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January 6, 2011  
Three Key Trends of
Foreign Money

WDG Architecture managing princiapl George Dove joins an all-star cast at 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. Wed, Jan. 18 at the McLean Hilton. Sign up today.

Whether they're from Germany, Japan, or Qatar, global dollars play a big role in DC real estate. Today, we take a look at three trends that experts say will shape foreign investment here in 2012.
Growing Preference for NY
The results of this year's Association of Foreign Investors in Real Estate survey (which measures foreign investor interest) revealed a growing gap between DC and NYC, AFIRE executive director Jim Fetgatter (right, with AFIRE chairman Werner Sohier) tells us. “Both have great markets, but investors prefer New York because it's still possible to buy below replacement costs there.” Add to that probable government budget cuts, and the Big Apple has a big leg up over DC, even if yields in the two cities are comparable. Even so, the trend won't likely have a long-term impact: “It's a short-term concern,” he says. “How long it's going to last, I don't know.”
Tenant Credit Concerns
credit score
Federal cuts impact foreign investors because they call the creditworthiness of office tenants into question, the Canada Pension Plan Investment Board's Zach Vaughan tells us. “It affects our ability to compete for assets,” he says. “Big budget cuts could change the credit profiles of some government agencies and law firms, which are DC's biggest tenants. That makes underwriting harder.” But, he agrees with Jim, it's not a long-term concern. DC's unique size, liquidity, and relatively stable history means it's still a target for his firm.
High Prices, Low Yields
Debra Lacy, Ben Lacy, Lacy Ltd.
Yields for Washington investment sales have dropped precipitously, Lacy Ltd. CEO Debra Lacy (above, with husband Ben) says. That's prompted many of her clients to look in other markets, such as Chicago, where she just arranged the purchase of 250 South Wacker Dr., headquarters of MillerCoors, overlooking the Chicago River in the West Loop. “Rent growth in DC has slowed and many large tenants, such as law firms and the government are contracting,”she says. “We don't expect returns to decrease further because that means more risk for an investor.”
Debra, Jim, and Zach will all be speaking at our first-ever Foreign Investment Summit, which will be held Feb. 7 at the Ritz-Carlton in DC. Stay tuned for sign up details next week.

Big GSA Renewal
JLL, Jae Lee, Rob Carey
Yesterday evening, GSA announced that the Small Business Administration would renew its 254k SF lease at 409 3rd St. SW. JLL's Jae Lee and Rob Carey (who repped the government with colleagues Bill Craig) tell us the deal comes after "scrubbing the market" for relocation options for two-and-a-half-years. The agency has been in the building for over 10 years. Owner Vornado/Charles E. Smith was repped in-house by Greg Redding and Brendan Owen; GSA's agents on the deal were Tawanda Beverly and Arisha Griffith.
1000 & 1100 Wilson Blvd
Another recent JLL deal: Dan Evans and Jay Farmer repped Booz & Co. in its 14k SF new lease at 1000 Wilson Blvd. The management consulting firm is relocating from Tysons. (We could say it's no longer in Tysons' corner and enjoy the double meaning.) Landlord Monday Properties was repped in-house by John Wharton and Scott Egarian; the firm has also signed three renewals worth 27k SF at 1000 and 1100 Wilson, including deals with Gulfstream Aerospace and the American Psychiatric Association.

Coolest Cribs
50 Cent
No, our headline doesn't refer to 50 Cent's Connecticut mansion that we saw on MTV. Rather, we're working on a story about the coolest offices in DC commercial real estate, and we need your help. Who's got the flashiest lobbies, most innovative floorplans, best employee perks, the shortest commutes, or anything else that sizzles? (We're only looking for offices of commercial real estate firms.) Suggestions we've received thus far: CBRE and Greystar in Tysons, and Public Properties in Georgetown. Send yours to mike.leon@bisnow.com.

Hoagie Invasion
Philadelphia natives Casey Patten (above) and his business partner David Mazza opened up their newest Taylor Gourmet hoagie shop on 14th just off U Street on Tuesday with plans for three more (plus a cheesesteak place) this year. Leading up to its opening, Taylor Gourmet announced on Twitter that it was having a "mayoral ribbon cutting." Several media outlets reported that Vincent Gray would be on hand, but when the time came, he was nowhere to be found. Turns out they invited their Foursquare "mayors" to do the honor. But ultimately, the Mayor (the real one) sent his congratulations via Twitter with this tweet: "Sorry I couldn't be there, but always happy 2 see DC_based small biz growing."
The new location's interior. (Those things on the ceiling are pickle buckets.) Another shop is slated to open in Merrifield at the end of the summer, plus two yet-to-be-disclosed locations. Casey and David are also opening Taylor Charles Steak & Ice this spring. (Taylor is Casey's middle name and Charles is David's middle name.) The H Street shop will serve classic cheesesteaks and some "fun, updated" versions. (They've recruited their parents to create the restaurant's playlist.) As for the future, Casey sees even more growth in DC and potentially venturing beyond some day. Sign up today for our Dining Bisnow publication for this and other great foodie stories.
What are your plans this weekend? Tell mike.leon@bisnow.com.
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