'What Keeps Me Up At Night': Aug. 27 Bisnow Event To Tackle Bellevue’s Housing Challenges

Whether affordable, market-rate or high-end, builders and developers in Bellevue are finding it difficult to build the housing that Washington’s fifth-biggest city desperately needs. 

To house its growing population, Bellevue, the largest suburb in Seattle’s Eastside area, this year released a growth strategy calling for the construction of 35,000 housing units in the next 20 years. 

Abigail Pearl DeWeese, a partner and land use and development attorney with law firm Hillis Clark Martin & Peterson, said the challenge is making housing projects work in a high-cost environment dominated by rising construction material and labor costs, high interest rates and stringent regulatory requirements. 

“It's an extremely challenging market, and people are doing whatever they can to keep residential projects moving forward,” DeWeese said. “However, there's widespread acknowledgement that rents will rise in 2026 and 2027 because the projects that should be getting going right now are not.”

DeWeese, who has advised numerous residential developers in Bellevue, particularly on projects downtown and in the BelRed Corridor, will lead a panel on Bellevue’s residential outlook at Bisnow’s The Future of Bellevue event on Aug. 27. 

Register here. 

Ahead of the event, Bisnow asked DeWeese about Bellevue’s housing challenges and what she hopes will come out of the panel discussion, which will include other housing experts from the city’s public and private sectors.

While new starts might not be happening fast enough to keep pace with demand, DeWeese said some submarkets will continue to see construction in coming years. 

“I hope to see continued investment in mid-rise housing types such as 5-over-2 and 5-over-3 podium construction because they're cost-efficient to construct,” she said. “And I think we'll see, in the next 10 years or so, a couple of high-end residential products in Bellevue.”

Any significant increase in new builds that meets the needs of all income levels, however, will require either a big jump in rents or major reduction in costs, she said.

“What keeps me up at night is knowing that there might be a hockey stick effect in rents coming up because of lack of new supply, and that's really unfortunate for the folks who need housing in our region,” DeWeese said.

However, the outlook is not all bleak, and DeWeese said she expects the city will see some expansion of “missing-middle” housing construction.

That is partly because Bellevue, like other Washington cities, is required to implement the state's Middle Housing Law by the middle of next year. It calls for additional higher-density housing to be built in currently low-density, single-family neighborhoods. 

“I expect to see four- and six-unit single-family plots proliferate over the next decade,” DeWeese said. “But many projects will probably also be luxury single-family homes, and not so much affordable housing, for which there is a huge need.”

DeWeese said the market can efficiently deliver housing, such as mid-rise multifamily properties, for people at 70% and 80% of area median income through programs such as Washington’s multifamily tax exemption.

But to deliver housing for those making less than 50% of AMI will require “extensive public subsidies,” she said. 

“That's an opportunity for projects on existing public land, and we've seen some of this already on surplus land formerly used for transit,” she said.

DeWeese said several city-owned sites in Bellevue are ripe for new affordable housing units built in partnership with nonprofit housing providers. Those projects would depend on financing sources such as city funding and tax-exempt bonds. 

New construction is not stymied by high inflation and interest rates alone, DeWeese said. Regulatory burdens, such as those related to the 2021 Washington State Building Code, which went into effect this year, also slow the development process.

“The new code has an extraordinarily costly energy code requirement, which trickles down to housing and significantly increases per unit costs,” she said. “Some developers estimate that these costs, paired with current material, labor and capital costs, are adding 40% to 50% to project expenses compared to just a few years ago.”

DeWeese said developers and builders need to bring these unintended consequences to the attention of state and local politicians. For example, lawmakers should be aware of the nonmandated strides that builders have already made in improving residential buildings’ energy efficiency, and that mandates can add costs.

“I also think it's a matter of educating legislators on how development happens — that it's not just done by super-rich developers who have infinite money and can bear these added costs,” she said. “It requires a developer with local knowledge and their capital partners and investors to take a bet that they're going to get reasonable returns on their investment.” 

DeWeese said Bellevue is fortunate to have “wonderful fundamentals” such as job growth, business expansion and quality local schools.

“I think those fundamentals will continue to drive people to want to live here, but if the costs remain out of sync with development, then housing will still not get built until the rents continue to rise,” she said. “That’s why helping legislators understand how housing actually gets built is really important.”

DeWeese said she hopes the session she is moderating at Bisnow’s Future of Bellevue event on Aug. 27 will help people better grasp the city’s housing challenges and potential solutions.

“I hope everyone walks away from it with a more nuanced understanding of where the housing market is today because it's changing really fast,” she said. “And I want people to really understand what the development pipeline looks like, with starts and new project entitlements continuing to fall off. And a robust discussion about regulatory changes could help both in Bellevue and in the region.”

Click here to register for the event. 

This article was produced in collaboration between Hillis Clark Martin & Peterson and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.