Developer Q&A: JBG Smith Executive Vice President Greg Trimmer
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JBG Smith, one of the most active developers in the region, has two major mixed-use developments in the works in Fairfax County. It is planning the 1.3M SF Phase 2 of RTC West at the future Reston Town Center Silver Live station and another 1.6M SF mixed-use project at the Wiehle-Reston East station. Bisnow caught up with JBG Smith Executive Vice President of Development Greg Trimmer to hear the latest on those projects and his thoughts on the Fairfax County market.
Bisnow: What is the latest on RTC West? Where are you in the process for Phase 2?
Trimmer: So RTC West is a project we’re really excited about. We have an initial phase of 40K SF of retail that’s being integrated into the first floor of the existing office buildings. We’re about two-thirds done with that. The balance should finish in the next few months. It’s almost entirely pre-leased. Coopers Hawk Winery is open. Starbucks and Nando’s are open. That project came with some addition of sidewalks and outdoor space. That is the first step of transforming that from a suburban office park to a mixed-use walkable environment. That will be done in advance of the Metro coming, which will bring a lot of energy from the Toll Road south, and we will be the beneficiary of that.
For the Phase 2 plan, we’re working through the entitlement process and hoping to get final approval of that some time this year. We’ll have three new office buildings and two new residential buildings we’ll be able to break ground on. The timing will be dependent on the market and where we are when we get final approvals. On the office side, we have three different types of buildings, which allows us to look at different tenants. We have a trophy building, which will be about 350K or 375K SF. It will be very tall and visible from the Toll Road, a true trophy presence in Reston. The smaller building will [be] 150K SF, we’re calling it a jewel-box building. We think that will be a really good build-to-suit for a corporate tenant. Then we have a third building we refer to as a loft office building that lends itself to open floor plan tech tenants, which you see often in the Reston market. Through having three unique offerings, we can cover a wide swath of the office market.
Bisnow: You mentioned that the timing is dependent on the market. How do you feel about the office market in Reston? Would you consider breaking ground speculatively on those office buildings?
Trimmer: In terms of having a definitive decision, we’re still a little ways away from getting entitlements, so we haven’t made any decisions. We’re very selective about locations where we go spec. We have to feel good about the market and have a unique offering. We can check those boxes here. We do feel good about the Reston office market. It’s a bit of a tale of two cities. If you look at Reston Town Center, there’s very few large blocks of space and there’s upward pressure on rents. If you look at the broad suburban Fairfax County market, there’s higher vacancy and downward pressure on rents. We lump our office buildings at RTC West into the town center market. We feel good about where they’re positioned and where rents are moving. We have our fingers crossed that we’ll be able to go vertical in the short to medium term.
Bisnow: How do you feel about multifamily? Are you concerned about the surge of supply coming onto the market?
Trimmer: On the residential side, it’s no mystery the broader D.C. market has felt softness in residential rents, primarily due to the number of unit deliveries. So Reston is no stranger to that. What we like about Reston, and what we’ve seen, is there has been discipline on the side of equity and debt providers to act as a governor to future deliveries. The market is a little overbuilt, but it’s not becoming too much of a problem because of that discipline. We’re also pleasantly surprised with absorption, it has been higher than what we anticipated. While we’ve seen a softness in 2017 and 2018, we think beyond that there’s a chance for rent growth again. That would suggest that well-located apartment buildings like RTC West, where you can walk to amenities, you have Metro access, should be a beneficiary to the market stabilizing.
Bisnow: I know you also have a 17-acre, 1.6M SF project you’re planning at Wiehle-Reston East, branded as Midline. What will that development look like? What is the timeline?
