Monday, June 22, 2015

Report on MoCo's moribund office market offers the wrong solutions

It's not news to landowners, developers or readers of this blog that Montgomery County's office space market is as moribund as its economy. But the county's Planning Board is scheduled to be briefed on the dire situation during its meeting this Thursday, June 25. An advance copy of consultant Partners for Economic Solutions tells just how bad it is, and makes recommendations of what to do next. Unfortunately, it sounds like the report's authors are mostly telling County officials what they wanted to hear.


  • Montgomery County's office vacancy rate has increased in the last year

  • 11 county office buildings are nearly or totally vacant

  • GSA could vacate 1.1 million square feet of office space in the county over the next 5 years, a devastating blow on the horizon

  • Montgomery County's share of the total jobs in the region has steadily declined over the last 10 years, during which time no major corporation relocated to the county


Some of the report's analysis and suggestions are off base. For example, one approach PES suggests is simply giving up on office space and converting it to residential. While developers and planners have already been taking that approach from Bethesda to Wheaton to Clarksburg, to continue on that path will generate a transportation disaster. Roads and Metrorail already overwhelmed by the current volume of commuters cannot handle a county where all the jobs are in DC and Virginia. Smart growth demands jobs be created, not vacated, across Montgomery County to reduce commuting distance. Instead, according to the report's data, MoCo planners and councilmembers have allowed 558,000 SF of planned office space to be canceled or converted to residential. And notes only a handful of the many planned projects and existing office spaces being converted to residential or canceled. We're literally becoming the DC area's ultimate bedroom community.

Secondly, the impact of telecommuting and shrinking office sizes are grossly overstated. The report attempts to partially blame those trends for vacant office buildings. But the same report acknowledges that the vast majority of jobs created in recent years are in retail and restaurants. You can't fold jeans or make a frappucino over the internet. There were no great numbers of private sector, high-wage jobs added in Montgomery County over the last decade. So you can't say telecommuting is the new normal when few of the new jobs can be done from home.

Thirdly, it also oversells the success of office space in high density urban areas within Montgomery County. While downtown Bethesda and Silver Spring indeed are desirable locations for employers, neither have attracted a major corporate headquarters in over a decade any more than the suburban areas of the county did. Wheaton is right on the Red Line as well, but is also a dead zone for office space.

If transit was the sole determining factor, Wheaton would be doing well. In fact, the report concedes this point on Page 40. It also notes that Wheaton and Glenmont are not convenient to I-270 and I-495, but fails to point out that two planned freeways (Rockville Freeway and Northern Parkway) that would have given both immediate access to the freeway system were canceled by the county decades ago. Whoops.

The report states - contrary to the current County Council's stated "transit-only" future, and its own final recommendations: "Subareas that can offer Metro and good roadway access within a walkable mixed-use environment will be the markets that recover most quickly."

Meanwhile, the Pike District of North Bethesda has been designed in the New Urbanism model for smart growth and walkable communities, and is on the Red Line as well. Yet it, too, has failed to attract a major corporate tenant. The only significant addition was a reshuffling of Bank of America/Merrill Lynch from Tower Oaks to Pike & Rose, which is simply rearranging the deck chairs on the Titanic. Strangely, the report claims a severe drop in the "White Flint" vacancy rate, without providing any data on what specific real estate and leasing moves account for their claim. Highly suspect.

If new urbanism and transit are so hot for employers, why is the Pike District utterly tanking for new corporate office space? Why are a gleaming new Class A office building at 4500 East-West Highway, and a revamped one at 7550 Wisconsin Avenue - both walking distance to the Bethesda Metro station, restaurants and nightlife - mostly vacant?

Finally, the report closes with a waving-the-pom-poms endorsement of the current County talking points for vibrant, walkable urban developments with transit, and infill development. That's great. But if you strip the corporate, government and government contractor jobs out of DC and Northern Virginia, guess what? They would both become ghost towns like the report claims single-use, auto-dependent suburban office parks are now in Montgomery County. All the window dressing and vibrancy in the world doesn't make a difference if you don't have any jobs or affordable housing for young professionals.

