2011 March Newsletter

The Challenge is on!

The 2011 Capital Challenge is in full swing!  Masters of Real Estate Programs at American University, (last year’s big winner!) Georgetown University, Johns Hopkins University and The University of Maryland met on April 8th to begin this year’s quest for the Challenge Cup.  Our teams will be applying their creativity and financial analysis skills to a case study of Buzzards Point, sponsored by Akridge.  Teams are working with consultant sponsors comprised of some of the best of the local commercial real estate industry.

Following a demanding judging session on April 8th teams will present a synopsis of their solutions to the public on April 14th.  This will be followed by the awarding of the Challenge Cup and scholarship and some celebratory cocktails and hors d’oeuvres.  Plan to be there!

Did you know . . .

Montgomery County
Captain John Smith of the English settlement at Jamestown was probably the first European to explore what is now Montgomery County, during his travels along the Potomac River and throughout the Chesapeake region

REIT’s:  2010’s Market Leaders Look Ahead to 2011

On February 24th NAIOP MD/DC members and their guests gathered at the N. Bethesda Conference Center to hear an esteemed panel of real estate industry leaders from the REIT sector discuss their investment strategies in this ever evolving real estate market. The REIT capital market saw active growth in 2010 despite the capital market challenges. While REITS are typically more conservative investors, they were the most active sector in 2010 and their well defined strategies over the years have rewarded them in the current market.  It was the consensus of the panel that today’s environment is a good one in which to sell but a difficult one in which to purchase quality assets, especially in the DC market where trophy quality buildings tend to be overpriced.  That being said, members of the panel share the philosophy of adding assets strategically to markets they are already in, especially in urban locations which retain more value in down times versus traditional suburban office locations with limited access to amenities and mass transportation. Panelists:  Nick Smith, First Potomac; Barry Carty, FRIT; Tom Regnell, WRIT; John Norjen, COPT; Ray Ritchey, Boston Properties; Jim Creedon, Vornado; Moderator:  David Popp, Transwestern

Left to right- Jim Creedon, Vornado, Executive Vice President ; John Norjen, Corporate Office Properties Trust, Managing Director of Investments (Dave Popp) ; Barry Carty, Federal Realty Investment Trust, Senior Director of Acquisitions;  Raymond A. Ritchey, Boston Properties, Executive Vice President and National Director of Development and Acquisitions ; Nicholas Smith,  First Potomac Realty Trust, Founder, Executive Vice President and Chief Investment Officer 

Missing from photo-Thomas Regnell, Washington Real Estate Investment Trust, Senior Vice President of Acquisitions

Wegmans is coming! Wegmans is coming!

One of the top 100 companies to work for is coming to
Montgomery County - #3 to be exact.

Minkoff Development Corporation, a third generation, family owned business founded in 1972 has traditionally focused on the development of employment-based light industrial, flex and office properties.  With Wegmans Food Markets as an anchor tenant, Minkoff is currently developing an attractive, 21-acre mixed-use project that will consist of 240,000sf of space including the grocery store, several restaurants, general office space and other retail uses.  The Shops at Seneca Meadows will be located on the north end of Seneca Meadows Corporate Center, which contains approximately 156 acres of land fronting on the eastern side of Interstate 270 between MD Route 118 and Father Hurley Boulevard. Currently, there are eleven existing, low-rise, multi-function buildings in a campus type setting containing over 700,000sf of space designed to accommodate a wide variety of permitted uses including high tech, biotech, laboratory, medical, distribution, and general office.  Minkoff plans to break ground this spring with an estimated delivery of late 2012 or early 2013.  In the January 2011 edition of Fortune Magazine, Wegmans Food Markets was ranked #3 as one of the top companies to work for.  Not only are Montgomery County citizens excited to shop at Wegmans, those looking for jobs will be glad to have such a great employer as well.

Did you know . . .

The Cretaceous Era brought dinosaurs to the area which left a number of fossils, now preserved in a 7.5-acre (3.0 ha) park in Laurel.  The site has been called the most prolific in the eastern United States.

