2+U Brings in the Big Hitters with Dropbox Lease

SEATTLE—The primary office space driver continues to be the push from tech companies expanding Puget Sound footprints, according to a first quarter report by Kidder Mathews. This, coupled with growth from some of the newer tech firms such as Tableau, Valve, Indeed and WeWork, is encouraging developers to take notice, and they have. Meanwhile, Microsoft, Facebook, Costco and REI are all self-developing new office product at Eastside locations.

As for the CBD’s demand, Dropbox Inc. recently committed to a 120,886-square-foot lease within four floors at 2+U, Skanska’s 38-story class-A office building currently under construction. The data storage provider is expected to take occupancy in late 2020.

Development and construction firm Skanska engaged community stakeholders in the planning stages to create a building that adds value to tenants and the surrounding community. The mega-tower will total 686,000 square feet when completed.

“From the very beginning, Skanska designed 2+U to create an exceptional office and ground-floor experience in downtown Seattle,” said Murphy McCullough, Skanska executive vice president. “It’s exciting to see that vision continue to come alive and support Seattle’s thriving technology sector.”

After this newest lease, the office portion of 2+U is now 60% leased, with approximately four months to go before completion. Other tenants at 2+U include online employment search company Indeed.com and global co-working firm Spaces.

“We’ve been in the area for the last five years and our top talent has helped us build our world-class technology, products and infrastructure,” said Greg Conklin, engineering director and Seattle site lead at Dropbox. “2+U will be a great home for us to grow.”

Located at the corner of Second Avenue and University Street, the building is adjacent to Seattle Art Museum and Benaroya Hall, and just steps from the new waterfront. Its design allows it to link the new waterfront, Pioneer Square and surrounding downtown neighborhoods.

“The space was attractive because of its location, amenities, design and more,” Conklin tells GlobeSt.com. “We’ve had tremendous success hiring in Seattle so wanted to find a space where we can grow and expand. The new office will also include what we call a ‘Tuck Shop,’ our cafeteria, where our employees can socialize and collaborate.”

2+U is lifted 85 feet off the ground at the highest point to create an outdoor urban village under the building. The urban village includes nearly a half-acre of open space designed for gathering and connecting tenants, neighbors and visitors with nearly 17,000 square feet of local retail, arts and cultural space.

Other building highlights include 18,000- to 30,000-square-foot floorplates, an offset core to provide flexible and versatile floorplates, unobstructed views of the Puget Sound and Olympic Mountains, a private tenant rooftop deck, tenant conference and event spaces, a fitness and wellness space, shower and sauna facilities, and concierge-style property management and digital interface.

With regard to transportation, the building has direct commuter access from the highway or to public transportation, including bus, light rail and ferries. There are parking stalls, valet service and EV charging stations in the building, along with a bike program with secure storage for approximate 360 bikes, EV bike charging stations and repair stations.

After another solid performance for the regional office market during 2018, the first quarter 2019 office metrics are somewhat lackluster in comparison as the Puget Sound braces for more office construction, according to Kidder Mathews. During the quarter, the regional office market saw vacancy increase to 6.48%, up from 6.10% at year-end 2018. The regional availability rate also jumped by 43 bps in the quarter to 8.57%. Four of the five major markets had vacancy increases in the first quarter with Snohomish County posting the only vacancy decline. Despite the slight jump in vacancy, it is currently at the second lowest mark in the last 10 years.

One of the fundamentals of the vacancy uptick in the first quarter was the nominal net absorption amount of just 6,095 square feet region-wide, marked by negative net absorption in the Eastside and Pierce County market areas. The highest net absorption was in Seattle at 209,681 square feet, says the Kidder Mathews report.

Other Skanska developments in the Seattle area include Stone34, the global headquarters for Brooks Sports, which was the first project to meet Seattle’s requirements for the city’s Deep Green Pilot Program, making it one of the greenest buildings in the region.

At 400 Fairview, Skanska delivered headquarters offices for Tommy Bahama, Impinj and Car Toy’s/Wireless Advocates, and assembled a Market Hall with mix of local retailers as well as a rooftop restaurant with sweeping views. Skanska also developed Alley 111, a 260-unit multifamily project with 6,000 square feet of retail in Bellevue.

In July 2018, Skanska purchased a land parcel located at NE 8th and 108th in Bellevue’s downtown core, located near major employers including Microsoft, Amazon, Salesforce, Paccar, Symetra, Expedia and Concur.

In October 2017, Skanska also purchased the 2200 Block, a 19,440-square-foot parcel comprised of three properties on 4th Avenue in the Belltown neighborhood of Seattle, which is currently being designed and entitled for a 300-unit multifamily tower.