Yet the report suggest abandoning current and planned office space in places like Glenmont and the northern I-270 corridor. That suggestion is contrary to smart growth.

I'm not saying it isn't good to have great urban areas. We have them, and they are working well in many respects. But to claim that urbanizing the rest of the county is the magic solution to attracting jobs is disingenuous.

We have to look elsewhere to find the answers. The authors of the report have partially conceded this in briefly referring to road access. They've noted that more successful jurisdictions are offering better incentive packages. It costs too much to operate a company in Montgomery County and the state of Maryland. Gridlocked roads drive up the costs of labor and shipping, among other expenses. There's a reason you get charged your shipping rate by zip code - you pay more when you live in an area with congested roads.

And we need to target industries like defense and aerospace that are never going away. They happen to need the kind of larger square footage that the I-270 corridor and upcounty can provide - research labs and testing and manufacturing facilities won't fit in tiny urban footprints. The report does not even consider those types of employers, much less Fortune 500 companies, and buys into what our local elected officials and Wall Street crooks keep trying to sell the American people on - that the future is only in the "knowledge economy" and small companies. Wall Street outsourcers, Warren Buffett and China certainly are hoping you'll believe them.

Many parts of the report sound as if the writers had been briefed by County officials and politicians, rather than taking a completely detached and independent look at the situation. They should not be referring to the failed Nighttime Economy Task Force at all, much less praising its utter failure. Those apparent communications have tainted the objectivity of the report.

And nowhere does it mention one of the County's major traffic and economic development liabilities - the lack of direct access to Dulles International Airport. It's impossible to take seriously a report that doesn't talk about that at all. You know about the Nighttime Economy Task Force, but say nothing about the competitive disadvantage of lacking access to the preferred airport of international businesspeople and corporations?

Again, this suggests the research process was poisoned by political interference. "Don't you dare talk about Dulles Airport or new Potomac River bridges in this report, do you understand?"

There is a lot of valuable data in this report, but its final recommendations are too tailored to what the Montgomery County political machine and its developer patrons want to hear. A report that tells us to keep going the way we are currently going is not going to bring about change.

78 comments:

Anonymous said...

Dyer's Greatest Hits:

"MoCo's moribund office market"

"Montgomery County's office space market is as moribund as its economy"

"no major corporation relocated to the county"

"fold jeans...make a frappucino"

"Rockville Freeway and Northern Parkway"

"[T]he report suggest abandoning current and planned office space in places like...the northern I-270 corridor. That suggestion is contrary to smart growth."

"failed Nighttime Economy"

"Dulles Airport...new Potomac River bridges"

Anonymous said...

The report admits most of our new jobs are retail/restaurant...depressing reality. The vanishing middle class.

Anonymous said...

I'd love someone on the MoCo council to focus on jobs. All this talk about attracting folks to live here is meaningless without good paying jobs. Retail jobs won't pay the rent in these new buildings.

Anonymous said...

"Meanwhile, the Pike District of North Bethesda...has failed to attract a major corporate tenant. The only significant addition was a reshuffling of Bank of America/Merrill Lynch from Tower Oaks to Pike & Rose, which is simply rearranging the deck chairs on the Titanic."

First, Tower Oaks is not "Pike District". Of course the move is a net gain for the Pike District. Are the new offices larger? If so, then that's a gain for the whole County.

"Strangely, the report claims a severe drop in the 'White Flint' vacancy rate, without providing any data on what specific real estate and leasing moves account for their claim. Highly suspect."

Are you accusing the MoCo Machine of having statistical analysis skills that are as poor as your own?

Anonymous said...