Energy Benchmarking in Washington, DC

Beginning in 2011, owners of private buildings over 200,000 sq ft are required to submit energy benchmarking results. Size requirements will become progressively smaller each year, until all private buildings over 50,000 sq ft are required to be benchmarked by the District. One of the first municipal surveys indicating energy audit results of public buildings recently released by the District indicated that many of the buildings performed below or significantly below comparable buildings nationwide. To view the results of the District’s survey or for more information on the District’s energy benchmark initiative, visit http://green.dc.gov/green/cwp/view,a,1235,q,463697.asp.

Call to Action
MAIOP Legislative Alert - Energy Star Mandate and Right of Rescission

A Maryland Senate committee is considering legislation mandating that commercial buildings obtain an Energy Star Rating and providing a right of rescission to  prospective purchasers and tenants up to 60 days after taking posession of the property.    

Senate Bill 261 mandates that commercial buildings over 10,000 square feet obtain an energy benchmark rating using the Energy Star Portfolio Manager and that prospective tenants and purchasers be presented with the building's Energy Star rating.  The bill allows tenants and purchasers to rescind leases and contracts up to 60 days after taking posession of the property.  

Click this link to read more and vote

ALERT! Legislative Affairs Committee

The Montgomery County Council is currently considering a subdivision regulation amendment that would automatically extend the APFO and preliminary plan expiration dates for all approved preliminary plans for two years.  This legislation, which has five Council sponsors and an excellent chance for adoption, is in response to the continued negative impact that the region’s economic downturn is having on development activity in Montgomery County.  The Committee testified before the Council in support of this needed legislation.  Barring some unforeseen delay, this legislation should be adopted in late March/early April.
The Montgomery County Zoning Ordinance is currently undergoing a complete rewrite.  In April, the Montgomery County Planning Board Staff and its zoning consultant are scheduled to release a draft of the proposed rewrite of all of the current commercial/retail/industrial/mixed use zones.  This draft will propose to create a series of new zones applicable to every commercial property in the County.  Every commercial property owner/developer in the County will be affected by this omnibus project.  Every commercial property in the County will be rezoned, raising multiple issues like master plan compliance and “grandfathering” of existing commercial property and commercial property that is currently being developed.  The Legislative Affairs Committee is hoping to have the Planning Board Staff in charge of this rewrite effort at its April 8th committee meeting to discuss this critical legislative effort.  Stay tuned.
For more information about either of the issues identified above, please contact the Chair of the Legislative Affairs Committee, Steve Elmendorf, at 301-961-5110 or via email at selmendorf@linowes-law.com   Better yet, become a regular attendee at the Committee meetings.  The Committee meets on the second Friday of every month at noon (lunch provided) at the law offices of Linowes and Blocher LLP, 7200 Wisconsin Avenue, Suite 800, Bethesda, MD. 20814.  The next meeting is scheduled for March 11, 2011.  Contact Sally at smodjeska@naiopmdmd.org  to have your name added to the Committee’s email list.

Did you know . . .

Lafayette Park
North of the White House, at one time was used as a racetrack, a graveyard, a zoo, a slave market and an encampment for soldiers during the War of 1812.

Watch the Progress – Coming Soon!

Last Summer, Akridge and joint venture partner Rockwood Capital took advantage of a unique opportunity, acquiring an ideally-located asset in the amenity-rich heart of Bethesda. The property at 7550 Wisconsin is an obsolete 1960s-era building that has been vacant for eight years. It requires complete rehabilitation, repositioning and lease-up. But Akridge was able to claim the 10-story, 120,000 square foot facility in a GSA auction for just $105 per square foot, easily justifying the investment needed to re-skin and renovate the asset into modern, boutique Class A office space.

This renewed trophy will emerge into a rapidly tightening submarket – most forecasts project a vacancy rate below five percent by the end of 2011. And 7550 Wisconsin, located less than a block from the Bethesda Metro station and across the street from the submarket’s only trophy building, will become the first essentially-new office building to deliver in Bethesda since 2001.

Akridge has a long history of success with the redevelopment and repositioning of assets in Washington, having created the iconic Homer Building from a historic four-story structure more than 20 years ago, and more recently turning a group of dilapidated rowhouses into the foundation of Carroll Square. The process of recreating 7550 Wisconsin is already underway, with Shalom Baranes providing design. The “before” picture can be seen below. Watch this space for the “after” vision, to be revealed soon...



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