DC Development Report: 2012/2013 Edition

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According to the Washington DC Economic Partnership’s 12th annual DC Development Report, there is 21.5M sq. ft. under construction, with a total estimated value of $9.5 billion. 2012 has been a record year in residential construction with 10,357 units under construction – the most since 2001.

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DC Development Report: 2012/2013 Edition

  1. 1. DCDC Development Report 2012/2013 edition Development Report 2012/2013 edition Rendering: 655 New York Avenue, NW
  2. 2. DC Development Report 2012/2013 edition Image courtesy of Douglas Development Square 450 | 655 New York Avenue, NW | Douglas Developmenta publication of the in partnership with
  3. 3. About The DC Development Report The DC Development Report is a summary of the major development and construction projects in the District of Columbia. The Washington, DC Economic Partnership (WDCEP) began tracking development activity in 2001 with the hope of creating a comprehensive database that would answer a number of questions in regards to the construction activity in the city. The Report summarizes our entire database of projects, highlights major projects and what lies ahead for development in the District of Columbia. This update of the DC Development Report is an overview of development activity and of the expansion occurring in the District of Columbia. As a resource book, it is a compilation of nearly 12 years of data collection and research that provides an overview of an ever-changing development and construction cycle. The WDCEP performs an annual “development census” in the month of August and receives contributions from more than 120 developers, architects, contractors and economic development organizations. This outreach results in updates to more than 300 projects. While our database of projects is constantly being updated, for the purposes of this publication all data reflects project status, design and information as of August 2012. This year the WDCEP partnered with CBRE to provide an executive summary on the overall construction market and in-depth analysis of each development market. Although every attempt was made to ensure the quality of the information contained in this document, the WDCEP and CBRE make no warranty or guarantee as to its accuracy, completeness or usefulness for any given purpose. For more information please see our Methodology section. © Washington, DC Economic Partnership, 20122 © 2012 Washington, DC Economic Partnership
  4. 4. Table of Contents1 Development Overview Executive Summary . . . . . . . . . . . . . . . . . . . . . . . 6 Summary of Projects . . . . . . . . . . . . . . . . . . . . . . 10 Most Active Developers, Architects & Contractors . . . . 122 Development by Sector Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Hospitality . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593 Development Hot Spots Anacostia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Capitol Riverfront . . . . . . . . . . . . . . . . . . . . . . . 72 Mount Vernon Triangle . . . . . . . . . . . . . . . . . . . . 74 NoMa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Shaw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 804 Appendix Methodology . . . . . . . . . . . . . . . . . . . . . . . . . 84 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . 87 DC Development Report 2012/2013 Edition 3
  5. 5. Developme
  6. 6. ment Overview 1 Executive Summary | Summary of Projects || Summary of ProjectsDevelopment Executive Summary Most Active | Green | Description Most Active
  7. 7. Development Overview Executive Summary The educated workforce, nationally-ranked universities, world-renowned museums, tourist attractions and high quality amenities that attract residents and visitors have made the District of Columbia a top tier investment market. Despite the uncertainty surrounding the national economy, DC’s economy has continued to thrive, adding an estimated 8,200 jobs in the past year1. Recent college graduates, “twenty-somethings” and baby boomers are moving into the city at a greater level than seen in recent years, as these groups demand a “24/7” environment, walkable neighborhoods, and easy access to neighborhood services. This has translated into new jobs, new retailers and restaurants, diverse transportation services and have created demand for new development. Through August 2012, 6.7 million square feet had broken ground in 2012 across all major development markets. By the end of 2012 we expect that figure to top 7.8 million square feet as several mixed-use projects are anticipated to start construction by the end of 2012. Residential Since 2000, the population of DC has grown by 8.0% and now is home to 617,996 residents. 2 The interest in urban living spurred a boom in residential construction, as over 42,000 residential units have been built (or underwent major renovations) since 2001. More significantly is that DC has grown by 43,592 people in the past four years (2007 – 2011) and now has more than 10,350 residential units under construction—the highest activity in the past 10 years. More than 90% of the units under construction are rental and with many new residences now in the 500 – 600 square foot range, these market-rate units are targeting the “young professionals.” Office While the total number of jobs in DC has now surpassed 736,6003, the historic drivers of DC’s office market (law firms and the federal government) have stopped expanding and becoming more efficient with their existing space. When looking at the largest 25 leases in the past year, nearly half were renewals or renewals with expansion, well above the historic average of 30% and thus limiting demand for new office development.4 