Obama On Real Estate.

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Barry Elliott
6 years ago
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1 Page 1 of 9 If you don't see images, click here to view Story Ideas. Events To ensure delivery, please add newsletter@bisnow.com to your address book, learn how Obama On Real Estate February 13, 2013 While the Prez didn't mention cap rates or FARs last night (shocking, we know), two of his main points might have big CRE implications for DC. JLL government leasing guru Lucy Kitchin tells us there were two big takeaways for local real estate: a push for cybersecurity and immigration reform. She says if new bills are passed for either initiative, much of the work of implementing those policies would be carried out in the DC region, signaling an opportunity for growth in GSA leasing. (To meet the demands of cybersecurity experts, we'll need dozens of more movie theaters for all of the Lord of the Rings marathons.) Lucy says a bigger focus on cybersecurity could mean lots of leasing activity near Fort Meade and Fort Belvoir.

Page 2 of 9 Lucy (snapped this morning) adds the high number of returning service members at the forts may create a need for new office development inside and outside those

Elsewhere in the government leasing sector, she says some big GSA leases are coming due this year (including within Homeland Security and other groups formed following

But like in 2012, the government is likely to continue triggering short-term extensions instead of new leases, she points out.

2 Page 2 of 9 Lucy (snapped this morning) adds the high number of returning service members at the forts may create a need for new office development inside and outside those areas. Elsewhere in the government leasing sector, she says some big GSA leases are coming due this year (including within Homeland Security and other groups formed following 9/11), which should create an uptick in activity. But like in 2012, the government is likely to continue triggering short-term extensions instead of new leases, she points out. As for those pesky budget negotiations between Obama and Congress? Unfortunately, Lucy says not much growth will occur until something's passed, which she hopes is this summer. "The public doesn't have an appetite for more kicking the can down the road," she says, adding that since there's more pressure than ever on lawmakers, action may be looming. Believe it or not, come summer, Speaker Boehner may be even more excited than the time he got his pic in The Scene Bisnow last November. Square 75 Moves Forward

Page 3 of 9 GWU's 250k SF Square 75 office project on Pennsylvania Avenue is taking the next

the school. She says the project won approval from the DC Zoning Commission on Jan.

Maureen says the project's design and amenities package (rendered above) ultimately won the

3 Page 3 of 9 GWU's 250k SF Square 75 office project on Pennsylvania Avenue is taking the next steps toward groundbreaking, according to Goulston & Storrs' Maureen Dwyer, who's representing the school. She says the project won approval from the DC Zoning Commission on Jan. 14, and next it'll put out an RFP this summer to developers for a ground lease; groundbreaking is possible for Q1 next year. GWU plans to ground lease it to a developer who'll then lease it out. Maureen says the project's design and amenities package (rendered above) ultimately won the zoning commission over. As part of the development, the school will turn three F Street townhouses into affordable housing a rare opportunity in an urban setting to provide freestanding affordable homes for families.

Page 4 of 9 GWU SVP Alicia Knight (snapped this morning) tells us the school is always looking to use real estate investments to fund its academic mission, and one can see that in the school's

tenant in investment buildings," instead opting for the success they've had in leasing them to third-party tenants. CMBS Back in Style?

4 Page 4 of 9 GWU SVP Alicia Knight (snapped this morning) tells us the school is always looking to use real estate investments to fund its academic mission, and one can see that in the school's under-construction Science & Engineering Hall; ground rents collected from its Square 54 project (also known as Boston Properties' 2200 Penn) have partially funded the building, a $275M project (seen in those cranes behind her). And though real estate development is a major part of GWU's future, it doesn't necessarily need to be in those shiny new buildings, as Alicia says the school "has historically not been an anchor tenant in investment buildings," instead opting for the success they've had in leasing them to third-party tenants. CMBS Back in Style? According to Trepp's Joe McBride, 2013 could be the year of CMBS. Joe told us this morning the industry expects $65B to $100B in new CMBS issuance this year, up from a previous projection of $50B to $80B. Most of those new loans will be used on the refinance side (and help absorb the threat of default), though CMBS will also play a large role in acquisition debt. Locally, Joe says DC is below the national loan delinquency rate (our 7.5% to its 9.6%), and that he sees that number continuing to fall. Apartments Contribute $5.3B Don't count out those apartment builders. According to research from GMU economist Steve Fuller (whom we snapped last month at a CREW event), DC apartment construction contributed $5.3B to the local economy in 2011, the most recent year data was available. The

Page 5 of 9 findings, released as part of a National Multi Housing Council/National Apartment Association study, also say that 43,000 jobs related to the industry were created in 2011.

) This Morning in New York This morning, over 250 folks joined us for our annual New York hotel investment conference at The Roosevelt in Manhattan.

Dan also says that in the past 75 days, three major NYC hotels (Beekman Tower, Flatotel, and Eastgate Tower) have traded to new owners, who plan to convert the assets into alternative uses

5 Page 5 of 9 findings, released as part of a National Multi Housing Council/National Apartment Association study, also say that 43,000 jobs related to the industry were created in (Though most of those were just extra walkway shovelers hired just in case Snowmageddon came back for more.) This Morning in New York This morning, over 250 folks joined us for our annual New York hotel investment conference at The Roosevelt in Manhattan. Hotel guru Dan Lesser, who moderated, said the NY hotel market is red hot in spite of all the new supply that has come on line there. Dan also says that in the past 75 days, three major NYC hotels (Beekman Tower, Flatotel, and Eastgate Tower) have traded to new owners, who plan to convert the assets into alternative uses including condos, apartments, and corporate housing. We snapped this in Central Park this afternoon of the building that's all the buzz in the Big Apple: the 1,050 ft. One Fifty Seven (at 157 W. 57th St.), a $1.5B hotel and condo development by Extell. The height limit in New York doesn't start until 58th Street, so they're taking advantage of it to offer astonishing unobstructed views of Central Park.

and one has set the record in NYC at $90M (no typo).

6 Page 6 of 9 The buzz comes not just from the stark prominence of the new building, but the fact that 70% of the condos have already been sold, and one has set the record in NYC at $90M (no typo). What was your biggest takeaway from the State of the Union speech? Tell chris.baird@bisnow.com

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