JBG Smith's Development Head Dishes On The 10-Hour Meeting That Won Over Amazon
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JBG Smith executives are never short on positive things to say about Crystal City, the Northern Virginia neighborhood where the company owns a large real estate portfolio, but it was the negative comments the developer made in a closed-door meeting with Amazon that won the tech giant's trust and, ultimately, its second headquarters.
To start off a 10-hour July meeting in which the developer was trying to win over Amazon's team, JBG Smith Chief Development Officer Kai Reynolds said he began by giving his brutally honest opinion of Crystal City.
“We wanted to be really honest about our view of the submarket and share with them our plans and our vision to improve upon it, but didn’t want to get in front of them and say, 'This is the best place ever, you’re going to love this,'” Reynolds said of Crystal City. “So we literally sat down at 8 in the morning, and I started the presentation by saying 'I’ve lived [in this region] a number of years, I had never been [to Crystal City]. While it’s better than I thought, it’s kind of a shithole.'”
Reynolds, speaking Wednesday morning at Altus Group's 6th Annual Real Estate Breakfast Panel organized and moderated by Ditto Residential CEO Martin Ditto, said he later received validation that the strategy made a difference in Amazon's selection.
"After they announced HQ2, we heard from the state of Virginia that that meeting in July changed their perception of us as partners and of the submarket we now call National Landing," Reynolds said. "The global head of real estate for Amazon said, 'These are guys we can trust.'"
The July meeting was JBG Smith's second interaction with Amazon, Reynolds said. The first was a 45-minute February walk-through during Amazon's tour of all of Northern Virginia's potential sites. It didn't hear from the tech giant for months after the walk-through, until Amazon in July gave JBG Smith one week's notice that it wanted to have a full-day meeting.
Reynolds and JBG Smith CEO Matt Kelly — who will speak on Bisnow's Amazon HQ2-Apalooza event Feb. 28 — happened to be on vacation at the time, he said, and they both came back early from their trips to prepare for the pivotal meeting.
After the July meeting, Reynolds said JBG Smith interacted with Amazon on a near-daily basis, including he and Kelly taking a four-day early October trip to the company's Seattle headquarters. Still, Reynolds said JBG Smith did not know with 100% certainty it had won the competition until just before it was publicly announced Nov. 13.
"We certainly felt really confident in our position and our offering, but we also knew for a fact there were several cities in the mix, and we didn’t find out definitively until the day before the public announcement," Reynolds said. "We would have been surprised had we not won a portion of it at least. But we were never overconfident. Every morning, we wasted time speculating and always felt we were still the underdog, and I think that helped our position."
Even after winning the HQ2 prize, JBG Smith didn't have much time to celebrate. Reynolds said he quickly began worrying about how it would meet Amazon's ambitious construction timeline.
"Through the entire process, the goal was Amazon needed 1.5M SF by the end of 2021," Reynolds said. "We had raw land in Pentagon City, but it wasn’t entitled. I kept saying we could do that. Privately I’m like, 'Holy ... how are we actually going to do this?' The day after the announcement, we were immediately trying to paper the fact that we made a big promise and we had to get going on it. So I had that anxiety. I still do."
Carr Properties Chief Development Officer Austen Holderness experienced a similar feeling after his company signed Fannie Mae to anchor its 852K SF Midtown Center project. The building, where Wednesday's event was hosted, delivered last year, but its completion seemed a long way off on the day Carr landed the mortgage financier in early 2015.
"I almost didn't sleep that night because I realized the construction schedule we had to hit," Holderness said. "You keep chasing it and chasing it, and you pull the fish into the boat and then you're like, 'How the hell do you get this to shore?'"