Through August, 2012 saw 1.1 million square feet of office construction/renovation starts in private projects with more than 50,000 square feet of office. By the end of 2012 that number could reach 1.4 million square feet with two additional projects expected to start in 4Q 2012. Of the 1.4 million square feet, approximately 40% of the space is preleased. While the total 2012 expected groundbreakings is on the lower end of the past 12 years, it is about 15% higher than in 2011 and 120% higher than 2010—a year that saw only 636,000 square feet of private office projects with more than 50,000 square feet of office space start construction/renovation. REtail 2013 will see major mixed-use developments such as CityCenterDC (185,000 sq. ft. of retail), 360 H (41,200 sq. ft. Giant), Monroe Street Market (50,269 sq. ft. of retail) and the Wonder Bread Factory (39,741 sq. ft. of retail) contribute to the more than 434,000 square feet of new retail project deliveries. The following year will see major mixed-use projects such as 77 H (76,000 sq. ft. Walmart), CityMarket at O (75,000 sq. ft. Giant), Louis at 14th/U (Trader Joes) and Twelve12 (50,000 sq, ft. Harris Teeter) open and with the recent groundbreakings of Cathedral Commons (56,000 sq. ft. Giant Food) and Safeway’s Petworth redevelopment (new 63,000 sq. ft. store), 2014 is expected to deliver an additional 587,000 square feet of retail space.5 2014 will mark the most retail deliveries since 2008, a year that delivered more than 867,000 square feet of retail, which included the opening of the Target-anchored, 500,000 sq. ft. DC USA project in Columbia Heights. However, unlike 2008, 2014 will see major retail deliveries in more neighborhoods such as Capitol Riverfront, Brookland, 14th & U/MidCity, NoMa, Shaw and Petworth. Hospitality 2014 is shaping up to be the most significant year in hotel deliveries in the past 12 years. If development plans stay on schedule 1,357 new rooms will deliver with the total potentially increasing to 2,361 rooms if several pipeline projects break ground in the next few months. This would surpass 2008’s total of 2,159 new/renovated rooms. 1. DC Department of Employment Services Office (9/2011-9/2012, preliminary estimates)  2. Census (2011)  3. DC Department of Employment Services Office (9/2012, preliminary estimates)  4. CBRE Research  5. Cathedral Commons and Safeway’s Petworth are still listed as near term in the report since both started construction after data was collected6 © 2012 Washington, DC Economic Partnership
  8. 8. Development Overview Executive SummaryThe largest project to deliver in 2014 will be the new 1,175-room Marriott Marquis (Convention Center Hotel) followed bythe 182-room Cambria Suites Hotel. The 1,000+ rooms that are currently planned, but may deliver in 2014, include a HiltonGarden Inn (2201 M Street, NW), Hyatt Place Hotel (New York Avenue & North Capitol Street, NE), Hampton Inn (1729 HStreet, NW) and Homewood/Hampton Inn (501 New York Avenue, NE).EducationThrough August 2012, more than 1.7 million square feet of education space is under construction1. This represents thehighest total since 2008 (1.9 million sq. ft.). This development activity corresponds to 43% college/university projects, 39%public high schools and 17% medical space. The new Dunbar Senior High School and modernized Cardozo High Schoolmake up the 689,000 square feet of public schools under construction. Expansion plans by George Washington University,American University and the University of the District of Columbia are mainly responsible for the 759,000 square feet ofcollege/university projects under construction.By the end of 2012 New York University’s 75,000 sq. ft. Constance Milstein & Family Academic Center (September 2012delivery) and E.L. Haynes’ 36,000 sq. ft. Kansas Avenue Public Charter School will also open.Industrial MarketWhile not a focus of the DC Development Report, the industrial sector plays an integral role in the makeup of the DC realestate market. It differs from most other regions because DC is not known as a manufacturing hub. High land value within thecity limits has historically lent itself to higher-revenue office or residential space. Developers, looking to maximize the returnon their investment, tend to steer clear of erecting new industrial product with a DC address as they explore developmentopportunities in the city’s core areas.The highest concentration of large warehouse space in the city lines New York Avenue, NE. The industrial parks that surroundthis major thoroughfare utilize the transit advantages it offers in a high traffic urban setting. The majority of large warehousebuildings resides in this area and is generally older, Class B and C product. Another concentration of smaller product inNortheast DC follows the CSX rail line north of Union Station and fronting the Anacostia River in the Capitol Riverfront.The availability of mid-size blocks of space has tightened across the District, but tenant demand remains as businesses inthe public sector need to operate within DC. This space is “needed to house those quasi-industrial functions such as wastehauling and transfer, street cleaning and plowing, road construction and repair, water and sewer construction and repair,and police, fire, and parking enforcement services that are essential to the business of city government.”2Tenants with flexibility have found attractive options in industrial-laden Prince George’s County, Maryland, which neighbors DC andhas newer product, cheaper rents and more large blocks of space. This trend, coupled with revitalization projects in the works andlittle industrial development in DC in the last decade (360,000 sq. ft.), will continue to constrict an already strained environment.10 Largest Industrial Leases Since 20113 Sq. Ft. Tenant Address Date 92,286 DC Government 2850 New York Avenue, NE 1Q 2011 30,400 Solo Furniture Installers, Inc. 3525 V Street, NE 2Q 2012 25,541 Crane Services 3335 V Street, NE 1Q 2012 24,399 Ideal Electrical Supply Corporation 2230 Adams Place, NE 3Q 2012 23,633 Forever Blossoms 3150-3160 V Street, NE 4Q 2011 20,000 Verifone 3300-3390 V Street NE 2Q 2012 19,262 Pitney Bowes, Inc 3300-3350 New York Avenue, NE 3Q 2012 19,200 District Food Vending 1901 Fairview Avenue, NE 3Q 2012 17,500 GSA 3015-3055 V Street, NE 1Q 2012 15,000 American Medical Response 2825 V Street, NE 4Q 20111. including medical space­  2. Industrial Land in a Post-Industrial City, DC Office of Planning (2006)  3. CBRE Research DC Development Report 2012/2013 Edition 7
