TENANTS RUSH TO FILL SPACE AT 1101 NEW YORK AVENUE
Touring Louis Dreyfus’ newest flagship property still takes a hard hat, but1101 New York Avenue is already 80 percent leased. Even while the hole was still being dug, says Dreyfus local chief Bob Braunohler, Ernst & Young took the bottom four floors and LeBoeuf Lamb the top three with an option on a fourth; letters of intent have been submitted for other space in the 12-story building. Ground was broken in late ’04 and occupancy is slated for July ’07. Dreyfus turned for leasing to Jones Lang’s Trip Howell, known for getting high rates: in this case, high 40s triple net .
Bob tells us that both location (near the old convention center) and design (no perimeter columns and 11 foot six inch floor to ceiling windows) account for the building’s popularity. Plus, the panache of a Kevin Roche-designed building. Roche, who did Station Place for the SEC and is doing 801 17th also for Dreyfus (where they started demolition a month ago) is aPritzker Prize winning architect considered heir to the Eero Saarinen’spractice in which he was a partner. At 84, he’s still active and comes down from his Connecticut base to DC once a month.
“When you compare us to other trophy buildings that have come on the market, we have definitely pre-leased at a faster pace,” says Amy Bowser of Jones Lang. In addition to the tight market for luxury buildings in D.C., she credits some of the leasing frenzy to a top-notch marketing campaign, which began two years ago with a leasing office in a nearby top-tier building, complete with building model and samples of material and finishes.
At the onset of negotiations to develop 1101 New York Avenue, Louis-Dreyfus made a deal at what was then the highest price ever paid for downtown land, $150 a foot, and then spent nearly two years negotiating a land lease. The parcel contained a parking lot and two small townhouses.
“The reason Louis Dreyfus was successful in acquiring the property was because of our higher appetite for risk than other developers, and our confidence in the Washington market continuing to reach the rent levels of other world-class cities,” says Bob, who has been cutting deals for Louis Dreyfus since 2001. The northern New Jersey native started with Dreyfus in 1976, worked on the Four Seasons for three years in tandem with JBG, to which he subsequently moved for 22 years. “Ben Jacobs and Mike Glosserman were transactional, and I handled construction,” he says. “What’s fun here is I get to do it all.”
Another skill set that the company has honed over the years is the ability to coax old properties from the hands of owners who are unwilling to sell. Their most recent acquisition, 801 17th Street, was purchased from a family that had owned the site since 1902, and had always said they would never sell. Two offers and three years later, Louis Dreyfus was able to ink a deal and promptly decided to demolish the newly renovated building.
“Our own analysis of the property led us to the conclusion that a gut/rehab would not be the best thing to do,” Bob says, “because the bones of the building were so ill-suited for what top-tier tenants are looking for today: high ceilings and very few columns. So we made the decision to raze the building and start over. Essentially, this means our land cost became the cost of the building plus its demolition. We believe this transaction has served to establish the new paradigm for redeveloping the CBD. It builds in a very high basis and drives overall development costs above $700 per SF, but in the right locations this can be justified.”
1101 New York Avenue clearly fits into this paradigm. Without even taking into account the granite, the marble and the resort-quality bathrooms, the most remarkable feature of this property are the windows. There seems to be nothing between you and the sky and, perhaps a little less comforting, the buildings below you. The corners of the building create the sharp, clean angles of a shark tank.
Also notable are the nine-foot ceilings, which Bob says are “really only sexy to people in the business, who know how rare that is.” Likewise the energy-efficiency strides that the company has built in to harness the heat from the windows. “The 20-somethings are jazzed about it. Not so much the older guys.”
Like all good aristocrats, this tightly knit family company does not seek out the media spotlight. William Louis Dreyfus, 75, has left that to his daughter, Julia. Who as it turns out, would never have to work a day in her life, even if she never taped a single episode of Seinfeld.
William has just handed over the reins to his cousin Robert, who was ironically in Braunohler’s 1973 class at Harvard Business School. William together with Jeff Sussman started the Dreyfus property group in 1971 and two years later met Ben Jacobs at a conference in Manhattan and decided to invest in Washington. Louis Dreyfus is mainly a commodities trader — number three in the world behind ADM and Cargill.
It’s safe to say Louis Dreyfus will continue to out-design, out-wire and out-spend the top-tier office buildings downtown. “Nowadays, you have to buy a building and tear it down to get the location you want," Bob says. "That makes it a lot more expensive.” It doesn’t sound like that will stand in the company’s way. Bob adds, “It’s a lot more fun to go shopping when you have money.”