2011 January Newsletter

The Forecast!

On January 18, 2011 the Maryland DC Chapter of NAIOP brought together a distinguished panel of investors/owners, brokers and financial advisors who are actively engaged in the Metro Washington DC market to discuss current investment trends in the industry.  Jim Hedges of Brookfield Office Properties and Marc DeLuca of ING Clarion Partners provided an insider’s view as buyers and sellers of trophy quality commercial assets in the region.  Jim Meisel of HFF, Phillip Thomas of Cassidy Turley and Phil McCarthy of Transwestern, our leasing and investment sales brokerage experts on the panel, identified key market attributes that make the DC and Bethesda markets attractive to investors, developers and tenants. Nic Seidenberg of Eastdil shared his perspective on a strengthening capital market for real estate investment.

According to our distinguished panel, the Washington Metropolitan market outperformed other key markets in the US in the 2009 – 2010 period largely due to the influence and growth of the Federal Government.  As evidence of the strength of our market, the first investment sale to achieve $900 per square foot was recorded in December 2010 in Washington DC. The prospect of investment sales cresting $1,000 per square foot did not seem far-fetched to our panelists. 

There is optimism that there will continue to be rent growth in class A assets in Washington DC and the Maryland suburbs and class B assets may benefit, particularly in Washington DC where the potential to reposition or re-develop these assets is greatest.

The absence of new development and limited availabilities of space in submarkets such as Bethesda is leading to rental rates in the $50 per square foot range.

2011 promises to be another interesting year for our industry.

(Left to Right) Michael Smith/LCOR, Phillip Thomas/Cassidy Turley, Nicolas Seidenberg/Eastdil Secured, Jim Meisel/Holiday Fenoglio Fowler, Phil McCarthy/Transwestern, Marc DeLuca/ING Clarion Partners, Jim Hedges/Brookfield Office Properties

Did you know . . .

 1789
The oldest Catholic secondary school in the Unites States was founded Georgetown Prep in Bethesda, Maryland

Back to the Future

If you missed the 2010 Annual Member-Guest Holiday Breakfast & Meeting you missed one of the most entertaining and informative presentations of the year! Mr. Anirban Basu from the Sage Policy Group took a look back at 2010 and gave us his insight on the broader economy and real estate in the year ahead. He believes that most of 2010 was fueled by stimulus, stimulus, stimulus from the Federal Government. He also feels we have seen the worst of it from a broader economic perspective but that it is too soon to tell if broad inflation domestically or globally will be problematic. Gridlock from the election results is good for the economy to a certain extent because it will delay policy to a degree providing some increase in certainty. He felt that 2010 represented a year of moderate improvement.

So what does 2011 have in store? Mr. Basu was optimistic in terms of economic growth mostly due to the extension of the Bush Tax Cuts. His outlook was bright for the Washington Metro Area and felt that we should see an increase in office leasing as a result. In all, his thought is that 2011 should outperform 2010. For additional information Mr. Basu can be reached at abasu@sagepolicy.com or you can download the presentation by visiting the Sage Policy Group website at www.spgtrend.com.

First Potomac Realty Trust’s (left to right) John E. Sadlik – VP of Construction, Skip Dawson – EVP & COO, Kelly Crough – Leasing Representative & Jeb Boland – Leasing Representative

 

Did you know . . .

4.03 Miles
Length of the William Preston Lane Memorial – better known as The Bay Bridge joining the western part of Maryland to the eastern shore across the Chesapeake Bay

REITs: 2010's Market Leaders Look Ahead to 2011

REITs were, by far, the most active investors in the Washington, DC region in 2010.  Hear about their strategies and views of the market in 2011 and learn why REITs have emerged as dominant players in our marketplace.  A stellar panel of senior executives from DC’s largest and most prominent real estate investment trusts will share their thoughts and insight. 

Our roundtable includes;
Peter Johnston, from Boston Properties, Nicholas Smith,  First Potomac Realty Trust,  Tom Regnell, Washington Real Estate Investment Trust, and Barry Carty, Federal Realty Investment Trust, additional panelists to be added.

Register on-line and join us at the Bethesda North Marriott on February 24th for breakfast and this not to be missed event.

Did you know . . .