  9. 9. Development Overview Executive Summary Project Management1 Statistically speaking, the beginning of 2012 has seen a slightly positive growth period for the commercial construction industry in the District. The District’s average is 5-6% more costly than Baltimore or Annapolis as selling prices have been increasing faster than material prices, escalating now 3%-4%. The DC market was essentially modest to flat in general construction activity (i.e., tenant build-outs/interior construction) with exception to on-going builds such as CityCenterDC. The new activity was attributed to the steady flow of releases. In most of these situations, clients look to have minor changes to the space such as paint and carpet improvements. As it relates to the private sector, most building owners of commercial office buildings continued to hold off on making major investments in their building’s infrastructure. They have instead focused on specific aesthetics and this trend continues to be compounded with little demand from end users as a competitive negotiation tactic when seeking an aggressive lease rate. Similar to the beginning of 2012, the moderate to flat construction activity will continue. As we glance to the future, we notice the overall construction costs appearing to remain steady with no major fluctuations. Individual project costs are generally averaging around $65 per square foot for general office space. Furthermore, expect moderate labor shortages in the near future to push prices at least another 1% higher, with escalations estimated at 4%-5%, in 2013. The major contributors to cost impacts on a per trade basis are in millwork, glass and metals. One positive influence to the cost of materials and products are those considered to have a “sustainable” focus. As demand remained constant by end users, manufactures and services providers have incorporated sustainable practices and materials into their deliverable as a matter of practice. This trend had a major positive impact on the area by creating more efficient facilities that combine to create an overall attractive market in competing with other markets in the U.S., ultimately creating the environment of positive construction activity. Moving into 2013, little movement in non-residential construction will yield flat prices. The anticipated cost of labor increase by June 2013 will be negligible as material costs follow the same trends, unless a major world event/conflict triggers the markets. Green Development DC has a total of 316 LEED certified buildings/projects with another 1,054 LEED registered projects2. With DC’s public and private push towards sustainability, DC now ranks second in the U.S. in combined registered and certified buildings3. While the Green Building Act of 2006 and Clean and Affordable Energy Act of 2008 requires LEED certification and encourages sustainability, tenant demand for “green” features was a driving force for developers and landlords to incorporate green elements into their projects before these legislative deadlines. This is evident in the 256 ENERGY STAR labeled buildings and that more than half of the LEED certified buildings/projects are Gold certified. Furthermore, Platinum buildings are becoming more common. In addition, 16 residential projects that are participating in the Enterprise Green Communities have been completed since 2007, with another eight under construction. Total Number of Certified LEED Building/Projects2 35 87 160 34 316 Certified  Silver  Gold  Platinum 1. tenant build-outs/interior construction  2. District Department of the Environment (3Q 2012)  3. District Department of the Environment (5/4/12)8 © 2012 Washington, DC Economic Partnership
  10. 10. Green Development
  11. 11. Development Overview Summary of Projects DC Development Deliveries ($ in billions) Completed  Under Construction $4.78 $4.39 $4.13 $3.71 $3.60 $3.05 $2.76 $2.67 $2.67 $2.51 $2.39 $2.32 $2.22 $2.19 $1.02 $1.65 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 20131 20141 DC Development Projects By Status (August 2012) DC Development Projects By Type # of Projects Sq. Ft. Estimated Cost # of Projects Sq. Ft. 2 Estimated Cost New Construction 871 210,644,223 $67,501,700,154 Completed 940 120,976,506 $34,931,352,284 in 2001 79 10,863,811 $2,224,531,829 Renovation 478 58,269,466 $12,410,654,877 in 2002 85 9,189,374 $2,190,473,500 Infrastructure 46 n/a $3,603,466,000 in 2003 95 11,409,328 $3,053,046,485 in 2004 97 11,591,945 $2,761,862,000 DC Development Projects by Use3 in 2005 87 10,180,302 $2,390,115,944 # of Projects Sq. Ft. Units/Rooms in 2006 102 12,933,180 $3,705,380,585 in 2007 73 11,621,355 $3,599,389,760 Education 186 16,820,763 in 2008 81 12,154,851 $4,128,790,000 Medical 27 4,115,190 in 2009 86 12,248,868 $4,390,058,073 College/University 51 5,228,948 in 2010 52 7,977,660 $2,508,795,163 Other Education 108 7,476,625 in 2011 57 5,944,403 $2,324,623,945 Hospitality 225 23,289,143 18,720 in 2012 (YTD) 46 4,861,429 $1,654,285,000 Community 91 2,256,081 Entertainment 26 4,236,932 Under Construction 113 21,526,569 $9,479,543,000 Hotel 83 