Yes, Dyer, we get it - you think our 3.7% unemployment rate, below-average office vacancy rates, and growing population mean we've got a "moribund" economy. We know you think this because you have zero perspective of what other jurisdictions are dealing with. You just regurgitate the same talking points every two weeks; why not actually provide some ideas if you'd like to see something change? There's always room for improvement, so that'd be welcome. Instead, you just while like a little bitch that we're not growing as fast as VA (while at the same time being a complete NIMBY idiot about Westbard, White Flint Mall, etc.).

Anonymous said...

whine like a little bitch*

Anonymous said...

So what are the office vacancy rates for NoVa and DC? And their recent trends, upward or downward? That would make a better comparison.

Anonymous said...

"Regurgitate the same talking points every two weeks".
Wait, are we talking about Bethesda Mag or Dyer?

I usually read Bethesda Mag daily to see which group has "slammed" Hogan today. Talking about talking points..lol.

Anonymous said...

You'd prefer to see Hogan idolized like he is here?

Anonymous said...

"We're literally becoming the DC area's ultimate bedroom community."

The NIMBYs will cheer when they hear this.

Anonymous said...

So will Dyer investigate why no one wants to live in NoVa or DC?

Anonymous said...

Down with the bourgeoisie. The proletariat must rise again and take back Montgomery County. Oh look a PAUL Bakery, never mind.

Anonymous said...

Bourgeosie... Viennoiserie... same difference.

Anonymous said...

7:14am Fair game to go after Hogan, though turn down the hyperbole with all this talk of folks "slamming" him.

Now let's turn those skeptical eyes to our MoCo government as well. Plenty to investigate and question there as well. Either they're batting 1.000 or no one is covering them (except Dyer).

Anonymous said...

Extending the Purple Line to Tysons Corner would kill two birds with one stone:

1) More direct connection to the Silver Line and Dulles

2) Transit station in Westbard

Win-win!

Anonymous said...

Hogan might approve a MagLev from BWI to Westbard.

Robert Dyer said...

6:59: Unemployment rate is not an indicator of economic development. It does not indicate the jobs are within Montgomery County - and the majority are not. These employed people are living in MoCo, but working in DC or Virginia. "Montgomery County is a great place to live." Yes, and that is all we are rapidly becoming. The ultimate bedroom community.

Anonymous said...

It's too bad a successful, hyper-local journalist that provides hard-hitting news that residents seek doesn't occupy lease some office space in the county.

Anonymous said...

@ 8:06 PM -

Mom's Basement is the ultimate bedroom community.

Anonymous said...

Here's the actual data on office vacancy rates by county in the area, and it even breaks it down by area within that, direct from MWCOG:
http://www.mwcog.org/uploads/committee-documents/bV1WXl9a20150317100949.pdf

MoCo is doing slightly better than comparable large counties in VA, like Fairfax and Loudoun. Overall, it's say office vacancies roughly in-line compared to other jurisdictions in the area.. so not great, but not awful either.

I couldn't find an easy link to show jobs data, but overall Fairfax does a lot better than MoCo in terms of the number of jobs in the county. Fairfax is a good comparison because the counties are similar in size and population.

Anonymous said...

Does MoCo really have a surplus of housing over Virginia? Or a surplus of employed Virginians who prefer to live in MoCo?

Anonymous said...

You will never become anything more than a jabbering blogger, as evidenced by your continual reliance on a single adjective "moribund" to reflect your morbid, narrow-minded, narcissistic viewpoint of the MoCo economy. I would love to see your the educational portion of your resume, something that probably totals a single page (double-spaced) and maybe extends one year beyond public education. Great skills for wannabe critic. Try children s books you may find yourself.

Anonymous said...

Dyer could try to operate out of Arlington, Virginia. Worked splendidly for BethesdaNOW. Locally owned and operated indeed.

Anonymous said...

8:34am Dyer has hit a raw nerve with you? Count to 10. Breathe deeply.

Who has "slammed" Hogan today? Anyone heard yet? Continued reliance on a single verb.

Anonymous said...

