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January 15, 2009  

Thanks to our friend Stephanie Williamson of Trinity Construction, who snapped the picture we run below of Tuesday night's Northern Virginia CREW dinner and panel. We'd glad to note that George Mason guru (and Cardinal Bank chief economist ) Steve Fuller had some upbeat things to say.


Don't get too excited by our headline at the top; it refers to office renewals, not actual growth. We were on hand at lunch yesterday with Maryland/DC NAIOP, and learned that the majority of this year's transactions in suburban Maryland will be renewals, just like 11 of the top 20 last year. We cheer that Lockheed Martin has renewed for 500K in Bethesda; and that nothing is set to deliver in 2010, so no huge vacancies. We'll take whatever good news we can get.


Rappaport's Henry Fonvielle and LCOR's Mike Smith welcome Brookfield SVP Jim Hedges, right, who traveled from NYC to deliver a zen-like slogan: "Acceptance; Perspective; Looking Forward." Accept the problem: 2.6M jobs lost nationwide, 40% in offices; CMBS lending has vanished as delinquency has doubled in the past two months, and foreign investors remain on the sideline. Perspective: Sure, DC dropped 52% in volume from '07 to '08, but the nation plummeted 75%. Manhattan, in particular, has seen vacancy rise from 5.2% to 8%, subleases spike 28% in the second half of '08 (11.2M SF), and the Barclays/Lehman Bros deal could add 4M SF. By comparison, Maryland's negative 388K SF absorption isn't looking too shabby.


In a blatant attempt to pander to us (which worked, by the way), Jim added predictions for "Bisnow Headlines in  2009." He expects more stories about green initiatives, rather than greenbacks generated by real estate transactions. He later added that office woes historically bottom out two years after a recession begins, which was December '07 (according to Steve Fuller's time machine). In the meantime, with CMBS out of the question, new sources of debt will emerge, including coverage bonds, where the issuer takes the risk, then sells the loan.


Other speakers: CBRE's Roberta Liss and First Potomac Realty Trust's Tim Zulick join Henry, Mike, and Jim. Roberta painted Maryland as the scrappy underdog. Sure, DC averaged $551/SF since '06, but Maryland has managed to hold the line at $250, even when only one county (Prince George's) had positive absorption last year. And Maryland absorption may look sad next to NoVa's defense-industry-boosted 1.1M SF uptick, but Roberta predicts growth for both areas next year; the death sciences won't dominate the life sciences any longer, even if wars abroad continue.


DBI Architects' Roseanne Beattie and Kathryn Ciliberti flank R.W. Murray's Patricia Redding. DBI is active in Maryland, rehabbing Lockheed Martin's Bethesda HQ, with Joe Boggs. They're also handling the interior at Constitution Center (old DOT in SW). Apparently we always neglect to mention them when we cover that building, so please consider that rectified.


Cushman's Dave Millard, Advance Realty's David Fisher, and First Potomac's Doug Donatelli. David ended' 08 with style, selling two properties (combined 141K) at Avion Office Park in Chantilly. CBRE Realty Trust was the buyer for Midrise III and IV, one of the very few sales transactions to close in the 4th quarter. A week later, he leased 88K SF at the park to Intersections, Inc. "The best holiday gift I could have hoped for." (Guess he hasn't seen the iPhone.)


We'll break our own rule about having the same person in multiple photos because Roberta makes this shot a momentous occasion. It's an ad hoc reunion of co-workers once employed at Barnes Morris, the Bethesda-based boutique eventually acquired by CBRE. She's with Cassidy's John Myers, McShea's Rick Farren, and Transwestern's David Popp. If this were a real reunion, all agreed Rick would win the prize for still looking like he did all those years ago. It would also be a pretty lame reunion because nobody's crying or drinking, and everyone is still very good looking, for the record.

Northern Virginia CREW hosted dinner for 135 Tuesday night at the Fairview Park Marriott: president Julie Maza (of Patton Harris Rust & Associates), programs chair Amy Talton of Applied Risk Management, and Himes' Associates Heidi Peppel. Panelists included Studley's Wendy Feldman Block, CB's Cathy Delcoco and Kathy Keller, NAI/Michael Companies' Betsy Daily, and Cardinal Bank forecaster Steve Fuller. We checked in with Steve this morning, who tells us his view is that NoVa is still, amazingly, in expansion, adding12,000 net new jobs last year, and he expects 10,000 this year. As a result, he predicts the NoVa economy will accelerate in the second half of '09. But he says this doesn't translate into absorption, because NoVa is so overbuilt, with a current 12-13% vacancy rate. He thinks it will take until about 2012 when new space will be needed again, though he knows it will "take some courage" for developers to start building again in advance.
Trammell Crow
Arent Fox
Forrester Construction
Reznick Group
Cardinal Bank
GVA Advantis
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