By Jon Peterson
Skanska USA Commercial Development is planning a new 700,000 square foot office building development in downtown Seattle to be located at the corner of 2nd Street and University. The project is being called 2 and U.
“We are now going through the entitlement process and are hopeful of having a groundbreaking at some point next year. It’s not been fully decided if this project will be started on a speculative basis or if there will be some significant leases signed before we start construction,” says Lisa Picard, an executive vice president and regional manager with Skanska USA.
This situation allows us to be more flexible with our design and we can be very creative with our projects.
The developer has already seen interest in the property. “There have been some existing tenants in the downtown Seattle market that have shown some interest in our project. This is even before we have done any real marketing on the project,” said Picard.
Skanska does have an added benefit that many other developers do not. This is the fact that it’s able to fund its projects with its own equity. “This situation allows us to be more flexible with our design and we can be very creative with our projects. I think that is important as many of the tenants for the downtown Seattle are looking to move into new projects that are a little bit different from the space that they currently occupy,” said Picard. Skanska USA is the operation in the United States for Skanska based in Sweden.
2 and U will be mostly an office project. There are plans for approximately 20,000 square feet of ground floor retail. This development is located within the downtown Seattle sub-market. The class A space for downtown trophy office buildings has a total vacancy rate of 11.7 percent, according to the 2015 third quarter report prepared by the Seattle office of Colliers International.
Skanska recently completed a major sale of one of its assets in Seattle. This was the $235 million sale of the 400 Fairview office building to TIAA-CREF. The sale was for a 90 percent interest in the property. The listing agent on the sale was through the San Francisco office of Eastdil Secured. This transaction is the first time that the seller and buyer came together on a transaction. “We felt that now was a good time in the market cycle to re-capitalize this property, and that is why we sold our interest in the property now,” said Picard.
Skanska has a major apartment project under construction in the Seattle region. This is the 260-unit apartment complex in Bellevue called Alley III, which is located at 11011 Northeast 9th Street. This development is being done in conjunction with New York City-based Deutsche Asset & Wealth Management. Around 50 percent to 60 percent of the units have been leased up so far.