12,900,180 18,720 2012 delivery 37 3,703,786 $1,015,849,000 Museum 39 3,895,950 2013 delivery 50 10,627,553 $4,775,916,000 2014 delivery 22 5,913,412 $2,669,141,000 Industrial 7 953,192 2015+ delivery 4 1,281,818 $1,018,637,000 Infrastructure 46 Office 349 99,130,123 Pipeline 342 127,371,932 $39,104,925,747 Near Term 87 11,512,628 $3,123,993,747 District Government 7 1,553,500 Medium Term 106 17,792,058 $4,575,279,000 Federal Government 41 18,588,461 Long Term 149 98,067,246 $31,405,653,000 Residential 679 104,608,559 101,243 Total 1,395 269,875,007 $83,515,821,031 Retail 457 13,419,915 1. projections based on targeted delivery dates of projects under construction as of August 2011  2. total by type may not sum to totals by status due to incomplete information about infrastructure projects  3. all projects (completed, under construction & pipeline); mixed-use projects may be reflected in multiple uses10 © 2012 Washington, DC Economic Partnership
  12. 12. Development Overview Summary of Projects Office  Retail  Residential  Hospitality  Education Projects Completed (2001–August 2012) # of Projects Sq. Ft. Units RoomsOffice 207 45,198,447Retail 232 4,523,952 121.0M Sq. Ft. CompletedResidential 435 43,903,233 42,268Hospitality 142 14,747,778 10,583Education 139 11,078,438Total Estimated Value of Projects: $34.9 billionProjects Under Construction # of Projects Sq. Ft. Units RoomsOffice 29 6,324,827Retail 46 1,162,038 21.5M Sq. Ft. Under ConstructionResidential 53 9,580,027 10,357Hospitality 16 2,029,418 1,667Education 14 1,751,000Total Estimated Value of Projects: $9.5 billionProjects Near Term # of Projects Sq. Ft. Units RoomsOffice 15 2,403,834Retail 44 1,788,372 11.5M Sq. Ft. Near TermResidential 52 6,129,389 6,438Hospitality 15 960,880 1,295Education 7 883,000Total Estimated Value of Projects: $3.1 billionProjects Medium Term # of Projects Sq. Ft. Units RoomsOffice 23 4,921,621Retail 49 1,065,075 17.8M Sq. Ft. Medium TermResidential 70 9,566,610 9,015Hospitality 19 1,032,455 1,227Education 7 614,000Total Estimated Value of Projects: $4.6 billionProjects Long Term # of Projects Sq. Ft. Units RoomsOffice 75 40,281,394Retail 86 4,880,478 98.1M Sq. Ft. Long TermResidential 69 35,429,300 33,165Hospitality 33 4,518,612 3,948Education 19 2,494,325Total Estimated Value of Projects: $31.4 billionNOTE: mixed-use projects may be reflected in multiple uses. DC Development Report 2012/2013 Edition 11
  13. 13. Development Overview Most Active Developers, Architects & Contractors The figures below list the developers, architects and contractors that have been the most active in contributing to DC’s development activity. Most Active Private Developers (# of projects)1 Completed  Under Construction  Pipeline PN Hoffman 16 1 1 18 Douglas Development Corporation 11 2 11 24 JAIR LYNCH Development Partners 20 3 5 28 WC Smith 16 5 8 29 The JBG Companies 20 8 11 39 Most Active Architects (# of projects)1 Hickok Cole Architects 28 5 9 42 WDG 27 4 13 44 Eric Colbert & Associates PC 30 5 9 44 Bonstra|Haresign Architects 28 8 14 50 Shalom Baranes Associates 34 9 23 66 Most Active General Contractors (# of projects) 2 WCS Construction LLC 14 4 8 26 Hamel Builders 17 7 2 26 James G Davis Construction Corporation 24 5 2 31 Forrester Construction Company 27 6 1 34 Clark Construction Group LLC 34 14 5 53 1. projects completed since 2001, under construction or in the pipeline  2. projects completed since 2007, under construction or in the pipeline12 © 2012 Washington, DC Economic Partnership
  14. 14. Increase YourNet Work.Attend INFORMATIVE PROGRAMS Benefit from ADVOCACYParticipate in POWER NETWORKING Help build COMMUNITYCreate OPPORTUNITY Increase your VISIBILITY dcbia.org DC Development Report 2012/2013 Edition 13
  15. 15. Developmen
  16. 16. nt by Sector 2 1 Office | |Retail | |Residential | |Hospitality | |EducationDescription Office Retail Residential Hospitality Education
  17. 17. Natural Gas. Efficient by Nature. Including natural gas in our project was a very smart decision. Plan Early Sell Faster with Natural Gas. If you don’t incorporate natural gas as a primary energy source into your plans, you’re missing a big opportunity. Savvy builders know that their clients prefer natural gas because of the comfort, cost savings, reliability and environmental benefits it affords. It’s easier than ever to include natural gas. • Attractive design alternatives are available through the use of the industry’s latest meters. They’re smaller, allowing for their placement in aesthetically pleasing locations. • Innovative piping options such as 2 psi delivery systems, and flexible copper and corrugated stainless steel piping help to reduce first costs. • Distributed Meter Rooms (DMR) provide the flexibility for individual unit meters to be installed in vertically stacked central gas meter rooms on each floor in a high rise multifamily building. Call Washington Gas for a free consultation. The Engineered Sales Team at Washington Gas is the resource you can count on for all multifamily development natural gas applications. Our representatives include a variety of professionals with the technical skills to understand your requirements and walk you through each stage of the process. To learn more about incorporating natural gas into your next project, email our Engineered Sales Team at EngineeredSales@washgas.com or visit PlanEarlySellFaster.com.
  18. 18. 1Office development Description
