Office Development in the Triangle

This week I hope to drill down deeper on some of the issues we recently chatted with MVT CID Bill McLeod about earlier this month. McLeod is limited in comments he can make about land use. Our readership is not bound by such requirements.

We asked McLeod about the prospects for office development in the Triangle. Office development is needed to come closer to realizing the vision of a vibrant mixed use community that has active streetscapes 18 hours a day. Yet we have yet to have any of the planned office developments from WilkesMount Vernon Place or Steuart Investment’s Square 483 breakground. Elsewhere around the city in NoMa and the Capitol Riverfront continue to move forward with office projects and land major tenants even in the market slowdown.

Artomatic 2008 at Capitol Plaza I

Capitol Plaza I office building in NoMA. Host of Artomatic;
image from Mr. T in DC

The Triangle clearly has locational advantages over other emerging office markets including proximity to all 5 metro lines and I-395. What are people’s theories on the complete absence of progress? Do Steuart and Wilkes lack the same access to equity as developers (Akridge, Lerner, J Street, etc) in the other emerging office markets? Are MVT developers waiting for the residential projects to bear the burden of boosting the safety and vibrancy of the neighborhood? Is tenant demand simply higher in the other emerging markets because they will charge $15/sf less for Class A office space than the Downtown BID and MVT developers hope to charge downtown rents.

If Mount Vernon Triangle office developments will charge the same premium rents as downtown what kinds of tenants can we expect? Does that limit the playing field to law firms, finance and the like? Will the General Services Administration continue to steer government agencies like ATF, DOJ and DOT away from downtown?

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Comments

  1. 1

    Anonymous says

    Maybe it’s the remaining spottiness of the neighborhood that is holding back development — i.e. no one wants to build a brand new office building next to a hangout for transvestite prostitutes — however, that seems unlikely to be the case.

    In any event, I doubt the vacancy of the new 455 Mass building is very encouraging to developers. Any update on potential tenants in that building?

  2. 2

    fourthandeye says

    @anon 12:51
    I don’t think it’s the prostitutes. They are a nuisance and the community needs to work to solve the problems they pose. But if people are willing to buy condos and live here 24/7 despite the “spottiness” of the neighborhood I don’t think that potential office tenants are deterred. Afterall it’s not like NoMa and the Capitol Riverfront are completely devoid of crime.

    The issue is almost certainly related to $$$ in some way shape or form.

  3. 3

    tig says

    Suggest it's money. I'd guess Steuart & Wilkes got in quite a while ago at a much lower basis than today's prices. So their carry is less, and they can afford to find the right time.

    Additionally, JBG, Akridge, etc. are fee developers – they make most of their money off development fees. And if they bought into, say, NoMa later, they're doubly incentivized to get something, anything built to minimize their carry.