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Lease Up: Major Corporate Space Moves for the Week of June 9-13

Tenants Include: Amazon, Barnes & Noble, Charter Oak, ebay, Flushing Bank, Genesys, Google, JLL, Optym, PPD, Red Ventures, SEI Investments, Universal Music
June 13, 2014

Amazon Preparing to Occupy Another 572,000 SF in Seattle


By Randyl Drummer
Already 'ginormous' and growing larger, Amazon.com has signed leases and taken out permits for tenant improvements and other modifications as the tech giant prepares to occupy more than 572,000 square feet of additional office space in four buildings in the Denny Triangle, Belltown, Lake Union and Elliott Avenue W areas near downtown.

After nearly a year of market rumors about the leases, city and county documents indicate that the e-commerce giant has inked lease deals and is soon planning to move into the space. The new lease agreements were first reported by The Seattle Times, which reported that Amazon has finalized leases for the four buildings.

Amazon already leases or owns more than 5.2 million square feet, including 2 million square feet currently under construction, and has secured approvals to build another 2.2 million square feet at Denny Triangle. In January, Amazon bought nearly an entire city block near Denny Triangle from Clise Properties for a reported $52.2 million.

According to Seattle planning and development department data, the city has issued permits to Amazon and its contractors in preparation for electrical and network cabling, and applied for a permit for interior tenant alterations valued at $2.5 million for conference rooms and offices at Blanchard Plaza owned by San Francisco-based Shorenstein Properties.

Additional contreuction permits have been issued for 2301 5th Ave. (5th and Bell), owned by Hines, and the build out of tenant improvements at 635 Elliott Ave. W, owned by Martin Selig Real Estate.

According to lease memos recorded with the King County Assessor's Office, Amazon took 255,818 square feet at Blanchard Plaza in an 11-year lease commencing April 24, with an option for a seven-year extension.

In other leases:

* Amazon also agreed to take the four-story, 187,434-square-foot building at 635 Elliott Ave. W in a five-year lease dated April 24 with two renewal options along with the right of first negotiation to purchase the building.

-Permits issued for the first, second and third floors of the 5th and Bell building total about 100,000 square feet.

-Amazon has also signed a 26,000-square-foot lease with the real estate arm of Vulcan Inc., owned by Microsoft billion Paul Allen, for space in the renovated Laundry Supply Building at Republican Street and Yale Avenue North, just east of Amazon's existing campus in the South Lake Union neighborhood.


eBay Leases 631,448 SF in Park South at Richmond


By Dan Pedevillano
eBay Enterprise, a global provider of retail-optimized commerce solutions and subsidiary of online auction-style marketplace eBay, inked a lease deal to occupy the entirety of the soon-to-be completed, 631,448-square-foot Building H, an expansion on eBay's existing 543,000 square feet in an adjacent building in the Park South at Richmond industrial campus in Walton, KY.

Park South at Richmond was constructed in 2006 between I-71/75 and Dixie Hwy. in the Florence Industrial submarket of Cincinnati. The central site affords eBay Enterprise access to a substantial portion of its clientele within a two-day truck drive and easy accessibility to the Cincinnati/Northern Kentucky and Louisville International Airports.

Construction on the newest facility is expected to wrap up in September 2014 and include LED dock lights, T-5 warehouse lighting, R-20 roof insulation, a white TPO roof and clerestory windows. eBay Enterprise will use the facility to fulfill online orders for a wide array of brands and retailers.

Powell Spears and Jeff Bender of Cassidy Turley, in cooperation with Brian Davies of Cresa Partners, brokered the transaction on behalf eBay Enterprise. Mike Lowe and Doug Whitten of CBRE negotiated on behalf of the owner, IDI Gazeley, with Jeremy Kraus providing in-house representation.


Barnes & Noble Swapping Space with Google in Cost-Cutting Move


By Mark Heschmeyer
Barnes & Noble Inc., the nation’s largest retail bookseller and the leading retailer of content, digital media and educational products, announced that Nook Media LLC has entered into an assignment of lease for its 208,000 square foot Palo Alto, California campus.

Google will take over occupancy of the space and in turn sublease space it leases to the two Barnes & Noble units.

NOOK Media anticipates leasing and moving into new office space in June 2014 and to terminate the sublease in mid-July 2014.

