Totem Lake mall plans: stores, offices, condos, movies

Developers Diversified Realty, the new owner of the Totem Lake Mall, has big plans for the foundering shopping center, and it wants Kirkland to kick in $15 million to help the effort along.

DDR plans include substantially increasing the retail space to 513,000 square feet, building a six-story office tower, adding two condominium complexes and putting together a 13-screen multiplex movie house.

DDR did not return a call for comment, but plans for a multiplex come as a bit of a surprise, according to Jeff Cole, director of corporate real estate for the Kirkland Parkplace shopping center, which has its own six-screen movie theater.

He concedes that there are new multiplexes opening, such as one in downtown Bellevue, but Cole notes that national movie chains were closing down multi-screen movie houses left and right around five years ago.

The theater companies shed massive debt with the closings, but the multiplexes appear to be staging a comeback, he said. "They really haven't learned their lessons," is how Cole put it.

He said Parkplace Cinema 6 has an advantage over some of its competitors because the multiplex doesn't show commercial advertisements before the main feature.

But factor in on-demand movies on cable television, along with the decreasing amount of time between a movie's release in cinemas and its release on DVD, and the movie-house market is tight.

"Our thought is it will certainly change the complexion of the entertainment stage here," he said of a Totem Lake movie house. "The multiplex will hurt us," Cole also said.

Still, the success of a multiplex at the Totem Lake Mall is a critical component in a potential deal the city may forge with the developer, said Kirkland Mayor Mary-Alyce Burleigh. "That's projected to be a significant piece of the (sales tax) revenue."

Sales tax is important under the proposed deal because it would pay off $15 million worth of bonds the city would sell to pay for improvements on 120th Avenue N.E. and the development of a public plaza between the two halves of the shopping center.

According to Mundy Associates, a financial consultant hired by DDR, the city would stand to make $38.3 million over the course of a three-year construction period and the 30-year length of the bonds. It comes to down to a gross profit of $23.2 million for a $15 million investment, according to Mundy Associates figures.

That sounds good to Burleigh, who stressed that state law requires that public money has to be spent for the public's benefit. By contrast, she said, an earlier DDR proposal to have the city pay $30 million for a mall parking garage was dropped because it would only benefit shopping-center customers, not the public in general.

But the mayor said the Kirkland City Council wants to make sure DDR figures really pencil out. "We've asked for a second opinion from legal and financial experts," she said. "It's really critical for us to get this right."

Burleigh said she expects the city council to make its decision on drafting a Memorandum of Understanding with DDR over the proposed deal in late October. That would be followed at an unknown later date with a development agreement.

But the mayor cautioned that the city has another requirement as well. "We don't pay up until we see the development occur," Burleigh said. That includes not only the retail, office and condo space, but also the multiplex, she said.

Staff reporter Russ Zabel can be reached at or (206)461-1309.

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