Beyond JBG Smith: 20 Developers Poised To Benefit From Amazon In Northern Virginia
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The big winner of Tuesday's announcement that Amazon selected Northern Virginia for half of its second headquarters was JBG Smith, the Chevy Chase-based REIT that will lease Amazon space for its initial offices and sell it land for future development of the 4M SF campus.
But the e-commerce leader establishing such a massive presence in Crystal City, Pentagon City and Potomac Yard, an area it is now rebranding as National Landing, is sure to create ripple effects that will flow throughout the surrounding area and affect hundreds of properties.
The 25,000-plus high-paid employees Amazon promises will need to find places to live and will spend their money at nearby retail businesses. The tech giant's new hub will attract visitors who will stay in the area's hotel rooms and could draw other companies that want to work with Amazon to lease nearby office space. Bisnow found 20 developers with major holdings and projects around Amazon's future campus that are in a prime position to benefit from the coming tsunami.
Crystal City and Pentagon City
While Amazon's ripple effect could spread widely, the most immediate beneficiaries of HQ2 will be the companies' new neighbors in Crystal City and Pentagon City. The neighborhood has long suffered from elevated office vacancy rates, and stakeholders have hoped to increase the attractiveness of the neighborhood for renters and bring more retail and hotel business. Amazon's large workforce and the multitude of visitors doing business with the company could help solve each of those problems — while bringing new ones — and increase the value of surrounding properties.
1. Kimco Realty
Across the street from the Pen Place development site JBG Smith is selling to Amazon, Kimco Realty is underway with its massive redevelopment of Pentagon Centre, a 329K SF, Costco-anchored retail center. The first phase, a 26-story, 440-unit apartment building with 7K SF of retail, is expected to deliver in Q2 2019. The second phase will feature an 11-story residential tower with 253 units and 16K SF of retail, and future phases call for 705K SF of office space, 346K SF of retail and a 200-room hotel.
“Our Pentagon Centre Signature Series redevelopment is in excellent position to take advantage of the incredible growth Amazon’s National Landing headquarters will bring to the area,” Kimco CEO Conor Flynn said in a release Tuesday. "It will be at the heart of this new center of gravity."
Also across the street from Pen Place and the Whole Foods-anchored Bartlett building, LCOR is moving forward with the second phase of a multifamily development. It began leasing at the 451-unit Altaire building in September and last month acquired the adjacent property, where it plans to build another 280-unit building. It expects to break ground on that $100M project in early 2020.
3. Lowe Enterprises
Near the corner of Crystal Drive and 23rd Street, a few blocks south of where Amazon will lease its first buildings, Lowe Enterprises is moving forward with a multifamily development. The developer, working on behalf of a pension fund, received approval last year to build a 22-story apartment building with 203 units and 22K SF of retail at Crystal City's Century Center complex. The developer also manages a handful of Crystal City office buildings on behalf of investment partners.
"It’s a household [name] now, whereas previously trying to get brokers to go look at a building down there was difficult," Lowe Enterprises' Mark Rivers told Bisnow. "Getting tenants to consider Crystal City was difficult. This has put it more in the forefront of people’s minds that there must be something interesting about it. If Amazon is considering it, there must be something there."
4. Simon Property Group
On top of the Pentagon City Metro station, Simon Property Group's Fashion Centre at Pentagon City features nearly 1M SF of retail space anchored by Nordstrom and Macy's, with dozens of other retailers, including Zara, Apple, Bath & Body Works, Gap and Banana Republic. The complex also features a 170K SF office building. The influx of 25,000 new, highly paid workers is poised to increase sales and make the mall more attractive to retail tenants, and the prospect of doing business with Amazon could help leasing at the office building.
5. Federal Realty
Directly to the west of Fashion Centre, Federal Realty owns the 299K SF Pentagon Row mixed-use complex. The property features Harris Teeter, Bed Bath & Beyond, T.J. Maxx, DSW, Ulta Beauty and several other retailers that are likely to see a boost in sales from the neighborhood's growth.
6. Xenia Hotels & Resorts
The 365-room Ritz-Carlton Pentagon City was sold last year to Orlando-based lodging REIT Xenia Hotels & Resorts for $105M. The 18-story hotel features 19K SF of meeting space and recently underwent an $11M renovation. The high-end hotel will likely be a top destination for visitors doing business with Amazon once the tech giant moves in around the corner.
Two blocks west of the Crystal City Metro station, where Amazon is leasing its initial offices, a 252-unit apartment building was approved by the county one year ago. Mack-Cali Realty Corp. subsidiary Roseland Residential Trust is developing the third building of the Crystal House complex. The five-story project will be built on a parking lot next to the first two buildings, which feature over 800 combined units, apartments that will likely receive a bump in leasing demand and rent from the e-commerce company setting up shop down the street.
The next most direct winners are the landholders down the road in Potomac Yard, where a new innovation campus will be built along with Amazon's move, and where office, residential and retail owners could also benefit from the proximity to the tech giant.
The $1B Virginia Tech innovation campus that was announced Tuesday will be built on StonebridgeCarras' Oakville Triangle site. The developer had previously been planning a mixed-use project, but had been waiting for more momentum in Potomac Yard, such as the future Metro station opening and the redevelopment of the shopping center, before moving forward.
The Amazon deal now hands the developer an immediate win. The innovation campus is being built with a $250M investment from Virginia Tech and a matching $250M investment from the commonwealth as part of its efforts to grow the area's high-tech talent pipeline.
9. The Meridian Group
In the Arlington portion of Potomac Yard, sitting along Route 1 just north of Four Mile Run, The Meridian Group still owns a large portion on the National Gateway site. The developer acquired the 15-acre property in 2004. It has since sold off pieces of the site, including the Lidl-anchored office building that the German grocer acquired in 2015.