  19. 19. Office Development DC Office Market Snapshot (3Q 2012)1 Inventory 124.1M SF Total Vacancy Rate 10.1% Net Absorption (4Q11—3Q12) 274,248 SF Overall Avg. Asking Rental Rate $53.24/SF (FS) The demand for downtown DC office space continues to fall while availability rises. Due to economic uncertainty surrounding the federal budget, many tenants opted to remain in their current locations to avoid moving costs, or relocate to reduce space usage. Historically, DC’s primary demand drivers are the law firms of the AM Law 100 and the federal government. Recently, law firms began reducing workspace areas for all employees, including smaller partner offices while reducing filing/storage needs. Simultaneously, the federal government, under intense pressure to reduce costs, continues to consolidate multiple locations and reduce the total amount of occupied leased square feet. As of 3Q 2012, CBRE tracked the overall vacancy rate for the city at 10.1%, a relative constant over the year, and below the peak of 12.0% reached in 2010. The 12-month trailing total net absorption was 274,248 square feet, reflecting bright areas in an otherwise down leasing market. New demand is being driven by smaller companies that typically experience a recovery first, foreshadowing economic growth. In addition, several technology-related firms came to DC, beginning a further diversification of the tenant base in the city. The largest 25 lease transactions from the past year reflect the change in composition of transactions in the city and the impact the economy had on companies. While the portion of renewals historically hovers around 30%, the past year experienced tenants staying in place at a renewal transaction rate of nearly 50%. Largest 25 Lease Transactions by Deal Type2 Sublet Renewal + Expansion 4% 16% 48% New/Relet Renewal 32% Two of the city’s largest law firms recently committed to relocating to new buildings in the expanded business core of DC. Arnold & Porter and Covington & Burling each surprised the market with their decisions to move from the Pennsylvania Avenue corridor to new construction in the East End submarket. Covington & Burling’s lease at City Center will take 80% of the office space at the site, and Arnold & Porter will lease 75% of Boston Properties’ new project at 601 Massachusetts Avenue, once NPR moves to NoMa. New development continues to attract tenants in spite of the higher rental rates it commands. The design efficiencies of the build-outs allow companies to lower their real estate floor plan and associated costs, one of the few immediate expenses they can control. Therefore, many are able to upgrade the quality and location of their offices, while paying a lower annual rent. While this has had a negative impact on the Class A relet market, with large blocks of space returned to the market, the newly available space is in prime locations that allow new tenants to make a similar move. Sources: 1. CBRE Research  2. CBRE Research (4Q 2011 - 3Q 2012)20 © 2012 Washington, DC Economic Partnership
  20. 20. Office Development Development OverviewOffice Development (August 2012) 133 Private Office Construction Starts1 (since 2000) # of Projects Sq. Ft. (projects with 50,000+ sq. ft. of office)Completed 207 45,198,447 in 2001 27 6,331,725 in 2002 23 3,013,280 in 2003 19 2,769,592 in 2004 12 3,201,153 in 2005 17 3,622,716 in 2006 25 5,903,380 16 16 in 2007 16 4,276,463 in 2008 21 3,261,473 14 13 13 in 2009 23 6,033,060 12 in 2010 10 3,408,455 in 2011 10 2,442,869 12 in 2012 (YTD) 4 934,281 11 8 8Under Construction 29 6,324,827 2012 delivery 8 1,144,560 2013 delivery 19 4,440,249 2014+ delivery 2 740,018Pipeline 113 47,606,849 4 Near Term 15 2,403,834 3 3 Medium Term 23 4,921,621 Long Term 75 40,281,394 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Total 349 99,130,123 (YTD)Office Deliveries (sq. ft. in millions) Government Completed  Government Under Construction  Private Completed  Private Under Construction 6.3 6.0 5.9 0.4 2.3 1.5 11-year Annual Average 4.0 million sq. ft. 4.4 4.3 0.6 3.6 3.4 2.1 3.3 3.2 3.0 2.8 5.6 0.7 2.4 1.2 1.2 4.4 2.1 4.1 1.2 3.6 3.7 0.6 3.0 2.7 2.8 0.5 2.3 2.0 2.1 1.3 0.5 0.3 0.4 0.3 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 20131 201411. projects with 50,000+ sq. ft. of private office space 2. projections based on targeted delivery dates of projects under construction as of August 2012 DC Development Report 2012/2013 Edition 21
  21. 21. A Capitol Sub-Section Ideal. Forward-thinking design. A strategic location. 440 First Street, NW puts you ahead in every way. 141,000 SF, delivering Summer 2013 Pursuing LEED® Platinum certification Amenities include fitness center and rooftop terrace Retail and restaurant space on ground floor Near Union Station and Judiciary Square Metro station Visit 440First.com or call 202.783.8200 for more information. FPO_Corp_DC_440_PromotionAd_48667.indd 1 10/26/12 11:24 AM Holland & Knight is proud to support the Washington, DC Economic Partnership. We provide comprehensive advice on legal issues surrounding the building, development, managing, financing and leasing of projects around the city and nation. Our firm is dedicated to achieving your vision and goals. www.hklaw.com Neil Albert | Janis Schiff | Washington, DC | 202.955.3000 Copyright © 2012 Holland & Knight LLP All Rights Reserved22 © 2012 Washington, DC Economic Partnership
