By Meghan Hall
Just weeks after Skanska USA topped off its 38-story, 686,000 square foot Class A office tower called 2+U in November, the developer announced that the property had inked its first tenant: Indeed. The internet search engine and job site will lease 200,000 square feet on 10 contiguous floors of the office beginning in the second half 2019. Indeed is expected to lease the building for just over 14 years and is paying market rate for the space.
“We designed the building for tenants like Indeed, who are really focused on attracting and retaining the best talent,” said Skanska’s Seattle Executive Vice President Murphy McCullough. “For them, to have the best office space with the great experience on the ground floor and the best location in the City for a new building, is really confirmation of everything that we’ve worked so hard to create.”
Real estate brokers Jesse Ottele of Newmark Knight Frank and John Hansen of CBRE brokered the deal on behalf of Skanska, while JLL broker Joe Gowan represented Indeed. According to McCullough, negotiations for the space had been in the works for over a year before the lease was officially signed.
“They are the perfect tenant,” added McCullough. “Both sides have been very focused on getting them into the project.”
The interior project design team is led by Bellevue-based JPC Architects, which will work with Indeed to create a unique space for the company’s growth and needs in the region.
Located at 1201 Second Ave. in Seattle’s Central Business District, the tower includes 665,000 square feet of office space, 18,000 square feet of street-level retail and floor plates that measure between 18,000 and 30,000 square feet. The building boasts a host of amenities such as a rooftop deck, tenant conference and event spaces, a bike storage program for 360 bikes, fitness and wellness spaces complete with shower and sauna facilities. Electric vehicle parking spaces and high-end concierge property management are also part of the development plans.
The building itself will be lifted 85 feet, under which a 24,000 square foot outdoor urban village complete with arts and entertainment spaces, restaurant and retail opportunities will be accessible to the public. 2+U sits at the corner Second Ave. and University St., easily accessible from the Seattle Art Museum and Benaroya Hall in one of the city’s most pedestrian-heavy neighborhoods. The project site is about equidistant from major shopping at both Pike Place Market and Pioneer Square and is just several blocks away from Interstate 5.
The building has been in the works for several years, first securing its building permits in 2016, with initial site excavation beginning in 2017. Anticipated completion for the development is mid-2019, after which Indeed will move in. The Austin-based company has grown substantially in Seattle over the past several years and has joined the like of other major tech companies looking to call downtown Seattle home. According to a May 2018 press release, Indeed has quadrupled its global headcount in the last three years and plans to add thousands of jobs in its hometown of Austin alone, after announcing its plans to lease ten floors at Block 71.
According to McCullough, the building has generated a lot of interest from prospective tenants, including tech, banking and coworking businesses. Many potential tenants, said McCullough, are not just thinking about the immediate future, but long term in a bid to snap up what available office space remains.
“Just there’s not that much space left in the urban core,” said McCullough. “It’s just an incredibly tight market.”
That sentiment was echoed in a recent Colliers International Puget Sound Office Market Report released in the third quarter of 2018, which stated that rental rates for Class A office space rose to $49.51 per square foot, driven by a 15 percent and 14 percent increases in Pioneer Square and South Lake Union, respectively. The report stated that tech and co-working spaces dominated the commercial real estate market, as vacancy continued to drop from 7.9 percent in the second quarter to 7.6 percent by the end of the third. No new projects came online during the second and third quarters of 2018 in Seattle, meaning that there are few options available for the tenants looking for close to 3.7 million square feet of space within Seattle, Colliers reported. This means that heading into the new year, demand for space will likely remain high until additional projects — such as 2+U — are completed.