PHOENIX—Zenefits has signed a 135,000 square foot 10-year new lease at the Hayden Ferry III development in Tempe that commences on November 1, 2015. With the execution of this new lease, Parkway Properties, Inc.'s Hayden Ferry III development is now approximately 92% pre-leased, compared to 28% pre-leased as of April 1, 2015.
Matt Coxhead and Ryan Bartos of Savills Studley's Phoenix office represented the growing startup in their lease negotiation. Jon Dishotsky of Custom Spaces represents Zenefits globally. Zenefits is a free, cloud HR automation platform that makes it easy to manage a business and its employees by automating all of the associated HR administrative work: compliance, on-boarding, payroll updates, health insurance, and other employee benefits.
Bartos tells GlobeSt.com, “Zenefits had the opportunity to be in the hottest tech market in all of Phoenix with access to an unbelievable employee base and educated work force being five minutes from ASU. They also wanted that urban environment with 24/7 amenities for their employees.
“Zenefits has 100,000 square feet in Scottsdale,” continues Bartos, “but they were hiring about 100 people a month. The biggest challenge here was speed to market. It's new for the market to have such a hyper-growth company. The pace was so fast the landlords and architects had to move fast to match that growth. Parkway did an outstanding job wrapping their head around this. They were very creative—but that's what they're known for.”
Coxhead adds, “The city of Tempe did a great job, too. They are set with the light rail and soon the shuttle will be expanded. Zenefits knows their employees are going to need that public transportation.”
Zenefits' arrival in Arizona last year was the largest expansion from a California-based tech company into the greater Phoenix region since PayPal in 2010. The expansion in Tempe will enable the company to meet the needs of its rapidly increasing customer base.
"The vibrant and amenity-rich Tempe submarket continues to attract high-quality technology tenants," states M. Jayson Lipsey, executive vice president and chief operating officer of Parkway. "With Hayden Ferry III now more than 90% pre-leased, the development has achieved stabilization ahead of schedule at rental rates above our initial underwriting."
Parkway expects to deliver Hayden Ferry III during the third quarter 2015. Parkway has a 70% ownership interest in the development, which is owned by Parkway Properties Office Fund II L.P.
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