Code42 won't be making a much-anticipated move to Uptown, leaving a yet-to-be-built office complex called MoZaic East in limbo.
The tech company, now headquartered on the north side of the Mississippi across from downtown Minneapolis, notified developer Ackerberg Group recently that it couldn't proceed with its previous plan to move to the new, eight-story building in 2016.
"Code42 can't move forward with the building we had designed at this point," JoAnna Hicks, senior managing director at Minneapolis-based Ackerberg, said Monday. "I'm always hopeful that we will be able to work something in the future."
The news comes less than a month after the city of Minneapolis approved a jobs-subsidy package for the fast-growing software firm that was tied to its expansion. The incentives were based on the company's promise to add 400 jobs to its 350-employee base.
Code42 did not respond to calls for comment.
The news raised speculation that the closely held company, one of the most successful in the Twin Cities tech start-up scene over the past decade, is in play. Code42, which had about $40 million in revenue last year, is best known for a data backup product called CrashPlan.
In addition to sale speculation, which has risen previously for Code42, the company may have backed away from the deal if its space requirements changed, the timing of the project didn't align with the firm or a business issue became a bigger priority for its leaders, said Paul DeBettignies, a Minneapolis-based headhunter for tech companies.
"Why would they go through all this work and then back out? That seems silly," DeBettignies said. "They are way past the implosion part. Almost nothing at this point would tank them outside of the catastrophic."
City Council Member Jacob Frey, who voted in favor of the incentives for Code42, said, "If this was a real estate issue, we will find someplace else that's even better. We are committed to do what we can to keep them in the city."
Ackerberg is now tweaking its nearly $70 million project to prepare for a multitenant configuration and may shrink its nearly 180,000-square-foot size, Hicks said. The office-retail complex will abut the Midtown Greenway behind the Lagoon Cinema.
"We have tremendous respect and belief in Code42 and their team," she said. "We would love to have the ability to accommodate them in the new configuration."
Hicks doesn't know what the market interest may be because Code42 was the first company she pitched the building to, but she says they are optimistic and remain bullish on the development.
"We have full entitlement and are fully financed. So we are ready to go. Even if we need to pivot slightly, we should be able to be to market very quickly," she said.
Hicks said the original plan was to begin building in late 2014, but Code42's withdrawal put the developer's plans on hold temporarily. Ackerberg won't begin construction on MoZaic East until it secures a major tenant. The developer hopes to present new options to prospective tenants next month.