Kirkland’s reputation as a growing high-tech hub lost some of its buzz last week after news of moving plans for video game creators Bungie plans leaked out.

The company, best known for creating the “Halo” video game franchise, is reportedly planning to move due to size constraints at their present location at 434 Kirkland Avenue, according to the city’s Economic Development Manager Ellen Miller-Wolfe.

“Bungie needs more space and they couldn’t find that in Kirkland,” she said. “We’ve been in touch with all the (property owners). They’re all aware of Bungie’s needs.”

Several sources with direct knowledge of property negotiations confirmed the company’s plans to relocate, but declined to make a statement on the record.

“If that’s confirmed, I’m sorry to see them leave,” said Mayor Jim Lauinger.

In response, Bungie Studios spokesman Brian Jarrard confirmed the company was “exploring a potential office move for the future, but it’s too early to say” when or where they will go.

“There are no concrete plans at this time,” he said.

Unconfirmed reports say the company has located an office space that meets their requirement of 80,000 to 100,000 square feet in Bellevue, but the deal is not yet “signed, sealed and delivered.”

Bellevue Economic Development Manager Tom Boydell said his city had several advantages that made relocation there an attractive option, such as proximity to cultural attractions, hotels and plentiful office space all within walking distance of each other. He also indicated that the economic recession was refocusing investment in central business districts.

“In times of a downturn, you tend to see investment pull back,” he said.

The departure puts a dent in the city’s attempts to attract a larger “knowledge-based” workforce to the city, notably succeeding in the case of Google’s offices on Sixth Street South. After years of being associated positively with the Seahawks and Costco, their departures spurred a new need to redefine Kirkland’s business cachet.

According to Tracey Dunlap, the city’s finance director, another economic effect of losing the Bungie would be the knock-on effect the employees produce in partner businesses, occupying nearby homes and patronizing local businesses and restaurants.

Bungie Studios, a subsidiary of Microsoft Corp. for several years, relocated from Chicago, Ill. to Kirkland in 2005. The company broke away from Microsoft in 2007. Their most recent product, Halo 3, sold over 8 million copies in the 2007 holiday shopping season and remains the most popular game for the Xbox game system, according to PC World magazine. The company employs 138 workers, according to city business license records.