Employees will be relocated to new state-of-the art facilities totaling 88,000 square feet. Nook employees will move to a new facility in Santa Clara, California, while Barnes & Noble College’s digital education employees will relocate to a facility in Mountain View, California. The relocations are expected to occur by the end of the first quarter of fiscal 2015.

This action will result in a net reduction of annual occupancy expenses of approximately $10 million, reducing the company’s future lease commitments by $102 million.

The asset impairment charges resulting from this relocation are $30 million, which are expected to be recorded in the fourth quarter of fiscal 2014.

The company also expects to incur cash closing costs and to adjust lease accounting items in the first quarter of fiscal 2015 to reflect the impact of these relocations.

“This move is a significant step in our ongoing efforts to both rationalize and better equip the Nook business to achieve success, while positioning the digital education team and platform for future growth,” said Michael P. Huseby, CEO of Barnes & Noble, Inc. “These relocations result in work environments and related cost structure impacts that are better aligned with our business objectives and our employees’ expressed needs.”


PPD Renews Office Lease for 225,000 SF


By Mark Heschmeyer
Pharmaceutical Product Development (PPD) signed a lease renewal for 224,979 square feet at MetCenter 10 in Austin, Texas.

With the lease renewal, owners of the 345,600-square-foot two-story building were able to refinance the property paying off a $24.4 million loan balance that was scheduled to mature in January. The loan was pooled in a CMBS trust (Banc of America Commercial Mortgage 2005-3).

PPD’s previous lease was set to expire next March. Terms of the new lease were not disclosed.

National Asset Services successfully represented the 29 co-owner tenants in common in the negotiations that resulted in a multiyear lease renewal for the space, which comprises about 65% of the total MetCenter 10 building area.

[Editor's Note:An earlier version of this story reported that this is property was being marketed for sale. National Asset Services reports that the property is not for sale.]

"This lease renewal ensures stable long term cash flow that allowed the ownership to extinguish 100% of the existing debt by securing a new loan with more competitive terms while avoiding a maturity default of the existing loan," said Shirlee J. Kingsley, CPM, vice president of National Asset Services, who lead the negotiations.

The company, which will use the medical office space as a 300-bed drug trial facility, is a leading global contract research organization providing drug discovery, development, lifecycle management and laboratory services and products for pharmaceutical, biotechnology and medical device companies.

Wilmington, NC-based PPD was recently selected as one of the most innovative organizations using information technology to create business value by CIO magazine's 27th annual CIO 100 Awards.

The leased space is part of a the 550 acre mixed use MetCenter Business Park campus, on State Highway 71 just west of Austin-Bergstrom International Airport.

The MetCenter 10 building features state-of-the-art communications technology, back-up generation, access to the Business Park's two on-site 400 Mega Watt electric sub-stations, fiber optics, five national hotels and hike and bike trails. The building also features dock level loading, a 13.5-foot clear height and 40-foot by 45-foot column spacing.


Universal Music Group Signs ‘Record’ Lease in Woodland Hills


By Mark Heschmeyer
Universal Music Group (UMG) signed a new 10-year lease for 146,636 square feet at 21301 Burbank Blvd. in Woodland Hills, California.

This is the largest relocation lease by square feet signed in the San Fernando Valley this year.

This relocation will combine the company’s two existing Woodland Hills offices into one larger location, effective February 1, 2015. UMG offices in Santa Monica will not be affected.

UMG, the world’s leading music company, will occupy the top four floors of the five-story building. Hines is the landlord and owner of the majority of the seven-building campus known as LNR Warner Center.

Paul Stockwell, Josh Leibowitz and Jeremy Charles of CBRE represented the tenant. Todd Later and Eric Lyon of Hines represented the landlord.


JLL To Sign 165,000-SF Renewal, Maintain Global HQ at Aon Center in Chicago


By Bryce Meyers
JLL signed a letter of intent with Piedmont Office Realty Trust that will see the commercial real estate firm maintain its global headquarters at the iconic Aon Center office tower in Chicago's East Loop.

Negotiations on a long-term lease deal, which would commence in 2017 when the firm's current lease is scheduled to expire, are in their final stages. The agreement would maintain the firm's 165,000-square-foot space and afford JLL the option to expand throughout the course of the term if necessary to accommodate future growth.

