkland Way. A woman representing the firm who spoke at the City Council’s June 2 meeting stated that the CBD5 was intended for office space and to rezone it into residential would create a shortage for employers.

“Downtown Kirkland does not need another apartment project,” she said.

Brent Carson, a partner at Seattle-based law firm Van Ness Feldman representing Davidson, told the council at the June 2 meeting that for them to change the Comprehensive Plan there would need to be a compelling reason and the existing residential developments in downtown, as well as the ones currently being built, demonstrate that it is not needed.

“This is not about MRM’s vision,” he said. “This is about the city’s vision.”

Carson told the Reporter that rezoning the CBD5 to allow another residential development downtown would deprive the city of office space it needs to support a daytime employment population, as CBD5 is one of the few remaining properties that is specifically zoned for office space with restrictions on the residential space. While downtown was intended to have a mix of both office and residential, properties that had the option of building either, he said, chose to build residential, which has left a shortage of office space.

“Many of the businesses, restaurants and so forth – the residential population can support them during the evening hours, but many of those business can thrive having a daytime population as well. Again, offices provide that, and that’s been a strong point of the city’s economic policies.”

In a report for Davidson, Seattle-based consultant Gardner Economics stated that a very low vacancy rate for office space in Kirkland indicated a “healthy demand for commercial space.” The report concluded that the amendment request was “inappropriate from a market demand standpoint” and converting it into office space would undermine the city’s ability to meet obligations for employment under the GMA.