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Real Estate Bisnow Real Estate Bisnow
The largest commercial real estate publication in the United States.
April 10, 2012  
WorkSpaces (Left1) DCRE
Old Buildings
Make Money, Too

Join us May 9-10 at the luxurious Tysons Ritz for our Bisnow Lodging Investment Summit (BLIS). We have great panelists like Marriott Int'l CEO Arne Sorenson and of course there will be so much networking you'll need to ice your palms. See the full line up and register here.

Is old the new new? Urban Investment Partners principal Steve Schwat thinks so—hours ago, his firm announced it purchased a decades-old Adams Morgan apartment building for $26M, betting that a $7M restoration will yield top-of-market rents.
Steve (right, with partner Wout Coster) tells us a bifurcated market means value-add plays for aging properties make sense. "In the District, there are generally two kinds of product: New, which means it has a dishwasher, and 80- and 90-year-old buidings that have had no systems upgrades," he says. "That means people who want to live in Class-A apartments have fewer options," historically limited to brand-new (and uber-expensive) or privately-owned condos. Luckily for investors, DC has an "abundance" of older buildings that are ripe for upgrades in historical, sought-after neighborhoods. (And we have an abundance of dirty dishes for that new dishwasher.)
Reznick (Build) JDCRE
UIP bought the building (1841 Columbia Rd, above) in partnership with NY's Infinity Real Estate. Other submarkets on its checklist include Columbia Heights, Petworth, Kalorama, Southwest DC, and Dupont. TOPA, a District regulation giving renters at existing properties the first right of refusal, scares some buyers, Steve says, but "in reality it's a catalyst for good things to happen." Renters who stay at the building through renovations get brand-new amenities at the same price they were paying before, and developers open the building up to a white-hot market.

Chero Takes GSA Helm
Late yesterday, the GSA announced that Linda Chero, Mid-Atlantic regional administrator for the Federal Acquisition Service (center, at a department conference), is Bob Peck's replacement as acting head of the Public Buildings Service. Desa Sealy was also promoted to the deputy commissioner spot, replacing Dave Foley. Does the news mean DC is getting yet-another opinionated Eagles fan? Time will tell.

Fitzgerald: Non-Profits Hold Steady
This morning, CB non-profit and association guru Manny Fitzgerald told us the sector has stabilized after sustaining losses during the recession. But space needs are evolving: "Many associations and non-profits are decreasing their occupancy ratios," shifting towards an open-floorplan model. Their reasons are twofold: Reducing real estate costs and increasing collaboration. The trend will likely hold steady, Manny says, and it's a good thing. "Organizations are still learning how to deal with new profiles in terms of staff sizes, but, for the most part, they're through the worst of the economy."

A Legend Reborn
We were on hand yesterday as Mayor Gray, DC Rep. Eleanor Holmes Norton, and DC councilmember Jim Graham cut the ribbon on a restored Howard Theater, which received a $29M facelift after nearly 30 years of neglect. The theater, a Shaw landmark since it was constructed in 1910, now seats 700 and will host shows six days per week. In its heyday, it served as launching pad for the careers of countless musical greats, including Duke Ellington, Ella Fitzgerald, Marvin Gaye, and The Supremes.
Former mayor and current Ward 8 councilmember Marion Barry was also on hand. The redevelopment team was led by Ellis Development. The theater's re-positioning will be celebrated Thursday night with a grand opening gala and concert.

Are US Hotels a Good Investment?
Smith Travel Research global development SVP Jan Freitag, who's speaking at our Bisnow Lodging Investment Summit (May 9 and 10), tells us US hotel room demand in January and February (150 million rooms) outpaced the rooms being built, and that limited supply is yielding higher occupancy. The slow construction pace comes from lenders that are scared of anything that's not foolproof, looking extra closely at debt-payment ability. Hotel, with its daily turnover, historically has required higher equity to get built anyway. Conservative lending is going to be around for a while, Jan says, but there's a lot of capital waiting to be deployed. The best way to get in first then, is to be ready with a hefty downpayment. Upper upscale is the hot segment right now, logging 70% occupancy in the 12 months ending in February. Since Sundays are usually below 50%, Jan tells us, Saturday (leisure travelers) and Tuesday and Wednesday (biz travelers) must have been full.
We’d love to see you at our event, which we're calling BLIS. For more from Jan and 25 other top speakers (like Marriott International CEO Arne Sorenson and Choice Hotels International CEO Steve Joyce, left, with Pircher, Nichols & Meeks' Gene Leone), sign up today!
JLL (KeyLease) DCRE
Cambridge (Courthouse)
AED (Rickard) DCRE
WS (Vitra) DCRE
GMU (OptionB)
RMA (Bizwomen2) DCRE
GWCAR (Dinner)
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