DoorDash Building Trades in Phoenix’s Largest Office Deal of 2020

Lincoln Property Co. sold its newly developed Grand2 property. The deal was the largest office transaction in Phoenix last year, and the fifth largest office deal in the US. Grand2 is a 9-story, 358,000-square-foot office building fully leased to San Francisco-based DoorDash. Apex Capital Investments Corp. purchased the property, but the sales price was not disclosed.

“The COVID pandemic has many investors making a flight to safety and quality. The industrial and multi-family sectors reflect that interest, so do high-quality, single-tenant office assets that have long-term, credit tenant leases,” David Krumwiede, senior EVP at Lincoln Property Co., tells GlobeSt.com. “Grand2 fits squarely in this office asset category, with its Class AA amenities and its long-term lease to DoorDash.”

Office has notoriously struggled in 2020 due to the pandemic and widespread remote work policies, which have kept most corporate offices closed. As a result, both office leasing activity and office investment nearly halted across the country, and particularly in major metros, like New York and San Francisco. However, Lincoln saw strong investment demand despite these market changes. Krumwiede attributes the demand to the property’s prime location and amenities. “These are the factors that are resonating with office tenants and employees,” he says. “We were not surprised that this combination attracted both U.S. and international interest, but the level of off-shore attention was more than we expected, and the pricing was right in line with our pre-pandemic expectations.”

It also helped that the property came to market prior to the onset of the pandemic. Lincoln Property developed the office building in 2019 as a speculative project, but almost immediately leased it to DoorDash upon delivery. Once stabilized, Lincoln took the asset to market in the beginning of last year, helping to offset some of the challenges of social distancing. “Initial tours took place prior to the pandemic,” says Krumwiede. “Completing negotiations during the pandemic required careful attention to safety measures and took a bit longer, but they did not deter the process.”

The success of the transaction only fuels Lincoln’s bullishness on the Phoenix market. It plans to continue to actively build, and it is already planning another project at The Grand site. We continue to push forward on other local office developments, like Union, and industrial projects, like Park303—all of which place a heavy emphasis on location and amenities,” says Krumwiede. “We entered into the pandemic as a thriving economy that was becoming more diverse by the day. We’ll emerge from the pandemic in the same way, with a dynamic workforce and business-friendly environment that attracts forward-thinking cultures like DoorDash.”