An Interview With: John Germano
Germano runs the Washington-Baltimore region for CB Richard Ellis, the largest commercial real estate leasing company in the region. Previously, he served in a similar capacity at Insignia/ESG, which merged with CBRE in July 2003. Germano’s diverse background includes leasing, investment sales, and asset services.
Bisnow: The East End is white-hot. What’s happening exactly? It’s really an exciting part of town. If you go back a few years, when the MCI Center was developed, there wasn’t a lot going on down there. What the MCI Center has done, and what the developers focused on, has the whole area back on the map. With the new convention center going up there, among other new developments, it’s only a matter of a year or so until that market will be as tight as the West End or Georgetown. Then development will continue to go towards Capitol Hill.
Really? Are we going to see development go block by block to Capitol Hill? It is absolutely going to. Right now, around the MCI Center, between 11th Street and 9th Street, where the Spy Museum is, that is all being re-developed. Those two blocks may have another year before they are completely occupied. That will connect 14th Street to 11th Street, and all the way through 7th Street will have been renovated. What you’re going to see, primarily due to lack of land, is the continued filling in of the entire city. The larger, more sophisticated developers have already looked to buy the land around Capitol Hill. They are anticipating that five years from now a big wave will hit. It’ll be essentially new, it’ll be vibrant, you’ll have the areas where people can work, live, and play. In commercial real estate, that’s what you’re trying to design.
Was it inevitable that this was going to happen? Or does Abe Pollin get the credit, because he located MCI Center where he did? He clearly saw it, even though a lot of people said, “That can’t really jump start a whole market.” In retrospect it clearly did. This is such a dynamic market because of the limited land, and the need to develop existing properties. Abe deserves his credit, but at the same time, you would have ultimately seen development head towards Capitol Hill in any case, because you have a lot of very sophisticated and smart developers in Washington.
Crystal City was hit hard when the Patent Office left, and contractors and government agencies are moving away for due to the Base Realignment Commission recommendations for security reasons. What do you think is going to happen there? I think Crystal City is an unbelievably good market, primarily because of its location. It’s a suburban location, but yet it’s close to the city and airport. Many have predicted Crystal City’s demise, but what really is happening is great opportunity. The Charles E. Smith Company and their President Mitchell Schear, have brought new restaurants and new tenants. It’s being viewed differently than it ever was. I believe it’s better off now, with a more diverse set of tenants. It’s a much friendlier place to be. Now, when you look at the next 3 months or 6 months, you may panic. But in reality there is a long, drawn-out process for everything to move out. The contractors and government agencies that are there will not move out tomorrow—they’ll move out over a period of time. This will give developers and land owners a period of time to anticipate, renovate, and put different systems in. Then they’ll put new tenants in. So, in the short term, it may cause some consternation, but over the long term it will actually be another positive for this region.
What kind of development is in store on the Potomac River? What is common in many cities is a water feature. The Potomac for Washington is an incredible asset, and I believe it is completely under-utilized. There was an article in the paper not long ago about the boats that like to dock by Sequoia, and the difficulty in getting a docking space. People are drawn to water, and there is still a lot of land available for development purposes. There are a few major water projects that I think are being bantered about now. First is Georgetown, which will extend the harbor where Sequoia is, all the way towards Key Bridge. That will extend the ability to have commercial, residential, and retail real estate. This will attract more people, and bring them from Wisconsin and M towards the waterfront. The second project is the Capital Harbor, a Peterson project, down in Prince George’s County. That’s going to be south of Wilson Bridge, so you’ll be able to see it as you go over it. Again, this is a piece of land that is under-utilized.
What time period are you talking about? Ultimately I think that is a 20 year project from start to finish, but I know the Peterson Group wants to kick that off just as soon as they can.
What about the new baseball stadium’s effect on the Potomac River? Well, as I started to look at the Anacostia River, I was appalled by the condition of that river. I had no idea that it is one of the most polluted rivers in the country. Clearly, the city and the government need to do something. Sometimes you need a catalyst to start things, and the stadium project happens to be one. It is an area of real estate that is not terribly valued. It has a certain type of tenant base, and what you’re getting now is all the sophisticated developers looking around. That baseball stadium will cause a lot of development. It’ll be built up, it will again bring people down to the river, and it will cause a cleanup of that river which is desperately needed.
Over in Maryland, Governor Ehrlich has pushed through the inter-county connector. How is that going to create new development there? I think it is exciting on a couple of different fronts. The traffic is one of the bigger problems in this market, and this will cut through all of that, so people can avoid large delays and save time. So first it’s great as just a matter of personal convenience. But what it does from a commercial real estate perspective is spur development along the road, the type that is similar to the toll road in Virginia. Where twenty years ago you had practically a dirt road, now it is some of the most sought after real estate in Northern Virginia. I believe the Governor’s approval will have the ability to create tremendous opportunity for commercial real estate.
Anything else new at CB Richard Ellis? Next year will be our 100th anniversary.
Funny, you don’t look that old.