Breaking: The Advisory Board Chooses DC, Douglas Development
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The big news in the private office real estate market has dropped: The Advisory Board Co is staying in DC and signing with Douglas Development Co.
The healthcare and education consulting company, with $2.4B in annual revenue, will move into the Jemal family’s 655 New York Ave NW development, occupying about 500k SF of the planned 756k SF mixed-use building in Mt. Vernon Triangle. In exchange for staying in the District and planning to create 1,000 jobs over the next decade and a half, ABC will get $60M shaved off its tax bills over the first 10 years of its 16-year lease. JLL brokered the deal for ABC while CBRE repped Douglas.
Currently, the ABC leases about 300k SF of space in two buildings in the West End, 2445 M St NW and 1227 25th St NW, with leases expiring in 2017 and 2019. It will move into most of the new building’s 678k SF of office space when it opens in 2019. The other developments in the running were Guy Steuart’s property at 501 K St NW and 1812 N Moore St, the Rosslyn skyscraper built on spec by Monday Properties, which opened in October 2013 and is still vacant. It’s back to the drawing board for Monday, whose search for an anchor tenant will remain among the most closely watched in the region. 1812 always finds a way into conversations about the office market, particularly the RB corridor, going through its worst office vacancy in history.
The Advisory Board was the biggest private tenant angling to move into new space in the near-term. Now, until another billion-dollar company announces it's looking for space, the region’s attention will shift to Marriott International’s search for a new HQ in space that could approach 1M SF. Considering Marriott is a much bigger brand name, a bigger company and will bring more jobs and economic development anywhere it goes, market watchers will be fascinated to see how high incentives will go. Virginia gave CEB, and Advisory Board spinoff, almost $15M to stay in Rosslyn, across the street from 1812 N Moore in JBG’s Central Place. Mayor Muriel Bowser’s administration quadrupled that incentive for a company less than twice its size.
“This is a big win for our city," Mayor Bowser (snapped next to Deputy Mayor Brian Kenner and across from ABC CEO Robert Musslewhite) said today in announcing the deal. "Keeping an influential company like The Advisory Board Co in Washington, DC, is a testament to the attractiveness of our market, our competitive strength, and our laser focus to hire District residents and keep jobs right here in DC.” The mayor still needs approval on the incentive package from the DC council, where she will introduce the “Local Jobs Tax Incentive Act of 2015” next week. If the council approves the incentive, the mayor will have announced $110M in investment in two days with an eye on job creation and development: DC will pay $50M to build a new Wizards practice facility and Mystics arena at the St. Elizabeth’s hospital site in Southeast. Mayor Bowser’s administration estimates the ABC deal will net the city $300M in tax revenue, justifying the huge incentive package.