An Interview With: Marc Dubic
A new 158-unit luxury condominium building called “Lionsgate” will soon begin to rise in the heart of Bethesda—at the corner or Old Georgetown Road and Woodmont. It will also have 14,000 square feet of street-level retail and 280 below grade parking spaces. Dubick, 44, the developer, grew up in Baltimore, went to University of Maryland, then American University law school (class of ’86), where by chance he met a classmate’s husband who was involved building houses. He got intrigued, and for 17 years helped develop the DC office of Lowe Enterprises, an L.A.-based real estate development and pension fund advisory firm. His work ranged from a PUD in Loudoun County, to office building renovations and remerchandising of neighborhood shopping centers in Maryland. In 2004 decided to go off on his own. He had become involved in a project with Steve and Marty Alloy, who founded the Stanley Martin companies, a regional homebuilder here. They decided to form a company together, based in Reston, and the name Duball stands for Dubick and Alloy. Besides Lionsgate, Duball is involved in a planned unit development called Wildewood in St. Mary’s County, near the Patuxent Naval Air Station.
Bisnow on Business: What used to be where Lionsgate at Woodmont Corner is going up?
Until three weeks ago, there was a 55,000 square foot, two story retail building. We have now demolished the building and the site is completely clear. The block has quite a history to it. Many years ago there was a carousel that folks that grew up in the Bethesda area are quite fond of. At one point I understand there was also a bowling alley, and I actually read a recent article that said the property at one point was Bethesda’s emergency bomb shelter. A year or two ago you might have seen Outback Steakhouse, Olson’s Books, Ritz Camera, and Flannigan’s, a famous pub that has since relocated around the corner.
How did you get the property?
We acquired the property in the fourth quarter of 2004. It was a single property. We acquired it from a gentleman named Sam Lehrman. Several years ago Sam had approached me while I was still at Lowe about assisting him in securing some entitlements for a project for the property. He felt, and he was accurate, that the property as a 55,000 square foot retail facility was not its highest and best use, and so I assisted him in getting approvals for a 253 unit rental apartment project that in terms of configuration and size is the project we are now building. The fundamental difference is that we modified it to be fewer units and condominiums.
Why did he decide to sell it to you rather than develop it himself?
There were tenants that were in the building at the time and they had some lease duration left. Sam determined that he felt it would be best for him to redeploy his capital. He really is more involved in shopping centers, so his preference was to be a seller of the property.
So you identified the property because you had worked with him. It’s not like you went walking all the streets of Bethesda saying, “Hmm. I wonder where we should put a new condo?”
Well, clearly, the fact that I had worked with the project some time ago, I think, lead me to think about the prospect that there might be a chance to do a transaction—although at the time the project was approved for apartments, the market wasn’t that strong.
How did you get capital to acquire the site?
For a project of this magnitude you need to have some institutional capital as your partner, and Duball is thrilled to have CIM Group involved. CIM is based in LA, and the local managing member is Charlie Garner. He was a 10-year veteran of Federal Realty and has a very good feel for retail, mixed use, urban projects, so it’s a natural progression. He was involved with the Bethesda revitalization that Federal did. And they had a lot of comfort with my past involvement with securing the initial entitlements and also my involvement in Bethesda with the Fairmont Building and the Air Rights building.
How much does this project cost?
All in all, it will have a total cost of around $100 million, and it’s fairly common that the developer is required to bring a substantial amount of equity into the project as a show of commitment to the project. So, although CIM is the lead in terms of its presence in the economics of the transaction, there is still quite a bit of capital that we had to bring to the table.
Who is the architect?
We sat down with Torti Gallas Partners. They’re based in Silver Spring. I had worked with them on a couple of other projects, including City Vista, the former wax museum site that I was very involved with, and Torti comes with a tremendous knowledge of the mixed-use urban components.
What is the vision of Lionsgate? What role and market does it serve?
Lionsgate comes because we have a Georgetown artist by the name of John Dreyfus, and John created two lions that will be perched at the entry to the building. They’re going to be life size like the famous lions that you would find in the bridge entering DuPont Circle, or the standing lions you see in various places around the world. These, hopefully, will become known as the Lions of Bethesda. John is also sculpting some owls that will be a part of the light fixtures on the first floor. So the notion is the strength of the lion and the wisdom of the owl. The project is really geared toward the high-end user. This project will have finishes and details that we hope will really set the benchmark—for example, we’re using Viking appliances and Woodmode cabinetry. There will be natural stone throughout, not just in the master bathroom but in the second bathroom and the powder rooms. The lobby will have a real chic feel to it. It’s almost as if this product is designed for the empty nester that says, “Is this my primary residence or is this my secondary residence?” We expect that a lot of these residents will have houses in other parts of the country as well. Clearly our buyer pool, when we look at the individuals that have registered, are largely empty nesters. You can almost say that they’ve been to a high school graduation either in the last couple of years or have one ahead of them in the next couple of years. The kids have gone off to college, and they’re saying, “Do we really need this large house?” They want to get back to the urban environment where they can walk outside, go to 150 restaurants, not be so dependent on a vehicle, and at the same time know that they can lock their doors, go to Florida, go to North Carolina, go to Arizona, go to Aspen or wherever else they want to go.
You think these will largely be Montgomery County residents?
We think so. We have a website, lionsgatebethesda.com, and we have had in excess of 2500 people register on the preview list. And a majority seem to come from Chevy Chase, Bethesda, and Potomac. Of course there are people from other parts of the Washington area and we have people actually from Europe and all over the place. But, no pun intended, the “lion’s share” come from nearby.
Why do people register? When are you going to be selling?
We are just finishing the marketing center, which will be a block and a half away, and hope to have that open in the next 30 days. The website is our way to collect names for brochures. So we’ll start selling these units sometime in April.
When do you hope that people will be able to move in?
We are hopeful that we can have the first residents move in towards the end of 2007, and we hope to have full occupancy in early to mid-part of 2008.
What’s the present thinking on prices, and how big are the units associated with those prices?
The market rate units average about 1600 square feet. We have some units that are as big as 2500 square feet, and clearly these will be sold for upper end brackets that you would find in the upper tier in pricing for condominiums in the Washington area.
Can you be more specific?
In about 30 days I’d be happy to be specific.
How high are the ceilings and windows?
Most of the ceilings are in the nine foot range, depending on the floor of the building. And lots of windows, some floor to ceiling. We have balconies. We have lots of bay windows. We have tried to make the building feel as if it’s nice and bright, open and airy.
Is this a unique building, or are there competitors out there?
Well, every developer likes to think that his or her building is unique. I will say that by most people’s account it’s a pretty hard location to replicate given its proximity to the Metro and the heart of Bethesda, in the cusp of Woodmont Triangle, with all its restaurants and art galleries. So in many respects it’s a once in a lifetime opportunity. That being said, you know, we’re not naïve to recognize that they’ll be other projects at some point will be built in Bethesda. But for right now it’s a one of a kind property.
Are you seeing any signs of condominiums being over built at that price level, or does it look like the market is strong?
At this price point, we believe the Bethesda market is very, very strong. There are prospectively other parts of Washington where, especially in conversions of apartments to condominiums, there might have been some over-building or over-sales efforts taking place, but that’s not the case here. This is a very, very healthy market that is supply constrained with an enormous demand. So we are certainly optimistic that our sales will go according to plan. :)