@ 8:34 AM - Dyer majored in Latin American Studies. He's like Rachel Dozeal in a sombrero.

Metro1 said...

Being familiar with the Washington Area office market I felt compelled to respond to your main points:

1. "Office buildings shouldn't be converted to residential"

I agree with you somewhat on this point in terms of the additional demands on transportation infrastructure a large conversion would bring about, as well as the need to retain jobs in the county. However, there are very few buildings in the county that would fit all the physical prerequisites and make financial sense. Any impact on jobs would be negligible. Developers are simply responding to market conditions, and if the planning department were to restrict office-residential conversions, it would be overstepping their authority.

2. "Secondly, the impact of telecommuting and shrinking office sizes are grossly overstated."

This is "grossly" incorrect. It is extremely rare to find a large tenant (public or private) sign a lease for Class A space in the entire Washington Area without downsizing. GSA has been leading the charge on this front (which is why the Washington office market is lagging most others in the nation), thanks to Congressional pressures, as well as their own internal initiative to operate more efficiently. Teleworking is only a small part of the picture. Most large private tenants are downsizing as well when they sign new leases.

3. "Oversells the success of office space in high density urban areas within Montgomery County"

Office space in dense, transit-oriented environments are far outperforming space in auto-oriented suburban office parks, not just in Montgomery County, but in the entire metro area. Downtown Bethesda's vacancy rate for Class A space is far lower than that of the I-270/Rockville or I-270/Germantown/Gaithersburg corridors. Similarly in Virginia, properties in the Route 28/Dulles corridor have the highest vacancies in the region while transit-accessible properties along the new Silver Line in Tysons, Reston, and other transit-accessible markets have been performing relatively well.

Most large tenants interested in attracting young college grads are relocating to more transit-accessible areas. Even Marriott, which has been in Rockledge for decades, would like to move to a more transit-accessible location. Yes, buildings are sitting empty (although 7550 Wisconsin, which you claimed was "mostly vacant," is fully leased), but significantly more so suburban parks than in urban centers.

Anonymous said...

"7550 Wisconsin, which you claimed was 'mostly vacant,' is fully leased"

I could have gotten away with it, if not for you meddling kids!

Anonymous said...

I don't hear many comparisons between White Flint and Tysons anymore.
Remember when White Flint was being touted as the next Tysons?

Anonymous said...

No, I don't. Perhaps you could give a link to an article that made that claim?

Anonymous said...

Actually yes I would love to know the comparative data, otherwise this analysis to VA doesn't have any legs to stand on for you.

Anonymous said...

I LOL'd from my cubicle in my 1,000 employee company office in MoCo.

Anonymous said...

Aaron kraut lived on Battery Lane... So not sure where you are going with that.

Anonymous said...

Dyer, what's your solution to not having a major international airport in Montgomery County?

Anonymous said...

Westbard International Airport!

That would eliminate both the slum that is there now, and the hand-wringing over "cookie cutter concrete canyons".

Anonymous said...

Why not a tunnel under the C&O Canal & Potomac River to Dulles Airport? Extend the ICC to the Fairfax County Parkway. There are tunnels in Hampton Roads and Baltimore, so that is not such a far-fetched idea. And it would not anger Dan Snyder and the other wealthy Potomac landowners.

Anonymous said...

Why do Bethesda's Millennials need an Outer Beltway to access Dulles Airport as part of their daily commute?

Anonymous said...

6:51PM Bethesda Millennials need more good jobs in Bethesda so they don't have to commute to DC or Northern VA.

Robert Dyer said...

Metro1,

1) Was the Planning Department overstepping its authority when it previously had single-use zoning? Or conversely, in trying to prevent strip malls now?

2) I didn't say office sizes weren't shrinking. I'm simply making the point that the shrinkage factor alone isn't the reason Intelsat bailed on 4500 East-West for Tysons. Let's get to the real drivers of the problem.