  22. 22. Office Development Development PipelineTop Office Projects Completed (2011 – August 2012)Project Ward Location Developer(s) Sq. Ft. Est. Value1 ($M) DeliverySquare 54 2 2200 Pennsylvania Ave., NW Boston Properties 439,798 $213 2011Supreme Court Modernization 6 Supreme Court Architect of the Capitol 414,289 $76 20111015 Half Street 6 1015 Half St., SE Douglas Wilson Companies 380,000 $180 2011Mary E. Switzer Building (Phase II) 6 330 C St., SW GSA 329,000 $62 2011Eisenhower Executive Office Building 17th St. & Pennsylvania Ave., 2 GSA 213,540 $198 2011(Phase III) NWDepartment of the Interior (Phase V) 2 1849 C St., NW GSA 200,000 $58 2011733 10th & G 2 733 10th St., NW Skanska/PN Hoffman 165,092 $85 20111000 Connecticut Avenue 2 1000 Connecticut Ave., NW Connecticut & K Street Assoc. LLC 370,170 $180 2012Forensics Lab 6 401 E St., SW Department of General Services 287,000 $215 2012U.S. Department of Commerce - 14th St. & Constitution Ave., 2 GSA 242,961 $118 2012Herbert Hoover Building (Phase II) NWTop Office Projects Under ConstructionProject Ward Location Developer(s) Sq. Ft. Est. Value1 ($M) DeliveryHarry S. Truman Building 2 2201 C St., NW GSA 270,000 $38 2012200 Eye Street 6 200 I St., SE StonebridgeCarras LLC/DGS 330,000 $86 2012U.S. Coast Guard 2701 Martin Luther King 8 GSA 1,179,550 $950 2013Headquarters Building Ave., SECityCenterDC 2 9th, 10th, 11th, H, & I Sts., NW Hines/Archstone/The First Investor 515,000 $700 2013Federal Office Building 8 2 200 C St., SW GSA 464,402 $129 2013GSA Headquarters (Phase I) 2 1800 F St., NW GSA 387,824 $161 2013 StonebridgeCarras LLC/3 Constitution Square 6 155 N St., NE 344,000 $140 2013 Walton Street Capital1111 North Capitol Street 6 1111 North Capitol St., NE Boston Properties/NPR 330,000 $115 2013Association of American Medical 6 655 K St., NW Hines 273,200 $115 2014CollegesLafayette Building 2 811 Vermont Ave., NW GSA 466,818 $164 2017Top Office Projects Pipeline (near term)Project Ward Location Developer(s) Sq. Ft. Est. Value1 ($M) Delivery2Akridge at Half Street 6 25 M St. & 1201 Half St., SE Akridge 370,000 $330 20142001 M Street 2 2001 M St., NW Brookfield Properties 285,000 20141200 17th Street 2 1200 17th St., NW Akridge 162,000 $110 2014900 G Street 2 900 G St., NW MRP Realty/ASB Real Estate 103,500 $65 2014Gallery Tower 2 627-631 H St., NW Monument Realty 72,000 $42 20141525 Fourteen 2 1525 14th St., NW Furioso Development 38,400 $11 20141728 14th Street 2 1728 14th St., NW Perseus Realty 14,534 20141442 Pennsylvania Avenue 6 1442 Pennsylvania Ave., SE Douglas Development Corporation 2014601 Massachusetts Avenue 6 601 Massachusetts Ave., NW Boston Properties 430,000 $150 2015 Donohoe Companies/Holland1111 New Jersey Avenue 6 1111 New Jersey Sve., SE 201,400 $50 2015 Development Group LLC1. may include non-office components   2. delivery date may reflect phase I delivery or final phase delivery DC Development Report 2012/2013 Edition 23
  23. 23. Office Development Development Highlights 1000 Connecticut Avenue 1111 North Capitol Street Location: 1000 Connecticut Avenue, NW  Ward: 2 Location: 1111 North Capitol Street, NE  Ward: 6 Developer(s): Connecticut & K Street Associates LLC Developer(s): Boston Properties/National Public Radio Architect(s): WDG Architecture PLLC/Pei Cobb Freed & Partners Architect(s): Hickok Cole Architects Contractor(s): Clark Construction Group LLC Contractor(s): Balfour Beatty Construction LEED: Platinum  Estimated Cost: $180 million LEED: Gold  Estimated Cost: $115 million Status: Completed  Targeted Delivery: 2012 Status: Under Construction  Targeted Delivery: 1Q 2013 Specs: 1000 Connecticut Avenue is a 12-story, 384,000 sq. ft. office Specs: NPR’s new 330,000 sq. ft. headquarters will feature a theater/ building offering approximately 13,830 sq. ft. of retail space. The production venue, open-concept newsroom and incorporate the building delivered in 2Q 2012 and Arent Fox LLP will occupy 236,000 sq. historic Chesapeake & Potomac Telephone Co. warehouse. ft. of space in 2013. Image courtesy of CoStar Image courtesy of CoStar 1700 New York Avenue 440 1st Street Location: 1700 New York Avenue, NW  Ward: 2 Location: 440 1st Street, NW  Ward: 6 Developer(s): Carr Development Developer(s): First Potomac Realty Trust Architect(s): SmithGroupJJR Architect(s): Fox Architects Contractor(s): Balfour Beatty Construction Contractor(s): Sigal Construction Corporation LEED: Gold  Estimated Cost: $80 million LEED: Platinum  Estimated Cost: $40 million Status: Under Construction  Targeted Delivery: 3Q 2013 Status: Under Construction  Targeted Delivery: 2Q 2013 Specs: Carr entered into a long-term ground lease with the Corcoran Specs: The former Class-B, 105,000 sq. ft. building is undergoing a gut Gallery of Art and will build an eight-story, 124,000 sq. ft. office rehabilitation with the addition of two stories. Once completed the building. Sullivan & Cromwell will lease about 58,000 sq. ft. of office Class-A building will offer 140,000 sq. ft. of space in 10 stories. space.24 © 2012 Washington, DC Economic Partnership
  24. 24. Office Development Development HIghlightsImage courtesy of CoStar Image courtesy of KCCT 900 G Street Location: 900 G Street, NW  Ward: 2 Developer(s): MRP Realty/ASB Real Estate Architect(s): Gensler Contractor(s): James G Davis Construction Corporation paho knowledge center LEED: Gold  Estimated Cost: $65 million Location: 525 23rd Street, NW Status: Near Term  Targeted Delivery: 2014 Specs: The 93,553 sq. ft. YWCA building at the corner of 9th & G Client(s): Pan American Health Organization Streets, NW will be demolished and replaced by a nine-story, 110,000 Architect(s): Karn Charuhas Chapman & Twohey sq. ft. office building with 6,500 sq. ft. of retail space. Contractor(s): Monarc Construction Inc. Green Elements: This interior renovation optimizing energy performance through lighting & thermal comfort controls, HVAC, and energy star equipment. Low-emittingImage courtesy of the AAMC materials such as adhesives, sealants, paint, flooring, and composite wood were used as well as recycled materials such as carpeting, fabric wall covering and upholstery. Status: Completed  Delivery: Design-Bid-Build The interior renovation of the former library at PAHO’s Headquarters transformed the original circular space into a new universally accessible Knowledge Center. The design integrates the distinctive circular geometry of the building into three functional areas arranged in concentric rings: conference rooms at the center; support spaces including a library, built-in workstations, and private offices in the middle ring; and ancillary spaces in the outer-most ring. State-of-the-art