DC's Most Watched Office Makeovers
Everyone loves a good teardown and rebuild, but, as we learned at our DC’s Repositioning Boom event yesterday, not every major project needs to include a wrecking ball. These five buildings were all transformed while still standing, going from Class-B or -C properties to new-looking Class-A trophies.
Gensler design director Duncan Lyons, a panelist at our event, says he has three categories of repositions: Refresh, Revitalize and Transform, or, as one of his female colleagues puts it “Lipstick, botox, facelift.” Duncan helped execute the vision of 500 N Capitol St, a $130M renovation of Boston Properties' 230k SF, early 1960s office building.
With a new fitness center, rooftop deck, glass exterior and other major upgrades, 500 N Capitol had full-on plastic surgery, and is now anchored by law firm McDermott Will & Emery.
Also among our panelists, Minshall Stewart president John Stewart—whose firm specializes in repositions—says location is sometimes the only asset he looks at when acquiring a property. 2001 L St NW is right in the Golden Triangle, and Minshall Stewart will make a pretty penny when it sells the building, which it bought with Heitman, for $61.8M in 2012.
This building is only 30 years old, but it needed a facelift. Minshall relocated its lobby, added new retail space and a fitness center to the 167k SF space.
The Silverline Center project, which we discussed yesterday, is the apple of Washington REIT’s Bob Elliott's eye. The building, constructed in 1972 and renovated in 1985, has been transformed from an aging Tysons office building into something Bob hopes can compete with the new construction of Tysons Tower and other Metro-related development. "How do we steal that thunder?" he asked on our repositioning panel. With a WiFi-enabled full building, two outdoor terraces, on-site daycare and a fitness center with a golf simulator, Bob thinks it was worth every cent of the $35M it cost.
At 10% of the cost of the Silverline Center, Washington REIT upgraded 2000 M St NW. Adding a conference center, fitness center, lobby and glass canopy, this renovation cost $3.5M and happened while the building was substantially leased. This eight-story building houses the Altarum Institute and law firm Bose, McKinney & Evans, among others.
Gilbane Building Co senior project executive Dave Doherty says that while much of the panel's discussion surrounded private developers, government offices are also looking to reposition their aging buildings.
While plenty of DC office buildings are repositioning, Trump Organization SVP David Orowitz is leading maybe DC's most-watched repositioning of all: turning the Old Post Office into Trump International Hotel.
Not to be outdone, Jacques Cohen of Euro Capital Properties—speaking on our hotel repositioning panel with moderator Judah Lifschitz—is turning the Watergate Hotel into lifestyle, luxury accommodations.
He's doing so with his wife, Rakel Cohen, who has hired the costume designer from Mad Men to design the new hotel's uniform. Everything in the Potomac-facing hotel will be chic, retro, yet original.
Financing many of the repositionings in the DC area is EagleBank CEO and chairman Ron Paul, who cautioned against turning every building into AAA office space. Eventually, property owners will price themselves out of the market, he says.
While Ron is foretelling a future bust in the repositioning market, Kevin Brightwell of KTA group says the next wave in repositioned properties will be adaptive reuse, turning office buildings into residential or factories into offices.
Our keynote speaker, Oliver Carr, was honored with Bisnow's lifetime achievement award, the Bizzy. He captivated the crowd with stories of his beginnings in DC real estate, staying through the 1968 riots and his thoughts on Millennials: "I think the Millennials are fabulous. I commend them on their existence."