JLL and Piedmont have already committed to revamp JLL's current space for a more open, flexible and collaborative design. Work on the new space will commence later this year, with the first group of employees set to move in by mid-2015.

In addition to JLL's space, Piedmont intends to follow through with a number of renovations to the 2.7 million-square-foot, 5-Star Aon Center, including upgrading building lobbies, common areas, the retail arcade and fitness center.

Jeff Liljeberg, Rob Schmidt and Michael Sessa of JLL are representing the firm in the final stages of negotiations. Steve Smith and Mark Georgas, also of JLL, are brokering the transaction on behalf of Piedmont.


Flushing Bank To Relocate to RXR Building in Uniondale


By Mark Heschmeyer
Flushing Financial Corp., which up until now has never really had a corporate headquarters, plans to relocate its headquarters and consolidate its non-branch personnel into one location.

They have entered into a lease with RXR Plaza in Uniondale for more than 90,000 square feet of space.

Flushing Financial is the parent holding company for Flushing Bank.

As part of that lease, its bank will also open a 1,200-square-foot branch in the building to serve employees as well as the numerous business tenants that occupy offices in the building.

RXR Plaza is a 1.7 million-square-foot Class A office building built in 1985 and renovated in 1996. The building currently shows 109,940 square feet available for lease with average rent of $36/SF/year. Terms of the lease were not disclosed.

"Over the past year, as our business continued to grow and our current lease nears its end, we recognized the need to identify a new headquarters location to enable us to sustain this growth and provide for the efficiencies and synergies that result from the majority of staff being under one roof," said John R. Buran, president and CEO of Flushing Financial.

The corporation is currently based at 1979 Marcus Ave., Suite E140 in Lake Success, NY, with a lease set to expire next March. Technically, the site is more of a full service cyber office, which acts as a back room operation centers for its 17 full-service offices and its internet branch, “iGObanking.com.”

Flushing Financial neither owned nor leased any property but instead used the premises and equipment of Flushing Bank.

"Nassau County's strong real estate dynamics as well as the commitment by local government and community entities weighed favorably in our decision to stay in Nassau County,” Buran said. “We worked closely with the Town of Hempstead Industrial Development Association on programs to support us in bringing over 250 employees to their town. This convenient location also allows us to stay connected with our branch network in the New York metro area while we look to expand the Bank's footprint in Nassau and Suffolk counties."

Ralph Pema, executive managing director, and Daniel Oliver, managing director, both of Newmark Grubb Knight Frank, represented Flushing Bank in the deals.


Red Ventures Opens Silicon Valley Style Office in South Carolina


By Mark Heschmeyer
Red Ventures celebrated the grand opening of a Silicon-Valley style, 180 000-square-foot addition to their headquarters just south of Charlotte, in Indian Land, SC.

The addition of the new building will bring headquarter-square-footage to a total of 330,000 square feet.

RVi, a Red Ventures spin-off team devoted to the insurance vertical, was the first group of employees to move into the new office, known by employees as ‘RV3’.

"RV3 represents a big step forward for our company," said Elias. "It is a building that is bigger than all of our other facilities combined. So with 180,000 square feet, we're taking a position that the best is yet to come."

The facility includes a bowling alley, spin room, on-site food court, beer garden and room for more than 1,200 employees. The addition complements the existing two buildings on the Indian Land, SC campus as well as Red Ventures' offices in Charlotte and Wilmington, NC.

The new building also features 60 additional meeting rooms, outdoor workspaces, and an expanded yoga room and gym. The amenities are in addition to the already impressive main office, which includes a putting green and indoor basketball court.

Red Ventures, a technology-driven marketing and sales company, has grown more than 30% every year for the past five years and is projected to house almost 1,800 employees on the South Carolina campus by the end of the year.

Red Ventures has also purchased more than 100 acres of land surrounding the headquarters in Indian Land for future use and development.


Charter Oak Federal Credit Union To Open New HQ in Waterford


By Ryan Stambaugh
Charter Oak Federal Credit Union has completed construction and will have a grand opening ceremony next week on its $18 million facility at 1055 Hartford Turnpike in Waterford, CT.

The 65,000-square-foot office property will operate as the company's headquarters and new branch, the credit union's 14th branch overall. The current headquarters is at 32 Chicago Ave. in Groton, which will continue to serve as a branch location.