Trimmer: So Midline, from an entitlement perspective, is on a a similar trajectory as RTC West. It should be through entitlements sometime in 2018. It will be market-dependent when we get going. It’s a little bit different of a mix. That’s intentional. Our entitlement is a partnership between JBG as well as our longtime townhouse partner EYA. They’re doing a large townhouse component. The third group is Chevy Chase Land Co. They will have an apartment building. Our plan, outside of EYA and Chevy Chase Land Co., has four components. It will have two apartment buildings. One of them may go for-sale, we’re preserving that option. It has a smaller office building than what we have at RTC West and a building that will be senior housing. We’re trying to embrace a wide swath of ages and resident types. So it would be nice if you could have millennials coming in and living in apartments, then they might move out to for-sale condos, then move into one of EYA townhouses, put their kids through school and retire to senior housing. That’s a pretty interesting dynamic.
One thing about Midline that’s different from RTC West is it’s a blank canvas. The challenge is to create a place. It starts with the people. We spent a lot of focus trying to get the public space designed properly and sized properly. We don’t want public space to be a placeholder. We want to foster people coming out, walking the dog, having kids running around. Part of that is place design and part is lining streets with great retail.
The last component is the office building. When we look [at] JBG Smith’s broader office buildings, this is a little different than the three at RTC West. It’s 200K SF, so it’s smaller than the trophy building. It has an offset core that enables us to do a great, open floor plan. We’re focusing on tech tenants more and creative tenants who want to foster collaboration with space.
Architecturally, we’re trying to make it a little different than RTC West. RTC West is coming into a palette created by the town center. We want to up their game, but that’s still an anchor. At Midline, one thing we’re trying to do between the green space and the well-traveled bike and hiking trail, it will have a bit more of an earthy feel. It’s less vertical and more pedestrian scale. The tones are warmer.
Bisnow: You retained CBRE to seek buyers for another 11-acre Wiehle-Reston East site. Why did you decide to sell that property, and have you had any activity?
Trimmer: So currently JBG Smith is marketing two Reston sites. One is our Summit property, an office building south of the future Reston Town Center Metro station, and our Commerce Executive property just south of Wiehle-Reston East. The decisions to sell assets are done at a portfolio level. We look at everything from liquidity to investment thesis and so on. The decision was to test the market on those two. We don’t have to sell them, but if we get an attractive offer, it’s something we’ll seize on. From a development perspective, we looked at Reston as an overall market and feel like between RTC West and Midline, we have a good short-, medium- and long-term development portfolio. The others have development components, but we feel like we’ve seized on the ones we feel most passionate about.
Bisnow: With these two major mixed-use projects, it seems clear JBG Smith is bullish on Reston. How do you feel about other areas in Fairfax County, such as Tysons?
Trimmer: Well JBG has been a longtime investor in Fairfax County. When you take a step back and look at the demographics and how well educated the populace is, how affluent they are and all the intangibles that are hard to create, the transit system with the Silver Line and Dulles Airport, the universities, the proximity to D.C., it’s a market that has been great and we anticipate to be great. We love Fairfax.
We haven’t been as active outside of Reston as of late. We do have a couple other assets we’re working on. Specifically have a project in McLean, The Signet. That’s a 123-unit condo building with 108 market-rate units that will deliver late summer, early fall. That’s held in JBG opportunity funds, not a JBG Smith asset.
We have a couple assets in the Tysons market. We’ve taken a slightly different strategy to Tysons. We don’t have really big multiphase projects because of the capital outlay and the time to bring them to market is tough for us. We’ve been really selective in Tysons. We have the old Container Store site we’re evaluating opportunities on. Then the second and third phases of Tysons West, as well as Tysons Sheraton Premier. One thing in Tysons is the scale is really big. The walkability will come, we already have that at Tysons West, so we feel good about that.
The last project is the VY at Reston Heights. That’s a 385-unit apartment building under construction for the last couple years, we’re commencing leasing tomorrow. That's one of those things where we love opportunities where you can really differentiate a product.
CORRECTION, JAN. 30, 9:40 P.M. EST: A previous version of this story misstated JBG Smith Executive Vice President of Development Greg Trimmer's title. The story has been updated.