Developer Q&A: StonebridgeCarras Principal Doug Firstenberg
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StonebridgeCarras principal Doug Firstenberg lives and works in Bethesda and has been developing in the area for more than 30 years. He chatted with Bisnow about how the neighborhood has changed and some of the project's StonebridgeCarras is working on.
Bisnow: How have Bethesda and the surrounding area changed since you first began working there?
Doug Firstenberg: The first deal I ever worked on at my own firm was at Rockledge Drive by Rock Spring Park in 1983. Back then, being at the hub of I-270 and 495 was ground zero. It was the greatest location you could find. You move forward to the late ‘80s, we had opened an office in DC and then in the early '90s we bought Hamden Square, which is right on Montgomery Lane, then Metro had opened and suddenly you could see this urban node in transformation. At that point, we really started focusing on buying and building buildings on and around transit. Our next project after that, which opened in the late ‘90s, was Two Bethesda Metro Center in a joint venture with Chevy Chase Land Co. Then we did Chevy Chase Center and then we did Chase Point on the District side of the line in Chevy Chase. We’ve been really active in this market and what you’ve seen is a tremendous maturation and sophistication of the market.
Bisnow: You sold a Bethesda high-rise apartment building last year for $207M or $520k per unit, the highest-ever recorded price in Maryland. How did you develop such a high-quality product and sell it at this price?
Firstenberg: When we bought that in 2011, the market was turning, but things were still pretty rough. It had been planned as a condo building. Condos weren’t going to work, so we entitled the property for apartments, which a lot of people didn't agree we could do. Also, we got a commitment from Harris Teeter and that was a surprise to the market. Those two things formed the basis for developing the project. The conversion from condo to apartment we didn't see as real risk. What we saw as real risk was five or six years ago, Woodmont Triangle wasn’t happening. It seemed a little on the fringe and kind of an in-between location. We thought it would all merge and it really has. We thought that grocery store was critical to making that a real destination, so our view was we knew we could fix the entitlements. We had Harris Teeter and our last decision was to overbuild the building because we felt rents would match quality over time. We strove to build the highest-quality building in Bethesda. We thought the rents would get there, and they did, and that’s what led to the record price.
Bisnow: What else are you working on in Bethesda?
Firstenberg: Right now we’re building a new police station for Montgomery County Police on Rugby Avenue. When that’s completed, we swap and get the old police station at Montgomery and Wisconsin. We’ve assembled two other properties. We're hoping with the new master plan we’ll be able to build a 250-foot-tall mixed-use building at the main intersection in Bethesda. It will be predominately office. Our target is to break ground in early 2019. It will have ground-floor retail and maybe another use. We’re trying to determine what makes sense.
Bisnow: What is your vision for that site and how you can shape this major Bethesda intersection?
Firstenberg: We have a couple things going for us. The additional height really gives you an opportunity to do something dramatic and make a statement. Also, office rents in Bethesda are extraordinarily strong. You’ll see trophy office development quality happening. So you not only have the height, you’ve got trophy rents, and you’ve got this opportunity to advance the market. You can take advantage of height and design elements that didn't exist a decade ago and have the opportunity to do something spectacular.
Bisnow: You talked about how much the area has transformed in your three decades there. How do you envision the neighborhood will change in the decades to come?
Firstenberg: Bethesda will always be a really interesting mix of single-family houses a stone's throw from high-rise offices. It's a pretty significant game-changer to get a corporation like Marriott to come into the CBD. Bethesda is going to go through another round of change. The urban core is going to get denser and the transition to single-family neighborhoods is going to be strongly protected by the County Council in the master plan. We are going to have this really interesting, walkable, mixed-use, live/work/play community that people write and talk about a lot. You’re going to have 250-foot-tall buildings in the core on top of Metro and this kind of terracing down, and within five blocks, you’ll be in a single-family house. I live, work and develop in Bethesda. My house is less than a mile from my office, so I've seen the transformation here from '83 when Bethesda wasn’t that great a place. I bought my house in '89. There are always issues as you urbanize and densify, but Bethesda is the economic engine of Montgomery County, and you’ve got to wisely take advantage of that. With Marriott coming here, the project we’re talking about doing and Carr's project in the urban core, that is going to make Bethesda more dynamic.