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January 5, 2011  
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Congressman Gerry Connolly headlines our next event, a look at Tysons Corner: The Next US City. See what's happening this year and in the year 2050. And probably sometime in the middle too.
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We asked experts what's going to happen in 2012. It's no Farmer's Almanac, but we were eating corn flakes as we wrote it.
It'll Be Better Than You Think, NoVa...
CBRE, Chris Soucie, Brad Flickinger
CBRE Northern VA office head Chris Soucie (left, with colleague Brad Flickinger) is optimistic: “2012 is going to be a better year than 2011, but people are nervous to say it.” Look at the economic data, he says—today payroll processing company ADP announced the private sector created 325,000 jobs in December, and the four-week moving average of new jobless claims is at its lowest level since June 2008. Much of the vacancy in NoVa is BRAC space that would've come recession or not, he says, and excitement is rising about an almost-finished Metro expansion.
...But Things Are Still Uncertain, DC
RE3 (Seminars) Mini
Studley, David Lipson
Studley government services group head David Lipson tells us economic uncertainly will curb DC office leasing this year. Small- to mid-size tenants (“the bread and butter of leasing”) in particular are in no rush to sign deals, thanks to a glut of available space. The bottom line: Users will delay real estate decisions as long as possible because there's “no reason” to jump early. Not that deals are dead: “There are plenty of clients to represent,” David says, “just not enough to fundamentally change market dynamics.” (His group worked on the State Department deal we told you about yesterday.)
Industrial Users Look Around
Transwestern, Caulley Deringer
Industrial tenants will focus on examining options instead of short-term renewals, Transwestern's Caulley Deringer tells us. More users are touring the market, and some want to take on new space. “That's what you hope to see when a bad market is transitioning to a good one.” What's more, cost is no longer the first priority on tenant checklists.” Functionality and location are equally, if not more, important, he says; demand is concentrated in the Dulles North submarket. That's where some spec development has started again, also signaling an improving market.
Tenants Shun Traffic
Bethesda traffic has gone from bad to worse. In response, tenants are migrating up Rockville Pike, JLL's Morgan Sullivan tells us. “The area we're seeing interest in goes along 355 from the Georgetown Prep campus to the Rockville Town Center,” he says. There are three Metro stations, a variety of amenities, and projects underway from JBG and Federal Realty. Tenants are also getting more educated about owner financials, he says—if there's any doubt that a landlord won't deliver on its obligations, users are likely to flee no matter the deal.
DC Retail Remains Steady
Jim Farrell, Rappaport
There are five large retail availabilities in downtown DC, Rappaport Retail Brokerage's Jim Farrell tells us. (That ticket he's pointing to is from the last game at Cole Field House.) He predicts four will be leased by the end of 2012: “It's not like the boom days, but steady demand exists for good locations.” That could surprise a few out-of-towners looking at DC and its inner 'burbs—landlords here have options, diminishing the leverage retailers have in other markets. Not that everything is rosy for owners. Some face drops in rental value, Jim says, because spaces will generally command lower rates compared to pre-crash levels.

Bingham's State of CRE
Bingham, Kenneth Lore

Bingham real estate practice group leaders Kenneth Lore (above) and Barry Rosenthal have navigated the industry’s conflicting signals. Although there is no doubt that clients are anxious and markets are volatile, there is still good news:

  • Interest rates are at all-time lows and the need to lease space is at a premium.

  • There is lots of capital looking to make equity investments.

  • Loans that were made in‘06/’07 are soon reaching maturity, so there are real questions about refinancing and restructuring.

  • Heads are also turning toward the new hottest property: multifamily housing (even now being considered by foreign investors who never before thought it to be “sexy”). For more info on our sponsor, click here.

Apartment Sales Diverge
Tanglewood Apartments, Manassas
Multifamily sales are becoming selective, Transwestern's Robin Williams and Dean Sigmon tell us: “Investors are mostly focused on either core assets or value-add opportunities.” The team recently advised Equity Residential in its purchase of The Chase at Bethesda (core), and today announced the same company has sold the Tanglewood Apartments (value-add, above) in Manassas for $68.7M to a pension fund. In the Tanglewood deal, research showed that newly-renovated apartments nearby commanded $150/unit rent premiums, garnering interest from institutions, private equity funds, and REITs. (It received over 10 offers.) According to Delta Associaties, there are 33,000 units under renovation in the DC area, they say, so expect the trend to continue.

Top 11 Deals?
Monroe Street Market
Holy smokes! We forgot one deal from our top 10 list yesterday: Pritzker, Bozzuto, and Abdo's JV to build Monroe Street Market, the first large commercial development to kick off around Catholic University in over 25 years. Abdo prez Jim Abdo says it's also the largest project under way in the Mid-Atlantic that doesn't have public financing; Phase 1 consists of 562 residential units, 50k SF of retail, and 15k SF of artist lofts. It delivers summer '13.

LexisNexis Renews
1150 18th St.
Today LexisNexis announced it renewed 32k SF at 1150 18th St. It's located on the second, sixth, and seventh floors for an eight-year term. Rockrose CEO Henry Elghanayan (the 171k SF office's owner since April 2011) says occupancy there has increased from 78% to 96% in six months. Added bonus: "a major work of art" will be installed in the building this winter. (Fingers crossed that it's Art Garfunkel. Haven't heard much from him lately.)

FCP On The Move; Hiring Too?
Federal Capital Partners, Lacy Rice
Yesterday Federal Capital Partners announced it's relocating from 1000 Potomac St. in Georgetown to 5425 Wisconsin Ave. in Chevy Chase. (Does that mean Chadwick's will open a new location at Mazza Gallerie?) The private equity firm will occupy around 5,000 SF for a seven-and-a-half year term and could hire between five and seven employees over the next two years. Above: The firm's Lacy Rice speaks at Bisnow's Multifamily Summit last month.
Which DC real estate company has the coolest office? Tell mike.leon@bisnow.com.
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