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Jamestown CEO Matt Bronfman Has $1B To Invest And He's Bullish On D.C.

Jamestown, a German-backed real estate investor with major properties throughout the U.S., is one of the largest foreign holders of D.C. real estate. The company owns office buildings from Ballston to the East End and a significant amount of retail in Georgetown

Jamestown CEO Matt Bronfman at a Bisnow event in 2014

We caught up with Jamestown CEO Matt Bronfman, who will be speaking at Tuesday's Washington D.C. State of the Market

Bisnow: I want to start with the latest news on one of your biggest D.C.-area properties in Ballston. You’re planning a $140M renovation for Stafford Place when the National Science Foundation leaves and rebranding it as Ballston Exchange. What is your vision for that property and your strategy for re-leasing it? 

Bronfman: We're very excited to move forward to the next steps. The National Science Foundation is moving out, and we bought it knowing that. We see an opportunity there to take an older office building and make it relevant again. We have the advantage that Ballston is a nice little 24/7 community and the mall is being improved across the street. We think we can do some cool things and bring in neat retail tenants.

Bisnow: What types of tenants are you targeting to re-lease the building?  

Bronfman: It’s hard to say. On the the retail side we think there’s an opportunity to bring in some interesting and innovative retail users that could be first to market. In terms of office, it’s too early to say. We think there’s an opportunity to create a space, especially with the right retail tenants, that’s really interesting to tech, creative and media, those sort of sectors.  

Bisnow: What is your overall view on where the D.C. office market stands right now, and how does it compare with other cities where you have a presence?

Bronfman: The D.C. market has not performed as well as some of the other markets where we’re active over the last few years. But that is the opportunity. If you’re looking in, say, Boston right now, it experienced many years in a row of well above inflation rent growth and absorption. We see a market like Boston has outperformed D.C. over the last few years, and to me, that's the opportunity. Over time, the D.C. story is fantastic. D.C. has lots of young creatives, a high percentage of college graduates. It has the government, law firms and media companies. It hasn’t performed as well as some of the other markets we’re invested in, but we’re bullish on D.C.

Unless you think D.C. has structural issues, you've got to think it will improve. We think that time is coming very soon. Why would Boston and other gateway cities have had their time in the sun more so than D.C? I would argue if you look at the fundamentals of job growth, tech companies, etc., you have to believe the future is rosy.

Bisnow: So given that you're bullish on D.C., are you still going to be an active buyer in this market going forward?

Bronfman: We’re still an active buyer. We have a queue of over $1B of available capital and we think D.C. is a very good market in which to invest. 

Bisnow: Are there any specific submarkets in the D.C. region where you're particularly interested in investing?

Bronfman: All over, we go to where the opportunities are. Whether that’s the center core, Georgetown, Ballston, Clarendon, we have invested in different places where we think we have the best opportunity for long-term growth. We’re open to multiple submarkets.

Bisnow: Do you expect to make any D.C. acquisitions this year? 

Bronfman: We would love to, but I can’t put a time frame on it. We're always looking at opportunities. I wish we’d be able to find more deals. We have $1B to invest in major U.S. cities. I like to think we can deploy a fair percentage in D.C. over the next year, but it's hard to say. It's all about where the opportunities are. 

Bisnow: In addition to D.C., what other cities are you primarily looking at?

Bronfman: We look at gateway cities like D.C, New York, Boston, San Francisco, Los Angeles. Those are our primary markets. One of the things I like most about D.C. is it has not experienced the rent growth some of these other cities have experienced over the last three to five years. I firmly believe in D.C.’s fundamentals and that’s part of the opportunity of D.C.

Bisnow: Looking at foreign investment in the U.S. overall, do you sense any consternation about the United States' position in the world under this administration? Are investors around the globe taking another look at markets in Europe and Asia?  

Bronfman: The U.S. has a lot going for it. We still have really great demographics, an educated workforce and the best universities in the world. I think there is patience right now from people like ourselves and others. There is a lot of uncertainty over things and that causes a lot of people to not be bullish or bearish but just be waiting. People say one of the things investors don’t like is volatility. There is a fair amount of potential volatility out there that causes a lot of people to want to wait and see. Are we going to see major tax reform? No one knows. That could be a major inflection point. The last time we did tax reform in 1986, it had a big impact on real estate. We could see the same thing.

Bisnow: Shifting to retail, there is a lot of talk about the struggles the industry is facing right now with stores closing around the country. You have a significant retail presence in Georgetown, one of D.C.'s top retail corridors, how is that submarket faring in today's environment? 

Bronfman: You know, I think Jamestown many years ago had concerns about where retail was going. We sold out of a lot of retail. We sold the power centers and Sports Authority-type retail centers a decade ago. Our view is, if you’re going to be successful in retail, you have to offer something experiential. You have to be constantly thinking how do you surprise and delight the customer?

We've focused our retail efforts on places like Georgetown, Newbury Street in Boston and Chelsea Market in New York. Retail is not easy because we’re over-retailed as a country. The internet has significantly impacted the landscape. If you’re going to be successful in retail, it’s because you create something somebody wants to go to because it’s going to be a good experience, as opposed to something somebody says it's easier to do shopping on [the] internet.