audio-visual and video- Association of American Medical Colleges teleconferencing technology has been incorporated to facilitate Location: 655 K Street, NW  Ward: 6 emergency communications worldwide. The existing curved Developer(s): Hines Architect(s): Shalom Baranes Associates marble walls, new curved acoustical natural maple walls, new glass Contractor(s): Clark Construction Group LLC walls and curved acoustical wood ceiling clouds define the spaces LEED: Gold  Estimated Cost: $115 million by combining elegance with functionality. Additional acoustical Status: Under Construction  Targeted Delivery: 1Q 2014 quality is achieved with the use of acoustical fabric-finished wall Specs: The AAMC’s new 290,000 sq. ft. headquarters, located at the panels in the conference spaces and acoustical plaster ceilings intersecrtion of 7th, K & New York Avenue, will include 14,300 sq. ft. of throughout the Center. retail space. AAMC will move into the new building in mid-2014. Learn More about PAHO Knowledge Center DC Development Report 2012/2013 Edition 25
  25. 25. Office Development Development Highlights Image courtesy of Stonebridge Carras LLC 3 Constitution Square Forensics Lab Location: 155 N Street, NE  Ward: 6 Location: 401 E Street, SW  Ward: 6 Developer(s): StonebridgeCarras LLC/Walton Street Capital Developer(s): Department of General Services Architect(s): HOK Architect(s): HOK Contractor(s): Clark Construction Group LLC Contractor(s): Whiting-Turner Contracting Company LEED: Platinum  Estimated Cost: $140 million LEED: Gold  Estimated Cost: $215 million Status: Under Construction  Targeted Delivery: 3Q 2012 Status: Completed  Targeted Delivery: 3Q 2012 Specs: 3 Constitution Square is a 355,000 sq. ft. office building with Specs: The new 287,000 sq. ft. Forensics Lab combines police forensics, 11,000 sq. ft. of retail space. This project is part of Constitution Square, public health, a medical examiner’s office and drug-testing services. It is a seven-acre, 2.6 million sq. ft. mixed-use development site. expected to eventually employ more than 500 people. Image couresty of Monument Realty Image courtesy of CoStar Gallery Tower Progression Place Location: 627 - 631 H Street, NW  Ward: 2 Location: 1805 7th Street, NW  Ward: 1 Developer(s): Monument Realty Developer(s): Four Points/Ellis Development Group/Jarvis Company Architect(s): Cunningham|Quill Architects PLLC Architect(s): Devrouax & Purnell Architects/Eric Colbert & Associates Estimated Cost: $42 million Contractor(s): James G Davis Construction Corp./Gilford Corp. Status: Near Term  Targeted Delivery: 2014 LEED: Silver  Estimated Cost: $140 million Specs: Plans call for a 82,500 sq. ft. building with 72,000 sq. ft. of Status: Under Construction  Targeted Delivery: 4Q 2012–4Q 2013 office space and 10,500 sq. ft. of retail space (on two floors). If Specs: The new 50,000 sq. ft. United Negro College Fund HQ will be adjacent parcels can be purchased the project could expand to part of a mixed-use project containing 110,000 sq. ft. of office space, 450,000 sq. ft. of development with retail, office and residential uses. 19,200 sq. ft. of retail space and 205 apartments (7th Flats).26 © 2012 Washington, DC Economic Partnership
  26. 26. Office Development development Highlights Image courtesy of Trammell Crow CompanyImage courtesy of Shalom Baranes Associates Square 450 Sentinel Square (Phase II) Location: 655 New York Avenue, NW  Ward: 6 Location: 1050 1st Street, NE  Ward: 6 Developer(s): Douglas Development Corporation Developer(s): Trammell Crow Company Architect(s): Shalom Baranes Associates Architect(s): SmithGroupJJR Status: Long Term  Targeted Delivery: 2016 (ph I) Contractor(s): Clark Construction Group LLC Specs: Initial plans for Phase I (Square 450 West) call for 367,000 sq. ft. LEED: Silver  Estimated Cost: $105 million of office space with about 68,000 sq. ft. of retail space. Phase II (Square Status: Under Construction  Targeted Delivery: 4Q 2013 450 East) could be a 260,000 sq. ft. office building with 25,000 sq. ft. of Specs: Sentinel Square’s four phases will eventually be able to retail space. accommodate 1.3 million sq. ft. Phase II will be a 12-story, 278,817 sq. ft. Class-A office building, with 13,337 sq. ft. of retail space that will deliver in late 2013 or early 2014. DOUGLAS DEVELOPMENT CORPORATION enhancing communities & creating dynamic places since 1985 LEARN MORE about Douglas Development & its future projects DC Development Report 2012/2013 Edition 27
  27. 27. Office Development Development Highlights Visualization by Interface Multimedia Image courtesy of Property Group Partners Capitol Crossing U.S Coast Guard HQ Location: I-395 at 3rd, E & Massachusetts Avenue, NW  Ward: 2 Location: 2701 Martin Luther King Avenue, SE  Ward: 8 Developer(s): Property Group Partners/Center Place Holdings Developer(s): GSA Architect(s): Kevin Roche John Dinkeloo & Associates/SOM/Kohn Architect(s): HOK/WDG Architecture/Perkins + Will Pedersen Fox & Associates Contractor(s): Clark Construction Group LLC LEED: Platinum  Estimated Cost: $1.3 billion LEED: Gold  Estimated Cost: $950 million Status: Long Term  Targeted Delivery: 2016 (ph I) Status: Under Construction  Targeted Delivery: 2Q 2013 Specs: Capitol Crossing will be a 2.2 million sq. ft., three-block, mixed- Specs: The new 1.2 million sq. ft. office building for the 4,400-employee use development that will be built on a platform above I-395. Full build- U.S Coast Guard is located on the 176-acre West Campus of Saint out will include 2.0 million sq. ft. of office space, 63,000 sq. ft. of retail Elizabeths. space and 150 residential units. DELTA ASSOCIATES Photo by Freddie Lieberman Photography Leading advisor and information provider to the Washington-area commercial real estate industry APARTMENTS | CONDOMINIUMS | OFFICE 815 Connecticut Avenue RETAIL | MIXED-USE Market Studies | Repositioning Analyses | Asset Valuations Location: 815 Connecticut Avenue, NW  Ward: 2 Services Include: Feasibility Studies | Litigation Support | Market Data Developer(s): Alecta Real Estate Investment LLC Architect(s): VOA Associates Contractor(s): Forrester Construction Company CONSULTING AND ADVISORY SERVICES Greg.Leisch@DeltaAssociates.com LEED: Gold  Estimated Cost: $36 million Gregory H. Leisch, CRE, Chief Executive Status: Under Construction  Targeted Delivery: 4Q 2012 MARKET PUBLICATIONS GROUP Alexander.Paul@DeltaAssociates.com Specs: The renovation of the 212,000 sq. ft. existing building includes Alexander (Sandy) Paul, CRE, National Research Director a new façade, the addition of a roof terrace, extension of the 11th and www.DeltaAssociates.com | 703.836.5700 12th floors and renovation to all core spaces on all floors.28 © 2012 Washington, DC Economic Partnership
  28. 28. 1Retail Development development Description
  29. 29. Retail Development DC Retail Market Snapshot Retail & Retaurant Sales1 $10.0B Population Growth (2010–2011) 2 2.7% Retail SF Under Construction 3 1.16M SF Grocery Stores Under Construction4 9 Retail development in DC has been on the upswing since 2009, when retail deliveries hit the second lowest level since 2001 at 266,000 square feet. Looking forward, it is expected that DC will see retail deliveries in excess of 400,000 square feet in both 2013 and 2014. Rhode Island Row with its 70,000 square feet of retail and restaurant space was the largest retail project to deliver this year through August 2012. At the time of publication the project had leases with various retailers such as CVS, Chipotle and Carolina Kitchen. By the end of 2012 it is expected that a total of 428,000 square feet of retail space will have come on line. Most notably will be the new 154,000-square-foot Costco, set to open in November 2012 at The Shops at Dakota Crossing and The Boilermarker Shops (Buzz Bakery, Huey’s 24/7 Diner, Bluejacket Brewery, Willie’s Brew & ‘Cue Sports Bar) in Capitol Riverfront. While food users such as restaurants and grocery stores have been the main driver of retail leases, several apparel retailers opened or announced expansion plans in 2012. In Georgetown, Nike opened a 29,000 square foot superstore (one of nine in the U.S.) and the Shops at Georgetown will be anchored by a new T.J. Maxx and HomeGoods (occupying a total of 47,800 square feet) with J. Crew expanding from 8,000 to 14,000 square feet.5 J. Crew also opened an 8,625 square foot store in Downtown DC in August and Charles Tyrwhitt opened its first DC store in the Golden Triangle in April. H&M also announced plans to open a 21,700 square foot store at the newly renovated Chevy Chase Pavilion. This uptick in retail development can be contributed to several factors, 1. Retailers are looking to expand into urban markets 2. DC’s population has increased nearly 43,600 residents since 20076 3. New retail projects bring modern retail space to the market 4. DC’s economy and buying power remains one of the strongest in the U.S. 5. There is significant market demand for retail in DC. DC’s ratio of shopping center square feet per person is 8.2, while the DC metro area averages 27.87. Grocery stores have recognized these trends for the past decade as 16 new grocery stores have opened in DC since 2000 with another nine under construction. Once dominated by Giant and Safeway, new grocers such as Whole Foods, Trader Joe’s, Harris Teeter and Aldi have expanded into DC. Over the next two years, DC will welcome new stores from Giant, Safeway, Trader Joe’s, Harris Teeter, Walmart, Sav-A-Lot and Costco. 1.  CFO, Budget & Financial Plan (FY 2010)  2. Census (April 2010 – July 2011)  3. WDCEP (8/2012)  4. WDCEP (3Q 2012)  5. Washington Business Journal (9/24/12)  6. Census (2007-2011)  7. Delta Associates (Washington Area Retail Outlook, 3Q 2012)30 © 2012 Washington, DC Economic Partnership
  30. 30. Retail Development Development OverviewRetail Development (August 2012) 261 Retail Construction Starts (since 2000) # of Projects Sq. Ft.Completed 232 4,523,952 27 27 in 2001 18 226,178 26 in 2002 22 311,800 in 2003 19 347,229 in 2004 22 369,208 in 2005 25 706,923 23 22 22 23 in 2006 24 294,862 in 2007 22 378,658 20 20 in 2008 22 867,131 in 2009 27 265,943 in 2010 10 330,700 18 in 2011 11 312,345 in 2012 (YTD) 10 112,975 15Under Construction 46 1,162,038 2012 delivery 14 315,082 2013 delivery 19 434,220 11 2014 delivery 11 399,736 2015+ delivery 2 13,000Pipeline 179 7,733,925 7 Near Term 44 1,788,372 Medium Term 49 1,065,075 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (YTD) Long Term 86 4,880,478Total 457 13,419,915Retail Deliveries (sq. ft. in thousands) Completed  Under Construction 867 707 11-year Annual Average 428 434 400,998 sq. ft. 400 369 379 347 331 312 312 295 266 315 226 113 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20121 20131 201411. projections based on targeted delivery dates of projects under construction as of August 2012 DC Development Report 2012/2013 Edition 31
  31. 31. the new element of style. Delivering november 2013 • citymarketato.com Roadside Development salutes the Washington, DC Economic Partnership for its continued success in attracting new businesses and opportunities to our nation’s capital. Rapp AD V2.pdf 1 10/18/12 1:50 PM When you think RETAIL, think Rappaport Retail Leasing • Tenant Representation Property Management • Construction Management Consulting & Receivership Services C Development • Marketing M Retail Real Estate Experts Since 1984 How can we work together? YCMMY Henry Fonvielle, PresidentCY 571-382-1220 • Hfonvielle@rappaportco.comCMY K 32 © 2012 Washington, DC Economic Partnership

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