Groundbreaking commenced in the fall of 2012 with Enterprise Builders of Newington, CT handling the general contracting. The headquarters was designed by Point One Architects of Old Lyme, and CLA Engineers handled the engineering.


SEI Investments Inks 18,000-SF Lease Renewal, Expansion at 777 Third


By Justin Sumner
Investment management firm SEI Investments Co. signed a lease renewal and expansion at 777 Third Ave. in New York City that brings the firm's total footprint there to 18,412 square feet. In addition to its 7,869 square feet on the 26th floor, the company is leasing an additional 10,543 square feet on the 20th.

The deal marks the culmination of William Kaufman Organization's successful repositioning of the property, which is now 100% leased.

Over the past 12 months, Sage Realty Corp., the leasing and management arm of Kaufman, has teamed up with JLL to sign new leases and renewals totaling more than 100,000 square feet there, to tenants including ERG Property Advisors, Retrophin Inc., Starboard Value LP, Alta Fundamental Advisers LLC, Sompo Japan Insurance Company of America, Morelli Alters Ratners PC, Candlewood Investment Group, Trident Investment Management, and Lascaux Resource Capital.

The multi-year repositioning effort included a multimillion-dollar capital improvement program that included the restoration of the original Italian Calcatta marble in the lobby, new elevator cabs, installation of state-of-the-art technology, safety, and emergency systems, and upgrades to the common areas as well as turnkey buildouts and spec construction of pre-built units.

Immediately following the departure of a large advertising agency in 2010, the landlord was able to diversify its tenant roster with the addition of Avon into 272,000 square feet just 10 days after the previous lease expired. Several full-floor tenants subsequently took space in the building, which carries asking rents in the $75 per square foot range.

"We believed from the beginning that the new 777 Third Avenue would be able to attract a diverse roster of new triple A tenants, and we were proven right," said Michael Lenchner, vice president and director of leasing at Sage. "It speaks volumes about the quality of the property, as well as the viability of the Third Avenue corridor. Equally important, taking rents in the tower lead the Third Avenue market."

Built in 1963 and designed by architect William Lescase, the 39-story, 575,985-square-foot, 4-Star office tower is in Manhattan's Plaza District submarket, between 48th and 49th Streets. The building is known for its open public areas with distinctive artwork, including two iconic sculptures in the plaza area - the "Big Red Swing" by Theodore Ceraldi, and "Contrappunto," a rotating stainless-steel sculpture (pictured, right) by Beverly Pepper.

L. Craig Lemle of Savills Studley represented the tenant in its seven-year lease deal. Lenchner represented the landlord in-house in this most recent transaction.


Genesys Inks 27,000+ SF Lease Deal at 2 Burlington Business Center


By Bryce Meyers
Genesys is set to relocate its New England offices from Bedford to Burlington, MA after the customer service and contact center solutions provider signed a 27,140-square-foot lease deal at 77 S. Bedford St. within the Burlington Office Park.

The Dale City, CA-based outfit will take occupancy on the fifth floor of Two Burlington Business Center, a 146,470-square-foot, Class A office complex acquired by local firm RJ Kelly in 2013. Following the acquisition, RJ Kelly followed through with a multi-million reclamation project which included upgrades to the lobby, common areas, cafe, facade and landscaping.

Mark Roth, Matthew Malatesta and Blake McLaughlin of Cushman & Wakefield brokered the transaction on behalf of RJ Kelly, while Jason Levendusky of CBRE New England represented Genesys in negotiations.


Optym Finds New Global Headquarters


By Marcus L. Smith
Optym, a Gainesville-based software developer for airways, railroads, trucking, and mining, acquired the office building at 7600 NW 5th Place in Gainesville, FL from AMJ Inc. for $2.2 million, or about $76 per square foot.

The property delivered in 2008 and totals 28,775 square feet. According to CoStar information, the property was vacant at the time of sale.

Formerly known as Innovative Scheduling LLC, Optym will relocate from its current headquarters at 2153 SE Hawthorne Rd. in Gainesville. The company plans to begin renovations in late July and hopes to take occupancy in January of 2015. This location will serve as Optym's global headquarters and add an additional 100 jobs to the Gainesville region.

Beau Beery of Coldwell Banker M.M. Parrish Realtors represented the seller in this transaction, while Front Street Commercial Real Estate Group represented the buyer.

Please see CoStar COMPS #3040620 for more information.

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