Skanska's Going Spec Again
While most other developers in DC are shying away from spec office development, Skanska USA is going there again. After starting construction on 99 M St in the Capitol Riverfront earlier this summer, Skanska announced yesterday that it’s moving forward on an 11-story, 250k SF trophy-class office building at 2112 Pennsylvania Ave after signing a ground lease with George Washington University for the land.
EVP Rob Ward, who leads Skanska’s development in DC, told Bisnow yesterday that the decision to speculatively develop again makes sense in the current market. “It’s certainly not a decision we take lightly,” he says. “If this was 500k SF we probably wouldn’t be starting without a pre-lease.”
But since the building is half that size, and it’s being designed by Gensler to be trophy class, it’s positioned to snag some of the right-sizing law firms and businesses fleeing older buildings for less space in new product. “That’s a trend that’s been pretty consistent for some time.”
No one would be surprised if Skanska signs a tenant before construction wraps up in Q1 2018. Spec office development is certainly lower in DC since the high-profile vacancies at Monday Properties’ 1812 North Moore in Rosslyn and Trammell Crow’s Sentinel Square in NoMa, but they’re not unheard of.
Akridge went spec at 1200 17th St NW, and signed Pillsbury to a 101k SF lease well before delivery. MRP Realty did the same with 900 G St and signed Simpson Thatcher Bartlett before delivering. 99 M St still doesn’t have a lease signed, but we’re told a law firm has been snooping around (we know, a law firm in Southeast? The times, they are truly a-changing). But Rob doesn’t need to land a mega-deal for this development to make sense, the kind StonebridgeCarras did yesterday with the DOJ to occupy all of its own 350k SF spec office development in NoMa (plus a build-to-suit, 475k SF building). “An anchor tenant for us could be 100k SF or 80k SF,” he says. “A smaller tenant can be a more meaningful part of this building.”
And, like with all developments hoping to attract trophy-class rents, the building itself is key. The façade will face Pennyslvania Ave with a glass-hinged exterior that will create a wave effect. There will also be a sprawling rooftop deck with views of the Washington Monument, National Cathedral and the Capitol, fitness center and big floor plates. “We try to build inside-out with the tenants in mind,” Rob says.