Developer Q&A: Stonebridge Principal Doug Firstenberg
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Stonebridge has been one of the most active developers in Alexandria, with three major projects at various stages of development.
Over the last year, it broke ground on a Wegmans-anchored development, bought a large, vacant Eisenhower Avenue building with redevelopment plans and was initially selected and subsequently passed over for Virginia Tech's Potomac Yard campus. Bisnow caught up with Stonebridge principal Doug Firstenberg to hear the latest on each of these projects and his overall thoughts on the future of Alexandria.
Bisnow: You broke ground last month on Carlyle Crossing, a 1M SF mixed-use project with Wegmans as the retail anchor. How big of an impact do you think this development and the grocery store will have on the continued growth of Eisenhower Avenue and the Carlyle neighborhood?
Firstenberg: That area has had massive growth over the last 20 years. We actually developed a project in the 1990s with two buildings pre-leased right in Carlyle before [the U.S. Patent and Trademark Office] came. You’ve had PTO, you’ve had thousands of apartment units built over the last 15 to 20 years, but there’s still well over 10M SF of development potential in that area. When we started on Carlyle Crossing three years ago and started looking at the area five years ago, we thought it was going to be a great growth corridor. It has two metro stations, King Street and Eisenhower, Amtrak, VRE, and you have two and a half interchanges to the Beltway within two minutes. It’s one of the great transit-oriented, car-oriented opportunities in the Washington area.
What we felt it was missing was a retail core. It really needed more retail. We saw the opportunity with the AMC that, if we could find the right grocery store, you could create a hub of activity. When we looked at blocks 4 and 5, we focused on Wegmans. We thought a large-format grocery store — albeit it’s a small format for Wegmans — was the key. The key for Wegmans was to get them to go on the second floor so you could create that walkable environment people really enjoy with a mix of retail. Wegmans was amenable to the idea. We had to figure out how to get their loading up to the second floor, and we were able to figure that out.
Now you’re seeing the explosion of development around our blocks. Our project alone over is 1M SF. You’ve got Perseus next door converting an old DOD building to residential, and Rubenstein is moving forward with their building, and NSF just moved in a little over a year ago. We just see that whole King Street Metro to the Eisenhower Metro, the Carlyle area will be one of the great explosive markets in the entire region over the next few years. What was missing was this walkable, livable shopping experience. Now we think we’ve got that, plus Metro, plus the vehicular access that’s probably unsurpassed in the Washington area.
Bisnow: You mentioned that the idea of putting Wegmans on the second level was to activate the ground-floor retail with other users. What specific types of retailers are you targeting for the street-level space?
Firstenberg: I think we’re going to see a cross-section. We’ll certainly do food, a range of food with a mix of sit-down restaurants, fast-casual and coffee and bakery to give that vibrance and help serve the movie theater population. We also certainly are going to do a mix of fitness. In a location like this you could to three, four or five fitness options ranging from Barre to Orangetheory to a SoulCycle and things like that, where you've got a diversity of things that allow you to work out.
We’ll see some soft goods shopping, and also I think we’ll do some medical office. Medical is a great complement to the overall retail mix. It’s very counter in terms of when its biggest demands are compared to movie and grocery. So I think it’ll help overall the retail vibrancy.
Bisnow: Earlier this year, you acquired the building at 5001 Eisenhower Ave., formerly known as Victory Center, which has been vacant for years. Why did you decide to make this bet that you could fill the building, and what strategy are you taking to get there?
Firstenberg: We came in with a bit of a different strategy and fresh eyes. You’ve got a 16-acre site with 12 acres of parking. You’ve got to look at how you’re going to position it differently. We worked with the city and they gave us approval to do residential on the eastern half of the site, about 6.9 acres in total. We’re in the market now and expect it to be a for-sale product. We’re excited because that will bring vibrancy, interest and an attractive mix to the area. It will also help us drive retail. We don’t see this being a massive retail site, but with all the residential and when we lease the office, there will be a need for retail. We see this residential component helping drive that use.
Quite frankly, it allows us to be at an attractive cost basis to go at government tenants. We think there will be several large procurements in the next 12 to 24 months that this building will be perfectly positioned for. The bones of the building are good. It meets every technical requirement for a GSA lease. We’ve got some ideas about how to make some modifications that will make it more attractive to any tenant in terms of adding windows and things of that nature. We’re quite confident that it’s properly positioned and with the overall environment, this building is going to be attractive to the government.
Bisnow: Can you give any more specifics on which government agencies you're targeting? Are any of them large enough to fill the entire 600K SF building?
Firstenberg: There are things we’re tracking that haven’t been sent to the Hill yet for prospectus, so I’d prefer not to comment. But we’re quite confident there are several in formation right now that would drive pretty close to a full-building user, and that’s exactly what we’re looking for. The Social Security Administration is looking for 250K to 300K SF. I don’t think we’ll pursue that because we don’t want to split the building given what we see coming down the road.
Bisnow: I want to talk about your Oakville Triangle property. This site was initially announced as the location for the Virginia Tech Innovation Campus, but the university later switched plans and selected another Potomac Yard site. Why do you think it played out this way and what was your response to the selection?
Firstenberg: Virginia Tech will have to speak to it themselves. But they always wanted a project of at least 2M SF, which we could not accommodate. We went through the planning exercise with them for a good campus, but it had a square footage limitation. From our perspective, the fact that it's staying in the area and in Alexandria is a positive. We're going to be a great recipient of what's going to happen in the area.
In the near-term, we have an ability to do retail and do mixed-use, it's one of the few sites where you could really do that with Route 1 frontage. What we're focused on right now is evaluating our options in terms of what type of development we could do in the near-term, and also looking at the existing industrial use. The last-mile industrial and self-storage markets in these urban infill areas are very strong. So we have to balance those two options, and right now, we're deep into studying which could be a better outcome for the next five to 10 years.
Bisnow: Do you see this property as viable for an office project, potentially benefiting from the ripple effects Amazon and Virginia Tech could create, or are you more likely to pursue other uses like multifamily, retail or industrial?
Firstenberg: I think there are better pure office sites. The office sites don't tend to pay the same premium that retail or institutional users would pay for that Route 1 frontage. So you've got other sites across Route 1 in Potomac Yard where offices can go.
Bisnow: What is your time frame for Oakville Triangle? When do you hope to have concrete plans and move forward with a development there?
Firstenberg: Our goal is to come up with a plan this fall. Depending on how that works, if it's a development plan, we'll immediately engage with the city. Our goal if we're going to go the development route would be to be in development as early in 2021 as possible. That's just how long it takes to get through the [entitlement] and building permit process.
Bisnow: What are your overall thoughts on the future of Alexandria and how it will look five or 10 years down the road?
Firstenberg: Alexandria has always been this quaint city. Old Town’s King Street is a place that people love, but the reality is the rents in Alexandria have been historically low compared to other markets. We see the transformation of National Landing and, quite frankly, with what we’re doing at Carlyle Crossing as complete game changers. I think Alexandria ought to trade at a premium because it’s this great combination of proximity, quality of life and different types of lifestyle options. It really has the entire package.
I think in the next five to 10 years, Alexandria is going to go from this quaint city that didn’t have superior economics to a city that offers all the aspects that employers and residents are looking for, and I think it’ll trade at a premium.
Firstenberg will speak Aug. 27 at Bisnow's Future of Alexandria event, held at 5001 Eisenhower Ave.