But Meridian Group still owns an office building with 190K SF of available space at 3550 South Clark St., and it owns the final office development parcel on the eastern portion of the site. The property is approved for two office buildings totaling 518K SF. The developer had not announced plans to break ground speculatively there, focusing instead on its major projects in Tysons and D.C.'s East End, but being roughly 1 mile from Amazon's new home could help it draw an anchor tenant to kick off construction.
10. Praedium Group
Directly to the north of National Gateway, Praedium Group began work last year on a 342-unit apartment building. The 12-story building will include the Meetinghouse of Worship church in a 24K SF space on the north side of the first two floors, and the south side will have additional retail space.
Many Amazon employees could seek housing on the corridor immediately west of its National Landing neighborhood, Columbia Pike, which is connected via a bus route or a short drive to the tech giant's new home. Developers have several projects in various stages along the corridor, each of which sit between 1 and 3 miles from the planned Amazon campus.
After acquiring a 711-unit Columbia Pike apartment complex, The Wellington, for $167M in 2015, WashREIT moved forward with plans to add additional housing to the site. The developer broke ground last year on three buildings totaling 401 units, branded as The Trove, which it expects to deliver in 2019.
12. BM Smith
A 106-year-old development and management company, BM Smith controls a large Columbia Pike portfolio. It manages four apartment buildings totaling over 600 units, including the 299-unit, Giant-anchored Penrose Square building. Its portfolio also includes at least nine Columbia Pike retail properties totaling over 225K SF. In 2016, it gained approval for a 105-unit condo development with 14,500 SF of retail, in partnership with Four Mile Run Associates, at the intersection of Columbia Pike and South Barton Street.
13. Arlington Partnership for Affordable Housing
The Arlington Presbyterian Church in 2015 sold its Columbia Pike property to the Arlington Partnership for Affordable Housing. The church was demolished and APAH last year broke ground on a 173-unit affordable apartment building with 9K SF of retail. While Amazon's salaries may be above the threshold for its employees to qualify for affordable housing, the project could help relieve pressure on the housing market from rising rents that the tech company's entrance could spur.
14. Orr Partners
The 366-unit Centro Arlington development Orr Partners is building on Columbia Pike is expected to deliver in June with a 50K SF Harris Teeter and 20K SF of additional retail space. The developer also reached a deal with WhyHotel to turn 150 of the units into temporary hotel rooms during the lease-up phase, so the influx of Amazon employees could help the project bring in residents and provide hospitality demand during the leasing process.
15. Pillars Development Group
Sales are underway at the 78 condos Pillars Development Group built at 4707 Columbia Pike. The four-story project, dubbed Trafalgar Flats, was approved in 2014 and includes studios, one-bedroom and two-bedroom units, plus 8K SF of ground-floor retail. Amazon employees looking to become homeowners could be drawn to the condo building, and the project could benefit from rising housing prices caused by HQ2.
Arlington's largest commercial, residential and retail stretch, the R-B Corridor, could also see a bump in activity from Amazon coming to the county. The most easily accessible part of the corridor, Rosslyn, is three Metro stops away from National Landing without a transfer, and roughly a 15-minute drive from the tech company's future home. Several developers have large footprints and are planning major projects in Rosslyn that could see increased commercial and residential demand.
In western Rosslyn, Penzance broke ground last month on a three-building development that will include nearly 900 residential units. The project is expected to deliver in 2021 with 104 condos and 780 rental apartments. The developer also signed Vida Fitness to open a 27K SF gym at the development, and it has 4,300 SF of available retail space remaining.
17. Monday Properties
Many of the tallest office towers in Rosslyn are owned by the same landlord, Monday Properties. The developer owns 10 Rosslyn office buildings, including the 35-story 1812 North Moore, the recipient of Arlington's last major economic development win when Nestlé decided to move its U.S. headquarters to the building last year. Monday is also planning a 2-acre development at 1401 Wilson Blvd. that will replace two existing office buildings with a 32-story residential tower and a 29-story office tower, plus 92K SF of retail space.
New York-based REIT Vornado had owned the Crystal City portfolio that landed Amazon before it spun off its D.C. arm to form JBG Smith. But the developer withheld some properties from last year's merger, including its stake in the Rosslyn Plaza property.
The 7.6-acre site, jointly owned by Vornado and Gould Property Co., is home to an aging office and residential complex that has been tapped for a major redevelopment that could transform Rosslyn's skyline. The approved plans call for five new towers with 1.8M SF of office space, 550 residential units, 45K SF of retail and a 200-room hotel. Vornado began looking to sell its stake in the property last year but has not announced a deal. Gould also owns a stake in a Crystal City office building.
19. Witness Hospitality/Grant Investment Properties
A 1950s-era Best Western hotel and adjacent four-story apartment building could soon be replaced with a new mixed-use development. Witness Hospitality and Grant Investment Properties filed plans in September for a two-building development with 150 hotel rooms, 64 apartments and ground-floor retail, where the developers aim to bring a gourmet grocer. The project, at 1501 Arlington Blvd., sits roughly a half-mile from the Rosslyn Metro station
20. Weissberg Corp.
Rosslyn's 48-year-old RCA building at 1901 North Moore St. has been envisioned as a potential residential redevelopment play. Its owner, Weissberg Corp., filed plans in early 2017 to build a 24-story tower on the site with 407 multifamily units and 13K SF of retail. Weissberg then put its plans on hold in June and decided instead to focus on leasing the office building. Whether the owner continues with its office leasing strategy or again pursues a multifamily project, the property sitting one block from Rosslyn's Metro station could benefit from the increased activity Amazon will bring to the area.