This week, F5 Networks signed the biggest office lease of the year in Seattle, in a striking new skyscraper under construction in the heart of downtown. F5 is a major employer in Seattle, but it has flown under the radar thanks in part to the behind-the-scenes technical nature of its work.
That will surely change with its flashy new headquarters. It’s a decision years in the making for F5, meant to shape its presence in Seattle for the next decade and beyond.
For the developer of the 44-story skyscraper, it was a validation of his then-radical idea of designing a high rise building with technology companies in mind as tenants. He originally conceived of the project in 2006, years before Amazon started building a forest of skyscrapers north of downtown Seattle and companies like Salesforce planted flags in high-profile buildings in San Francisco.
But the story of how the network infrastructure and security technology company ended up leasing 515,500 square feet in Daniels Real Estate’s The Mark tower — now the F5 Tower — began in 2015. It was a combination of foresight, timing, relationships and a good fit.
At that time, F5 was evaluating its global real estate portfolio and investing in some of its satellite offices. But it became clear that the Seattle headquarters office was bursting at the seams, and the company needed something bigger.
F5 set out on a search for a space nearly double the size of its 320,000-square-foot Seattle headquarters. The search area encompassed the entirety of King County, said Jay Phillips, F5’s director of global real estate and operations, meaning that a move out of the city wasn’t initially off the table. One must-have: proximity to good transit connections, something its current waterfront site lacks. The company also wanted something “iconic” to make its presence known, said Nathan Misner, F5’s senior director of global communications.
“Despite being a $2 billion company with 5,000 employees, we’re still a little bit behind-the-scenes,” Misner said. “This is a good, visible way to show we are committed to Seattle, we are part of the Seattle tech scene and we are here for the long haul.”
That knocked out a lot of potential sites, as did the timing of the company’s move.
Last summer, as F5 was searching for space, Daniels was looking for tenants for The Mark, which was now well under construction at 801 5th Ave. During the recession, part of the structure was converted into a hotel, reducing the size of the office space.
The hotel created amenities for a 24-7 tech company, as well as spaces like meeting rooms that a tenant could rent, rather than having to build them into their space, said Kevin Daniels of Daniels Real Estate. As part of the project, Daniels retained the historic First United Methodist Church and added conference and meeting space.
Daniels had an existing relationship with F5’s Phillips, who previously worked in real estate for Starbucks. Another company Daniels co-owns, Nitze Stagen, renovated the former Sears building south of downtown Seattle into Starbucks’ global headquarters in the early 2000s. Years later, that relationship would come back around.
The Mark wasn’t on the list of F5’s preferred buildings at the time, but Daniels thought the two sides would be a great fit. Not only is the site on all of Seattle’s major transit lines, but the angular building design, and place next to the 76-story Columbia Center would give any tenant a prominent spot on the Seattle skyline.
So Daniels enlisted Craig Kinzer, a high-powered real estate broker who had worked with both Phillips and Daniels in previous Starbucks deals, to get F5 in the building for a tour.
Once F5 got in the door, the company was wowed by the design, and that got talks started. The two sides didn’t go into the nitty-gritty details of negotiations, but both groups said one thing really stuck out to F5: the 9-foot, 6-inch windows throughout the structure.
“The floor-to-ceiling glass was an amazing benefit to this building that just dramatically changes the way you connect with the space,” Phillips said. “You just don’t get that window line out of anything in Seattle right now … Every floor has an amazing view; no one is going to be without a view.”
Today, F5 employs 1,375 people in Seattle and adds about 100 per year. The new office space in F5 Tower gives the company room for approximately 2,400 people. Over the course of the 15-year lease, F5 will pay $359.5 million in rent, according to a filing with the Securities and Exchange Commission.
F5 has a lease at its waterfront building for several more years, and the company plans to sublease that space after it moves to the new F5 Tower in 2019. Phillips thinks the company will have no problem finding a taker for an office building on the water, just down the road from Expedia, which is coming to Seattle in 2019.
With the big lease out of the way, the only thing left to do is keep building. Daniels said the hotel, which will run under the SLS flag, could open around Labor Day.
F5 will start building out its new office early next year. The floorplates are large, and free of columns in the center, giving the company a lot of flexibility in its design.
Building a tech office in a high rise has its challenges. Phillips said F5 wants to make sure people on different floors aren’t isolated from each other. To do that, interior staircases throughout the office will connect floors, and there will be various collaboration spaces. If done right, the high rise can actually be more efficient, while still fostering collaboration.
“The interesting thing between vertical and horizontal is you sometimes end up walking longer horizontally than you would to go vertically in an office space,” Phillips said. “Keeping teams in one building is a benefit, but we are very mindful of going vertical. We don’t want to make everything feel like it is an elevator ride.”
The high-profile lease is the latest in a series of changes at the company. New F5 CEO Francois Locoh-Donou started in that role in April, replacing John McAdam — who became CEO in 2000, retired in 2015, and then stepped back into that position after the unexpected resignation of his replacement.
Having a signature building like F5 Tower raises the profile of the company locally as it competes for top talent with homegrown and out-of-town tech giants alike. Another way to draw employees is through unique amenities, but Phillips said the company hasn’t decided what to include on that front.
“I don’t think you’re going to see any climbing walls or water slides or anything like that,” Phillips said, “but we are focused on making it a space about our employees, so that they feel connected, and it’s an engaging space for everybody.”