No, you’re not going to find sales on Nintendo Wii in here. But we will leave you with some of the good things that happened in December around the DC metro area. Happy holidays from Bisnow!
Creaney & Smith has acquired an eight-asset portfolio of office and flex buildings for $75 million, or approximately $114 SF. Asset Capital Corp. sold the 652,376 SF portfolio, represented by JLL’s Collins Ege, John Kevill and Jim Molloy.
One reason this deal went through is because the properties transferred with assumable financing – giving the buyer a good idea of its yield on equity. The portfolio, which is 91% leased, consists of two single story buildings and six multi-story buildings. Five are located in Prince George’s County at Commerce Center, Metro 400, 4260 Forbes and 4550 Forbes and 7700 Montpelier. Two buildings are in Hampton -- Executive Tower and Pinewood Plaza -- and one is in Baltimore at 20 South Charles St.
First Potomac and AEW will be partnering to acquire several properties next year, with the goal of hitting $100 million in transactions. The duo just inked their first JV, in which First Potomac contributed a 306,656 SF flex/office complex in Columbia it acquired earlier this year for $42 million called Rivers Park I and II. AEW is the majority owner of the JV at
75%. First Potomac received some $12 million in proceeds for the transaction as well as an acquisition fee. It will continue to manage and lease the property, guaranteeing a three-year master lease agreement by the former owner for 8% of the space. First Potomac and AEW will not necessarily follow this ownership structure in subsequent JVs next year, although the type of assets they will be acquiring will remain true to First Potomac’s investment approach: business parks or industrial facilities with a heavy emphasis on value-add.
The American Chemistry Council is taking 90,000 SF of space in a Capitol Hill office under development by Fisher Bros. and Louis Dreyfus. ACC is moving from Arlington to be closer to the Hill when the building delivers in summer 2009. Located next to Union Station, Station Place Three is an approximate 500K SF, ten-story building that is designed to meet LEED Silver standards. A JLL team represented ACC including managing director Gregory Lubar and Vice President Eric Antonini from the brokerage division, and vice president Mark Montgomery and SVP Colin Haynes from project and development services.
PullThePlug Technologies has leased 45K SF in one of the buildings at MRP’s three-building, 194,183 SF office/flex park in Ashburn.
Development deals with the government – both federal and local – are still on track, even though budgets are clearly heading for the chopping block. The biggest lately in the DC area has been the $950M, 1.7M SF complex Duke Realty is building for the Army Corp. of Engineers at its Marks Center development in Alexandria. The deal had been rumored about for weeks; the market got official confirmation earlier this month when Duke announced it sold 16 acres at the Center to the Army for $105M. Duke is developing two office towers – one 15-stories, the other 17-stories -- two parking garages and a public transportation center. The project is expected to deliver in September 2011.
For its part, the District is still kicking in funds to spur development. It will be doling out $51M for six medical projects in DC. It is also supporting a $15M project to rehab abandoned buildings in Northeast that will create 58 units of new housing, most of which will be affordable. Mi Casa, Manna, DC Habitat for Humanity, and MissionFirst are receiving funds from the federal Neighborhood Stabilization Program.
Delta Associates thinks the economic crisis – especially all of the money being dispersed by the federal government – will result in an additional 2M to 4M SF of space absorbed in the local community, by both the government and private sector. To put that number in perspective, Delta said that long-term average net absorption of Washington-metro area office space is approximately 8M SF per year.
Delta CEO Greg Leisch tells Bisnow that estimating how much the government will eventually need can be confusing. Certainly, though, he says, that number will be far more than the 40K SF GSA says it has immediately identified. “DOJ has direct leasing authority so they won’t be going through GSA. Also, some of the new agencies created under the bailout plan won’t go through GSA either.”
By late Spring, he estimates, the DC area will see upward of 500K SF of new space demands by the government. “That will be the first wave,” he predicts.
The big question is whether this influx will be enough to offset the losses the DC area will experience. It looks like the DC metro area will have absorbed 3.5M SF for 2008, “which is pretty crummy,” Leisch says. Next year, with the stimulus and bailout, DC should absorb between 3 to 4M SF, he says. Without the federal support, the city would find itself with only a 2 to 3M SF absorption rate, he estimates.
Alexandria-based REIT AvalonBay will be cutting back on new developments – although the 15 apartment communities it has under construction will still go forward. In Q4, the REIT will take a non-cash impairment charge of $55M to $65M for the lost value in eight land parcels it owns that will not be developed, a non-cash charge of about $7M for land development rights under option agreement that will not be developed; and $3M in severance.
Christopher A. Sowick, SVP at Cassidy & Pinkard Colliers, has been sworn in as the 2009 president of the Greater Washington Commercial Association of Realtors. Also, Cassidy & Pinkard Colliers’ SVP Mark O. Sullivan and Christopher S. Lucey, assistant VP, are now GWCAR Board Members.
David F. Pearce, Jr. is the Real Estate Roundtable’s new vice president and counsel. He will be focusing on tax policy issues. He has been vice president at the DCI Group and executive director of Morgan Stanley’s government relations and legal department.
Correction: In our last Deal Sheet we said that Provident Bank was a part owner of Monument Corporate Center I in Gaithersburg. The bank just leases space at the building.