Puget Sound Business Journal -- Cancer therapy company Dendreon Corp. has filed for building permits to take space in the Russell Investments Center in downtown Seattle, and is reportedly close to signing leases for lab space in South Lake Union that was formerly occupied by ZymoGenetics.
The Russell Investments Center was formerly known as WaMu Center, when it was the headquarters for now-failed Washington Mutual.
The leases, if completed, suggest that Dendreon will have a significant and long-term presence in downtown Seattle and the South Lake Union neighborhood of the city. However, a Dendreon lease is not likely to have much effect on Seattle’s soft commercial real estate market.
Dendreon (NASDAQ: DNDN) filed building permits Feb. 4 with the city of Seattle to make interior alterations on several floors of the Russell Investments Center, city records show. Sources close to the deal said Dendreon is looking to lease about 175,000 square feet of office space in the 42-story office tower.
People familiar with the deal also say they expect Dendreon to sublease 100,000 square feet of lab space in South Lake Union at 1144 Eastlake, which has 9,446 square feet, and the Earl Davie building, with 97,366 square feet.
The space in South Lake Union is currently leased by Bristol-Myers Squibb (NYSE: BMY), which acquired leases for both buildings when it purchased ZymoGenetics last year for $885 million.
Parker Ferguson, a principal with Seattle-based Flinn Ferguson Corporate Real Estate, which is not involved with the transaction, confirmed the impending leases in downtown Seattle and South Lake Union. “They are very close,” he said.
Hans Kemp, a managing director in the Seattle office of Jones Lang LaSalle, declined to comment. He is Dendreon’s agent and also the listing broker on the South Lake Union space. A spokeswoman for Dendreon declined to comment. A representative of Russell Investments said the company would not comment.
Last spring, Dendreon signed a preliminary letter of intent to take 191,000 square feet of space at developer Martin Selig’s 635 Elliott building, and potentially another 60,000 square feet at the neighboring 645 Elliott building. Both buildings are near the waterfront north of downtown. Because those spaces are still being advertised, it appears that deal has fallen apart.
Selig shrugged off the loss of Dendreon as a potential tenant.
“It gives us an opportunity because we are the only one with a new building with 200,000 square feet on four floors,” Selig said.
Even though Dendreon and Isilon Systems Inc. are moving out of his 3101 Airborne building near the Elliott buildings, Selig said he has three potential tenants looking at taking that space.
With office vacancy rates in downtown Seattle in the mid to high teens, Dendreon’s leasing deals “make a small dent” on the office vacancy rate but won’t tip the Seattle market in the landlords’ favor, said Kip Spencer, co-founder of OfficeSpace.com
“The magic number where supply and demand tend to shift is 10 percent” vacancies, Spencer said. “We’re still quite a ways from that.”
Dendreon is marketing Provenge, an immunotherapy treatment for prostate cancer, which was approved by the U.S. Food and Drug Administration last year. The company said in January that as it ramps up its drug manufacturing, it expects to generate revenues of up to $400 million in 2011.
CLAY HOLTZMAN covers nonprofits, biotech and research for the Puget Sound Business Journal. Phone: 206-876-5439 | Email: choltzman@bizjournals.com | Twitter: SeattleDonorBiz
JEANNE LANG JONES covers commercial real estate for the Puget Sound Business Journal. Phone: 206-876-5426 | Email: jlj@bizjournals.com
