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January 4, 2011  
 
 
THE KING IS BACK

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King of condos, that is. You remember the word “condos” from the old days—a residence people actually buy! And developer Jim Abdo, famed for building some of the snazziest, pre-recession, is at it again. He put shovels in the ground this very morning, probably the first groundbreaking of the new year around here (and in the US for a big condo development).

 
Jim Abdo at Rosslyn Courthouse, VA's Gaslight Square on Jan. 4, 2011

It was pretty cold this morning on Clarendon Blvd. in Rosslyn/Courthouse as we snapped Jim on the three acres where 117 units will go up in three phases; symbolically behind him are his 87 unit Wooster and Mercer lofts, which sold out even through the recession. Are those earmuffs or is Jim just listening to his fave guitarist Mark Knopfler of Dire Straits?

 
Brookfield (Blue) - mini
 
Scott Ritter, Dave Peterson, Ross McWilliams, Chris Ballard, Jim Davis, Lacy Rice, Cecilia Cassidy, Gordon Buist at Rosslyn/Courthouse, VA's Gaslight Square on Jan. 4, 2011

Davis Construction’s Jim Davis, center, literally pointing out that this was a real not a ceremonial groundbreaking, and that work starts today—do you see how we skillfully caught that dirt actually coming off the shovel? Others key players on hand: United Bank’s Scott Ritter and Dave Peterson (providing a $48M loan), condo sales mavens Ross McWilliams and Chris Ballard, Federal Capital Partners’ Lacy Rice ($22M of mezzanine debt and $2M more if needed), Rosslyn BID executive director Cecilia Cassidy, Abdo CFO Gordon Buist and Jim ($12M of sponsor equity).

Rosslyn/Courthouse, VA's Gaslight Square groundbreaking on Jan. 4, 2011

Money guys (and gal Nikita Rao of FCP) are dangerous even without heavy equipment. Here they try running Jim Davis over the old fashioned way.

Rosslyn/Courthouse, VA's Gaslight Square groundbrealing on Jan. 4, 2011

It takes a village—or at least a BID. And that’s why Jim’s surrounded by Arlington County board members Barbara Favola and Mary Hynes as well as Arlington chief building official Shahriar Amiri, among others. The $82M development will deliver the 1,100  to 1,900 SF, $695k to $1.5M residences starting in spring 2012. That’s it; there isn’t any retail space going in, and the underwriting doesn’t rely on apartments as a fallback, which would have forced Abdo to chip away at the luxury it wanted to achieve, Jim says. It’s got all the amenities—private elevator entrances, individual outdoor spaces, some units with 19 foot ceilings, ground floor units with front and back terraces. Oh, and electric car charging stations in the garage.


Bisnow

WHO'S ON FIRST?

 
conceptual rendering on 440 First St. NW on Capitol Hill in DC

This morning, First Potomac investment head Nick Smith told us the REIT has made its first District redevelopment play with yet another off-market deal. It bought Capitol Hill’s 105k SF 440 First St. NW for $15.3M (conceptual design above) and expects to close on the acquisition of the fee interest in the land (subject to a remaining 45-year lease) within a few weeks. Built in ’82, it was occupied by the National Association of Counties until 2007. First Potomac will start renovations right away and plans new mechanical systems and LEED cert. Its investment could be about $10M to fix up the existing building or about $12M if it takes advantage of an allowance to add 30k SF. Nick points out that First Potomac has bought the dog on the block and its renovation will enhance the neighborhood that just happens to include 500 First, which the REIT bought in July for $68M.


