Meridian Lands 2 Big Office Tenants At Renovated Dupont Circle Building
The D.C. office market's record-high vacancy has given tenants a plethora of options and forced landlords to aggressively compete for deals, and The Meridian Group has won three of those competitions over the past week.
The developer told Bisnow Tuesday it closed two leases at its newly renovated 1333 New Hampshire Ave. NW building: a 96K SF deal with the Patient-Centered Outcomes Research Institute for the top three floors and a private penthouse area, and an 87K SF deal with the American Bankers Association.
These deals came after Meridian announced Monday it signed tech company Enovational for 97K SF at its newly renovated 1400 L St. NW building.
The Meridian Group worked with JLL's Evan Behr, Doug Mueller and Thomas Myers to lease the 1333 New Hampshire building. West, Lane & Schlager Realty Advisors' Gary Schlager and Ganon Rich represented PCORI, and CBRE's Manny Fitzgerald and Harry Stephens represented the ABA.
The development and leasing team gave Bisnow an exclusive tour of the building to show how it was able to land two multi-floor tenants in today's hypercompetitive market.
"The market is so competitive, so in order for a tenant to make a decision in today's market, they need to be inspired," Behr said. "That can come in a variety of ways. It can come in the form of inspiration via economics or features of the building."
The 350K SF office building was formerly anchored by Akin Gump, which relocated in 2018 to the Alexander Court redevelopment. Meridian Group acquired 1333 New Hampshire in December 2018 from Boston Properties for $136.5M.
The acquisition was made in partnership with WeWork Capital Advisors, an investment fund backed jointly by WeWork and private equity firm Rhone Group. WeWork had previously planned to take four floors, but it has cut its footprint in half and will now take the second and third floors.
Following the acquisition, The Meridian Group launched a $50M-plus repositioning effort for the building. The highlight of the renovation is the building's rooftop penthouse, an offering that the developer said helped it stand out in the competitive market.
"We had the ability with this building to walk into it, see a penthouse mechanical room that we could convert into probably the most impressive penthouse experience in D.C," The Meridian Group Senior Vice President Katie Yanushonis said. "That was really compelling to a lot of large prospects, and it's compelling to a lot of smaller prospects that we're talking to now as well."
The rooftop features a large indoor-outdoor amenity space with 15-foot ceiling heights and terraces that offer views of the Northern Virginia skyline, the Washington Monument, the National Cathedral, the Basilica and other D.C. neighborhoods.
The western portion of the rooftop is shared by all of the building's tenants, and it features a conference room, indoor entertainment space and outdoor terrace. Anchor tenant PCORI has its own private space on the eastern portion of the penthouse.
"We always thought from the beginning that having that feature was important," Behr said of the private rooftop space. "When a tenant can get its own penthouse rooftop experience with a direct connection down to the top floor, in today's market, not every building can do that."
The building is now 73% leased, with the fourth, eighth and ninth floors still available.
PCORI plans to move in spring 2022 into the 10th, 11th and 12th floors plus the private penthouse space. It is consolidating from multiple D.C. offices, including 1828 L St. NW and 1919 M St. NW. A PCORI spokesperson said the new lease represents an expansion for the organization, as it has more conference space and room for expected staff growth.
The ABA, which is relocating from 1120 Connecticut Ave. NW, plans to move in November 2022 into the fifth, sixth and seventh floors.
Yanushonis said The Meridian Group has been offering higher concessions than it did before the coronavirus pandemic. But she said she has seen other landlords try to swoop in with larger concession packages, and the tenants have ultimately picked the building they liked the most.
"We have heard of deals trying to get into the mix with TI packages that we could probably never compete with, but they never acknowledged those unsolicited proposals and stuck with us," she said.
"To me, that's really a testament to how strong our building is and how attractive it is to people. They're saying, 'Maybe I could get another $10 or $15 a square foot from someone else who's really looking to fill their vacancy, but it's not the right experience for us for the next 10 to 15 years.'"
The developer also installed a series of new building systems that have become a draw to tenants during the pandemic.
The building will also feature a touchless access system from Openpath, one of the proptech company's first locations in D.C. Yanushonis said Meridian plans to roll it out at other D.C. buildings.
"With Openpath, for us it's about providing the ability to have a touch-free, hands-free experience," she said. "One of the things we really focus on is innovation ... We always say, 'What do people want five years from now?' and that's what we want to think about today."
The building features a new 4,500 SF fitness center with a studio for workout classes. It sits on a partially underground level but still has windows on one side that bring in natural light.
The developer also redesigned the lobby with separate entrances on the New Hampshire Avenue and 19th Street sides. The property sits across 19th Street from one of the Dupont Circle Metro station entrances.
In the building's retail space, previously occupied by Buffalo Billiards and Front Page, the developer has landed a large entertainment tenant.
Swingers, a retail concept featuring mini-golf, a bar and a food hall, signed on for 20K SF. It is scheduled to open on June 18. The building has multiple other retail spaces that the developer is still working to lease.
"We're generating good interest," Yanushonis said. "It's a great retail location. Now that we're seeing retail come back to life, we feel really good about some of our additional prospects, especially with the proximity to Metro and all of the foot traffic."
Behr said tenants have been drawn to the retail amenities in Dupont Circle and the unique neighborhood atmosphere that sets it apart from other parts of Downtown D.C.
"There are cool, unique bars and restaurants and retail, but even more so, you've got this really neat architectural, neighborhood fabric," Behr said. "There's this uniquely iconic Washington feel to the neighborhood, and that's always really attractive."
CORRECTION, JUNE 8, 3:45 P.M. ET: A previous version of this story incorrectly stated the floors that are available for lease, and it misstated the name of WeWork Capital Advisors. This story has been updated.