Skanska Signs Law Firm To 164K SF Pre-Lease To Kick Off Downtown D.C. Project
Skanska has landed one of the biggest D.C. office relocations this year, signing a law firm to take half of a new downtown project.
The global law firm signed a 16-year pre-lease and plans to relocate its D.C. office from 1050 Connecticut Ave. NW. The tenant was represented by JLL in the deal, while Skanska represented itself.
The project, branded as 17xM, is planned to span 11 stories and 330K SF of office and retail space. It sits about two blocks from the Farragut North Metro station. The developer said it aims to deliver the project in 2024.
The developer is working with KPF Architects, ARUP and Siemens on the project. Skanska said the building is designed to have LEED Gold, Fitwel and WiredScore certifications, and it is slated to be D.C.'s first office building with a SmartScore certification, a new classification WiredScore launched earlier this year to measure how a building uses smart technology to improve user experience.
“17xM’s future-forward design integrates elegant architecture demanded by this premier location with diverse, sustainable, and technological features to meet the evolving needs of our tenant customers," Skanska Executive Vice President Mark Carroll said in a release. "We are confident that it will be a flexible and dynamic workplace for Gibson Dunn for years to come.”
Skanska ground-leased the land for the project in January 2019 from JBG Smith, which had taken control of the site from Vornado after the New York REIT merged its D.C. business with The JBG Cos in 2017. Vornado had torn down the buildings on the property to prepare for the development before the merger, and the downtown site has remained vacant for at least four years.
The project is the latest in a series of D.C.-area groundbreakings for Skanska. Last month, it began construction on a speculative office project in Arlington's Virginia Square neighborhood, and last year it broke ground on a 410-unit apartment building in Tysons. The Swedish developer has also delivered the 2112 Pennsylvania Ave. NW and 99 M St. SE office buildings in D.C. during the past four years.
Gibson Dunn has 1,500 lawyers across 20 offices around the world. Its D.C. office handles a range of legal work including transactions, labor and employment issues, challenges to federal agency rule-makings, and congressional investigations.
The move continues the years-long trend of law firms departing older D.C. office buildings for newly developed trophy assets. The deals create leasing activity for the market but rarely create net positive demand, as law firms often reduce their footprint in moves to more efficient space.
The District's vacancy rate surpassed 18% for the first time last quarter, according to CBRE, with a significant portion of the vacancy in second-generation buildings that have lost anchor tenants. Also contributing to the vacancy rate is the trend of new office projects breaking ground after pre-leasing the top floors but adding vacancy to the market with their unfilled lower floors.