Wells Fargo (Access11) LDCRE
January 7, 2015

FBI Frenzy!

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One of the maddest scrambles in the history of Washington commercial real estate may be underway this week. (And you thought the screeching you heard was just wheels spinning in the snow.)

Many of the top developers in town have been planted on the phone this week coaxing and cajoling contractors, architects and engineers, and in some cases other developers, to work on their team (and not with others) on bids for the 2.1M SF new HQ of the FBI to replace the World's Ugliest Building. You remember—the cooler, more secure campus GSA wants in Greenbelt, Landover or Springfield.

CohnReznick (Field) MDCRE

Here's what started the scramble. The RFP from GSA that came out last month (cover page above) specified huge requirements for team members that even some major players who planned to bid can't meet. (GSA wants to be sure this project gets done right.) The developer(s) on your team must show they have $1B in liquid assets and have done three 500k SF projects in the past five years. Architects must show they've done three 500k SF projects in the past 10 years. And builders must show they've done one 1M SF and two 500k projects in the past five years and have $1B in bonding capacity for a single project. So contenders have to team up with others who can help them meet these criteria. And they don't want them to join other competitive teams. (You can be on more than one.)

Wingate Hughes (OnTop) MDCRE

Why do people care? The prize is: 1) the old FBI building, likely to be torn down by the developer but sitting on a long block of Penn Ave land valued at between $200M and $500M; and 2) probably another $500M or more in cash for the development of the new HQ.

Donohoe (NewWebsite) MDC

By this Friday, any questions on the process are due. By Feb. 10 at 3pm, you've got to tell GSA who's on your team. By May, GSA will announce up to five teams that can compete. And by May of next year, GSA will announce its selection for both a team and a site based on the designs proposed. (Teams can propose a design for any or all of the three sites.)

Here's a design developers Renard and Related have floated for the Greenbelt site, owned largely by WMATA. But now they have to be sure they meet the qualifications described above.

Same for Lerner, which has this design for the site in Landover, which it happens to own. And there are many other developers expected to bid, like Boston Properties, JBG, Hines, LCOR, Lincoln and Trammell Crow. Many architects like Gensler, HKS, HOK, SOM and Shalom Baranes Associates. And behemoth contractors like Clark and Hensel Phelps (which is rumored to have been lining up all the subcontractors in town so they're not available to competitors). Maybe you, too, want to join in the fun?

Why does everyone want the old FBI site? Nearby a glamorous Trump Hotel is being re-created from the Old Post Office. Everyone assumes there will be an intensified revitalization along Pennsylvania Avenue, needing another City Center-like mixed-use development of high-end shopping, restaurants, condos and hotel. Developers are teeing up to serve.

Who's overseeing the decision? A very hands-on and well-known GSA Administrator, Dan Tangherlini (here speaking at a Bisnow event). We wish him the best of luck pleasing everybody.

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Miller and Long (Jan28) DCRE
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Washington Workplace (102030-2) DCRE
Monday Prop (1812NorthMoore) DC
Hickok Cole (Creative3) DCRE
Bisnow (Sales-Checklist)

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Here's Glenda MacMullin, COO for the Consumer Electronics Association (CEA), and Crystal City BID CEO Angela Fox attending this week's International Consumer Electronics Show (CES). CEA is a global innovation leader headquartered in Crystal City. Glenda, who is also on the Crystal City BID's executive board, and Angela invite you to laser etch your own beer glass at TechShop's happy hour on Tuesday, Jan. 13, from 6-8 p.m. (Tickets: $15). For more info on our sponsor's event, click here.


First Data Center of 2015 Opens

CoreSite's data center presence in the region grew this week with the opening of its second facility in Reston. The company said it opened the first phase of VA2 and already has an undisclosed single tenant occupying 50k SF. The facility will eventually be 198k SF and another 50k SF will be completed in Q2. The new facility joins the company's VA1 data center, bringing the Reston campus total to 460k SF

Marketing and product SVP Brian Warren says the company's NOVA and DC presence are one of eight markets where the company has multi-tenant data centers (17 facilities in operation). CoreSite's first DC area data center is at 1275 K St downtown. Brian says as networks became more connected and private networking grew in popularity, K Street became a significant point of interconnection on the East Coast. (Well, technically, as lobbying central, there was already a fair bit of interconnection going on along K Street.) The building was eventually sold but the company kept the 22k SF data center. 


Clarendon: KBS' Latest Buy

KBS REIT III continues its buying spree in the DC region, this time scooping up 3003 Washington Blvd in Clarendon for $149M. SVP Stephen Close says the 211k SF Class-A building may be one of the last opportunities for the company to buy a trophy building there. So few Class-A buildings exist in the neighborhood, with most new developments focused on residential. The building, completed in 2014 and 95% leased with companies like CNA Corp., and the Common Application, recently won NAIOP-Northern Virginia's “Best Building” award in the speculative office 7-14 stories category. 

Stephen, who's in charge of the Mid-Atlantic region, tells us KBS also recently did deals in St. Louis and Emeryville, CA. He says leasing markets in the DC region are slower and “pretty far behind” others around the country. So it's still a tenants' market but it's strengthening. Areas like Clarendon, certain spots along the Dulles Toll Road (above), and DC are performing better than other NoVA submarkets, and better than suburban Maryland, he says.