1844
The first telegraph line in the world was established between Washington and Baltimore

GSA – A Look Back at 2010

As if we don’t owe the government enough, a sincere thank you is warranted! The National Capital Region has continued to be at the forefront of leasing activity for GSA. Although NCR manages 9% of all of the GSA leases, the value of these leases represents 29% of the totaled square footage leased and 36 % of total annual GSA rent.  Through November 2010 (most recent statistics) NCR has:

  • GSA leased over 3.8 million ANSI BOMA Office Area (ABOA) square feet of space in the Washington Metropolitan Area.
  • Procured space in new Class A buildings in the District and Bethesda with rents over $50 psf in the District and in the upper $40’s psf in Montgomery County

Those of you participating in the Automated Advanced Acquisition Program (AAAP) should check to see if your buildings are still in cue. In October 2010, the GSA swept clean the AAAP database for a clean start. All buildings that were in the AAAP will need to be resubmitted for consideration. Why use AAAP? Take a look:

  • Since the system was automated inn April 2006, the program has entered into 123 leases for almost 3.2 million ANSI BOMA Office Area (ABOA) square feet with a total lease value of over $932 million.
  • In 2010, the AAAP entered into 26 new leases for almost 768,000 ABOA square feet with a total lease value of over $ 241 million.
  • The warehouse land flex building leasing through the AAAP was discontinued in October 2010. Future requirements will be announced in the FedBizOps. AAAP will focus on office leasing.
  • Also in October 2010, a new SFO was issued which required submissions of new AAAP offers.
  • Additional changes to the SFO were issued in December which become effective in January 2011.


ATTENTION!!! IMPORTANT CHANGES EFFECTIVE JANUARY 2011

Unlike fine wine, getting old is tough! Recent changes to the SFO will make it more difficult for less energy efficient buildings to compete for GSA leases.  GSA is mandated to enforce Energy Star ratings on buildings. With certain limited exceptions, no Federal Agency may enter into a lease for a building that has not earned an Energy Star rating in the year of the lease.  The offeror must have EPA verification of the rating by due date for final proposal revisions, which for the AAAP is at the time an offer is submitted to AAAP.  One bright light is that for buildings meeting the requirements, recent higher rental rates reflect the selection of newer more energy efficient but more costly buildings are being leased by GSA.

Did you know . . .

55,000 Square Feet
The size of the White House!

NAIOP REEL- The Real Deal

The Maryland/ DC chapter of NAIOP kicked off the REEL (Real Estate Emerging Leaders) Program in early 2007 with the help of Sally Modjeska and Frank Pinto, REEL's first chairman.  REEL is dedicated to the professional development of up-and-coming members of the real estate community age 35 and under.  Boasting networking events, outings to Nationals games, volunteer days, neighborhood spotlights, and legends breakfasts, REEL is the real deal for young professionals seeking to further their careers and expand their professional network. 

REEL's current chairman is Jamison Weinbaum, who has been a REEL member since 2007 and helped co-found the group.  Jamison is the Director of the DC Office of Zoning, and worked previously for the DC Deputy Mayor for Planning and Economic Development.  While he has a legal background and practiced law for several years, Jamison moved into development first by serving as a Development Executive at EYA, an urban infill developer based in Bethesda.  Jamison has found REEL instrumental to his advancement in real estate, and believes the organization "provides a unique opportunity to grow as a professional by spending time with other motivated people.  We focus on developing relationships, learning about the industry, and becoming more routed in our region." 

Asked what REEL-related accomplishment he is most proud of, Jamison states without hesitation, "Our Neighborhood Spotlight series, in which we gather in an emerging submarket, invite special guests who are working on projects in the area or have a special expertise related to the area, and mix and mingle in a lower-pressure environment that fosters establishing relationships, rather than a more formal panel experience."  

Jamison’s predecessor to the REEL chairman position is Mary Catherine Williams, a REEL member since 2007.  Mary Catherine, a tenant broker at UGL Services, says REEL “helped me build a fantastic network of peers and well-established industry contacts. It’s opened doors for significant professional development opportunities and allowed me more exposure to the various sides of the real estate industry.”  During her term as chairman, Mary Catherine introduced a mentorship program and began to offer educational classes.

Frank Pinto launched the REEL program for the Maryland/ DC chapter of NAIOP in 2007.  Frank currently works at  Forrester Construction Company, managing project development across all markets.  NAIOP DC/Maryland was the first chapter to build a developing leaders program and, within 1 year of its inception, had over 100 members.  Frank explained that the success of REEL sits on 3 pillars; education, networking, and mentoring.  It is this established model that all other NAIOP developing leader programs have adopted.

For more information about REEL, please click here.
 

For additional information please contact:
Tim Taylor:    ttaylor@edgecre.com
Executive Director
EDGE Commercial Government Services Advisory Group

 

 

 

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