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October 23, 2008

Big shout-out to great new sponsor Lerner Enterprises that has brought this region many of its landmark buildings. Three of its impressive projects are now leasing: 1775 Tysons Boulevard, Fallsgrove Executive Plaza in Rockville, and 20 M St in DC.


We happen to know the Bethesda swim team chant: "Bethesda, Bethesda, Bethesda is the besta; Bethesda is the besta 'cause it's better than the resta." (If you could hear us sing this, it would sound even more convincing.)  In these challenging times for commercial real estate, especially in the suburbs, could these words happen to be true?


That's what CBRE Bethesda/Chevy Chase chief Larry Thau, whom we snapped here in his Wisconsin Ave office, tells us. CB does a lot in the market, along with Jones Lang, Transwestern, Cresa, Cushman, Grubb, and a number of boutiques. Here Larry points to what he considers the area's top trophy: the 5-year old, 750k SF twin Chevy Chase Bank towers (7501 Wisconsin), which he says are 98% leased with the highest rents in the area. Larry says the vacancy rate for A space in Bethesda, even with some recent downsizing, is just 3%; and that "if you want the best space, you can't find it." Transwestern's Phil McCarthy tells us it's "a unique market in the country because people just want to be there, half way between where they live and where they used to work." Jones Lang's Morgan Sullivan says the key is: "It's not overbuilt." And it costs less than 75% of downtown ($50/ft full-service v. $70).


Larry keeps a hat of his son Danny in the office to remind himself that, as he says, "life can be tough, but it could be tougher." Danny joined the Army in 2005, got basic training in Ft. Benning, was shipped to Iraq in mid-2006, and became a gunner on a Humvee. Early this year in Fallujah, it came under attack, rode into a ditch, and rolled over. Danny broke his collarbone and shoulder and was sent to Ft. Bragg and  then Ft. Meade for operations. He's doing fine, but still has six more months of recovery. Another son, Andy, is in college in Ohio. "He's not going into the Army," Larry says.


The building where Larry works (7200 Wisconsin) was bought by JBG for $500/ft four months ago from the Artery Group. It had 20k SF vacant, and within the first month JBG got it leased. Looks pretty modern, right? It was actually built in the early 80s in a contest held by the Bethesda County Arts and Design Commission. That glass curtain wall has stood the test of time.  


Another trophy, the 10-year old Newlands building, is owned by the Chevy Chase Land Company and serves as headquarters to Co-Star and American Capital Strategies. ACS just re-structured its lease to be there for 15 years. Co-Star plans to find lower cost offices in Columbia, Md. (Senator Newlands, by the way, was a Nevada Senator who founded Chevy Chase. Strange, we know.)  


The Clark building, owned and 80% occupied by its namesake, is a landmark of modern Bethesda, built 15 years ago and now leased and managed by JLL. It's got a full service health club and indoor swimming pool for its employees, plus a helipad that the county doesn't allow it to use anymore because it's too close to NIH.


A Hilton Garden Inn is going in on Elm Street. Rooms are in short supply in the area, so it's a good thing. TIAA-CREF owns the 735k SF Air Rights Building nearby, and developers are eyeing several new projects: Clarett out of NYC is planning to raze the McDonald's near Sport & Health and start on a 200k SF office later this year, in which it will fit a new Mickey D's.


Stonebridge Carras and PN Hoffman are in a j.v. to build retail, apartments, and parking (in a public/private partnership with the Montgomery Dep't of Transportation) across from the Barnes & Noble at Woodmont and Bethesda Avenues. They're in the design phase (using SKI) for 40k SF of retail and 260 condo units above it, including MPDU and workforce housing. JBG is planning a building near Woodmont and Bethesda, where Thyme Square used to be, which Transwestern's Phil McCarthy predicts will be a home run.  And Federal Realty has recently had a big success in its unveiling of Bethesda Row. Of course, our personal Bethesda favorite will always remain enchiladas at Rio Grande.

Arnold & Porter
Patriot Contracting
Georgetown University
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