Bisnow

BRAD & ERNIE

 
Brad Flickinger in CBRE's Tysons Corner, VA, office on Jan. 4, 2011

This morning, CBRE’s Brad Flickinger, in his Tysons Corner office, shared the 2010 headlines for his jurisdictions: the suburban Maryland and NoVa office markets. MD had its first positive net absorption since 2005, even if it only amounted to 225k SF. How did that come to be? Job growth has been declining since then as its life sciences emphasis fell out of favor politically to NoVa’s defense concentration. MD’s banking and financial bent didn’t help either, especially in 2008. It lost 10,000 jobs in 2009, but by 2010, healthcare was back in the news and 6,000 jobs were back on MD’s books. In NoVa, Brad says, there’s been plenty of government leasing, but it hasn’t accounted for much of the growth; that came from the private sector (government contractors and some user purchases). And tenants are starting to make quicker leasing decisions: It’s a race now, since 600k SF delivered in 2010, all in the first half, and there’s only 300k more coming in 2011.

 
Ernie Jarvis in CBRE's DC office on Jan. 3, 2011

Yesterday, CBRE’s District chief Ernie Jarvis (a fifth-generation Washingtonian) told us DC is seeing more CRE sales and leasing than any city other than London, Tokyo, and Singapore (and that’s a tall order considering height limits). The gospel has been spread about DC, he says, and indeed the District absorbed 4.3M SF of office in 2010, and vacancy dropped more than 2% in Q4. Even driving home from Vince Gray’s inauguration the night before, Ernie’s mother remarked how much the city has changed—more cosmopolitan. Take a look at the transportation, the cultural amenities, the employment base, he says. And if GSA activity remains consistent through 2013, the private sector uptick (which will be 2011’s end-of-the-year headline) will leave the District supply constrained, leading to a rent spike. Plus, the space that will be absorbed in the Southeast, Capital Riverfront, NoMa, and Southwest will change the very landscape of the city. Hang around with a toddler nephew over the holidays, btw, and you just can’t resist a headline like the one above Brad’s picture.


Bisnow
LIVING PROOF
 
Steve Fuller, Jon Peterson, and Doug Donatelli

Most DC municipalities haven’t included housing policy in their economic development plans, and that weighs on the mind of GMU prof Steve Fuller. The DC region sheds 250,000 long-distance commuters to Baltimore, the Eastern Shore, Winchester, and the like every day, an exodus of tax money and retail spending, according to Steve, left, at the NAIOP NoVa annual meeting with The Peterson Cos.’ Jon Peterson and First Potomac CEO Doug Donatelli. The DC region is going to pick up just under 2 million workers in the next 30 years, including replacements for those leaving existing jobs. So if he doesn’t plan to leave his condo when he retires, Steve wonders, where will the person who replaces him in the workforce live? The area simply needs urban housing, especially in employment centers like 270, 66, Rt. 7, and the Toll Road, he says.

 
Steve Fuller

Steve (feeling more at home here, since ... well ... he is at home), points out that rezoning has begun to let in more housing in White Flint, Shady Grove, and Tysons Corner (though Tysons pulled back a bit in its plan). He cites concerns over children and traffic but counters that Ballston has twice the population but no more traffic than it did 25 years ago. People there use bikes, Zipcars, public transportation—and their feet. Eventually, he says, if the housing doesn’t exist, workers in the Washington region will need won’t come here. (If you don’t build it, they won’t come?)

 
Dave Fisher, Lee Fifer, and Steve Cumbie

NVCommercial prez Steve Cumbie, right, with Advance Realty’s Dave Fisher and McGuireWoods’ Lee Fifer, has an application out for a 1M SF mixed-use project (office, hotel, retail, and residential) called Tysons Central 7, located next to the Metro stop at Rt. 7. If approved, NVCommercial would like to break ground in 2013 or ’14, once the Metro’s Silver Line is complete. But back when Steve started his company in 1983, NoVa was a sleeper community and CRE made up, say, less than 20% of the area’s tax base. The majority of the taxes the residents pay are used in support of the community, he tells us. CRE taxes, however, contribute well above 100% of the dollars the community spends on those businesses. In other words, CRE is a vehicle to increase services to the community with a minimal tax rate.

 
Will it be a groundbreaking year? E-mail amanda.metcalf@bisnow.com.
 
 
 
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