The law firm signed a 12-year deal for 65,000 sf on the top four floors of Brewery Block 2. The firm expects to move in next summer, about 18 months before its decade-old lease is up for the 14th and 15th floors in Pacwest Center. That space is now being marketed for sublease.
"We're the first major law firm to move out of the Downtown core, but we don't think we're too far away," says Dick Cantlin, who as head of the law firm's real estate group represented the firm in the lease transaction. "The stumbling block historically has been the perception that litigators didn't want to be far from the courthouse, but our litigation group is quite comfortable with being over there."
The move is great news for the building's owner, the Multi-Employer Property Trust, an open-ended real estate equity fund for employee pension plans started by Seattle-based Kennedy Associates Real Estate Counsel in 1982. MEPT acquired the entitled land from Portland-based Gerding-Edlen in 2000 and then hired the company to build, lease and manage it.
The building has 168,000 sf of office space and about 50,000 sf of retail space. While the retail space has been leasing up nicely, prior to the Perkins Coie lease the only office tenants in Block 2 were: GBD Architects, which designed the building and took 14,800 sf; Gerding-Edlen itself, which leased 7,500 sf, and; Pacific Real Estate Management, the Gerding-Edlen spin-off that manages the building, which leased 4,000 sf. With Perkins Coie--which has done work for MEPT as well, but not enough to warrant a move into one of its projects--the building's occupancy is up above 50% within a few months of shell completion.
"Quite frankly, Gerding-Edlen had a lot to do with our move," says Cantlin. "They're local, we know them, we've been across the table from them in numerous transactions; we have respect for them and a great deal of trust." Moreover, says Cantlin, "They made us a great deal."
None of the parties involved would reveal the financial details, but local real estate sources estimate Perkins Coie is likely starting out at an annual triple-net rate of between $18 and $20 per sf. Add in $7.50 per sf for the full-service rate and the deal has a value of more than $20 million. In turn, given Perkins Coie's long-term commitment, MEPT is likely forking over a few million for tenant improvements.
Kennedy Associates Dave Sharp, asset manager for MEPT's Brewery Block building, admits that back in 200 when the disposition and development agreement with Gerding-Edlen was cut, expectations were higher as far as lease rates and occupancy. Having said that, Sharp says MEPOT is very pleased with the results to date given what has transpired over the past two years.
"What everyone is concerned about now is the volume of deals in the pipeline," says Sharp. "That's why we worked so hard to get Perkins Coie."
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