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Introduction
This is a special episode to review the highlights of the 2022 episodes of Icons of DC Area Real Estate. Rameez Munawar of Jamestown Investments, who has helped me with several postscripts in the past year, will be my companion on this review. We have filtered the review through six themes, which are highlighted below. The episodes will be linked accordingly for reference.
Themes
1. The Clear Trend Away From Traditional Office and Retail Toward Residential Mixed Use
- Don Wood, CEO, Federal Realty (5:15)
- Speech in 2012- “Let’s milk this until it is gone” in reference to “dying malls” and other retail that is failing
- “Best product gets repurposed and redeveloped”
- “No commodity. It’s got to be special”
- Rameez emphasizes these points and references Georgetown Park, Jamestown’s latest iteration of the property with a placemaking strategy to convert the “mall” into a mixed use property. The property will go through its 3rd iteration since its development in the 1980s as a mall. (7:15)
- Paul McDermott, CEO, Elme Communities (was WashREIT) (9:30)
- Research told him that multifamily was the product type for concentration beginning in 2013
- Conversion of the company from predominately commercial (office and retail) into a multifamily REIT- Sale in 2021 of both its office and retail portfolios in two bulk transactions
- Rameez cites that now is the industry’s fight or flight moment regarding office buildings (12:30)
- Unique moment in time regarding portfolio management to decide how to proceed
- Donna Shafer, Managing Director, Cityline Partners (13:45)
- Transition of suburban office park into several large residential mixed use properties and a hotel
- Discussion of Scotts Run Stream Valley Park being a natural feature to the land development plan
- Capital One mixed use project across the way allows them the opportunity to build complementary residential and mixed use to this project
- Tysons is transitioning to a mixed use environment, but not yet walkable, however, is progressing (17:45)
- Rameez cites geographical advantage of Tysons and other 1st tier suburbs as being closer to commuters than the CBD (18:45)
- Vicki Davis, Managing Partner, Urban Atlantic (20:00)
- Developing transformational mixed use projects with a variety of uses- residential, entertainment, and retail
- Parks at Walter Reed an example of transition from an institutional military use into a quality residential and mixed use development
- Synergies of place and the correct mix of uses in the project
- Chuck Watters, Regional Head, Hines (22:00)
- Hines was known as an office developer, yet they readapt themselves to address market trends
- Refocusing now on residential, industrial, and land development
- Transformation of office for unique uses
- Hines is one of the largest developers in “mass timber” and Rameez discusses this trend and it is a new work environment potential (24:00)
- Master planned communities are most successful- Reston Town Center, The Boro, and Parks at Walter Reed- planned streets and uses provide community feeling
- Moina Banerjee, CFO, JBG Smith (26:20)
- Before the merger with Vornado, JBG was 70% office building assets. Now moving toward 50% residential uses
- JBG Smith is only developing office for Amazon on a fee basis where Amazon buys the land and hires them to develop the buildings
- They are selling office buildings
- Anthony Lanier, President, Eastbanc (28:30)
- Pivoted on leasing retail during pandemic- leased over 500,000 s.f. of office and retail during the pandemic, but recognizes that urban centers will struggle
- Rameez compares Georgetown to 14th St, NW, and H St. NE. CBD has not leased as well
- Rise in direct to consumer brands instead of internet only- growing list of in place retailers and Georgetown is the market where they want to come
- Mixed use environments are key going forward…doesn’t see the CBD adapting to the needs for the market as yet.
- Eastbanc has been active in bringing mixed use to the CBD
- Discussion of office to residential conversion, either incentivized or not
2. The Emphasis on “Community” As The Important Drivers For Development and Activation of Real Estate
- Adrian Washington, CEO, Neighborhood Development Co. (33:45)
- Affordable projects looking beyond the site to neighborhood enhancement
- Led the Anacostia Waterfront Commission and learned about neighborhood activation
- Benning Road area
- Buwa Binitie, CEO, Dantes Partners (35:00)
- Connections at DC Government and on the Affordable Housing Board
- Learned development from Adrian and believed in the community relationships are critical
- Rameez reinforced this thought process through his work with Jair Lynch when he was working there who had a similar community approach- attained a broad portfolio of affordable and workforce housing (35:40)
- John Falcicchio, Deputy Mayor, District of Columbia (37:40)
- Major challenges due to pandemic- create environment for people to return to Downtown DC
- Incentives for affordable housing and also investing in other retail incentives
- City has $500M commitment to affordable housing
- Chuck Bean, Managing Director, Metropolitan Washington Council of Governments (39:15)
- Bringing people back to walkable environments and engaged workplaces- community orientation
- Rameez discusses economic development initiatives and the office to residential conversion- Refers to Universal North project by the Post Brothers (40:15)
3. Innovation in All Construction and Building Activities- Energy Conservation, Building Materials, Techniques of Construction
- Yolanda Cole, Managing Partner, Hickok Cole (42:00)
- Creative design tools and an innovation studio with new software
- Roger Frechette, Principal, Interface Engineering (42:20)
- New technologies for energy conservation and reclamation- American Geophysical Union Building only Net Zero Building yet
- Rameez discussed Biomimicry- incorporate biology in buildings (43:40)
- Jim Davis, Davis Construction (44:20)
- New materials and techniques
- Drones for monitoring
- QR Code for project timeline updated daily for subcontractors
- Carbon Cure concrete & basalt rebar
- Rameez quotes a story about construction that tells him that new innovation is more important today than ever. (46:45)
- Citation of the differences between engineering types- analogous to the human body systems
4. Importance of Bringing People Together For Training, Collaboration and Innovation
- Ron Gart, Partner, Seyfarth (49:00)
- Attorneys need to be together for training and mentoring
- Kyle Schoppmann, Managing Director, CBRE
- Adaptable collaborative space in their “Office 360” environment for their employees
- Advising clients around employee engagement- food and beverage and celebrations important
- Adam Ducker, CEO, RCLCO
- Discussed the uncertainty of companies today with regard to the amount of space to take, yet the flight to quality has continued.
- Cited that DC was 10 years into the redevelopment of older spaces due to sequestration accelerating bifurcation of quality and buildings that need to be redeveloped or retrofit to other uses
- Rameez discusses collaboration and why it is important to be in the office
- Proptech to help understand what will help people come back to the office
5. Adaptability to Changing Capital Markets Conditions
- Rising interest rates and inflation are creating volatility and uncertainty about valuations and “bets” on new projects
- Bryan McDonnell, Global Head of Debt Investments, PGIM (52:45)
- Diversity and adaptability to the needs in the capital markets- more nimble on where to invest
- Broader spectrum of ways to invest with different risks profiles through multiple funds
- Alex Johns, Managing Director, Grosvenor USA (54:00)
- She adapts to markets in a specific way and looks for long term viability and will change her mind toward community oriented projects
- Rameez discusses displacement from Jamestown’s perspective- new normal doesn’t feel the same and distressed opportunities look different than past downturns…the opportunity is narrower than in the past as it is demand driven (56:20)