3) Do you have a theory as to why office space within walking distance of Wheaton Metro station is being converted to residential, if urban areas with Metro are preferred by companies?

Regarding 7550 Wisconsin, who are the tenants that filled out the rest of the building? I haven't heard a public announcement since last June, when they had signed several tenants and had leased up to 65% of the building. Who are the new tenants? Why didn't Akridge announce the leases and the fact that they had fully leased up?

Robert Dyer said...

3:32: A new Potomac River crossing that would give us direct access to one just across the river.

Robert Dyer said...

6:51: You're claiming there are no millennials stuck in traffic today on the American Legion Bridge and I-270? You don't have much credibility with that statement. The majority of MoCo millennials work in DC or Northern Virginia.

Robert Dyer said...

4:01: I love it. Too bad your allies on the Planning Board and County Council jumped the gun and the shark with their decision on the Little Falls Parkway townhomes a few years ago. Whoops! Now neither you nor I, nor any other residents or stakeholders, get to decide the future land use of the Westbard sector's commercial/industrial space. It's residential. They decided for us. So no airport, much less corporate headquarters or parkland.

Robert Dyer said...

6:35 AM: I never said Tower Oaks was in the Pike District.

Anonymous said...

Because if they didn't announce it or send you a personal note, then it definitely didn't happen. am I right?

Anonymous said...

How much would that cost and where would that money come from?

What's the exact planned route?

What would that do to traffic? Housing? Etc.?

How much rezoning and displacement that you hate so much would have to occur for this to happen?

Anonymous said...

Why would us as residents get any say? Oh yes, we do, with our voting powers. And so far we have voted the folks in who made these decisions so what's your gripe here? That they didn't ask your permission personally?

Anonymous said...

Dyer still hasn't addressed the question of why the Millennials who work in DC or Virginia prefer to live in MoCo.

And he's still kvetching about a single tract in Westbard, that was made much nicer than it was previously. Why?

Anonymous said...

"GSA could vacate 1.1 million square feet of office space in the county over the next 5 years, a devastating blow on the horizon"

What Dyer doesn't tell you is that most of this is due to NIH and FDA employees consolidating in the main NIH campus, and in excess space NRC headquarters in White Flint. Obviously this is not good for the landlords involved, but the employees aren't leaving the county.

Also, Dyer didn't bother to mention that the office vacancy rates for mixed-use areas are barely half that of the obsolete suburban office parks.

The Chase said...

Hard to spin this one. The report validates much of Robert's reporting. Including the lack of major firms moving in, the moribund economy, McJobs, etc.

Robert Dyer said...

5:24: Millennials prefer MoCo over DC? Talk about nonsensical statements!

"Why?" Uh, because now there is a huge structure that protrudes into the green space in Little Falls Stream Valley Park, for starters. The decision also had environmental implications. The Hoyt property was perhaps the most significant of several industrial sites the supposedly "green" Parks and Planning and County Council should have been seeking to acquire as parkland and a stream buffer. Left zoned as Industrial, the price would have been affordable. Now we've got this - and more residential to come - right on the banks of the stream. Nuts.

Robert Dyer said...

8:57: It's vacant office space no matter how you spin it.

How do you explain the bad office market in Wheaton when it's mixed-use right on Metro?

Robert Dyer said...

5:11: There's no announcement of it on their site. Who are the new tenants?

Robert Dyer said...

5:12: You can get a private company to build it for free as a toll facility. Very little displacement and no rezoning. The rights-of-way are already there.

Anonymous said...

"Left zoned as Industrial, the price would have been affordable."

What does this mean? You can't build affordable housing, or any kind of housing, in land that's zoned industrial.

Your entire comment is incoherent.

Anonymous said...

Dyer: "How do you explain the bad office market in Wheaton when it's mixed-use right on Metro?"

Dyer, you're showing how blatantly uneducated you are. Wheaton has effectively zero office vacancies - a 1.3% vacancy rate - within walking distance to the metro station. If you're referencing the greater "Kensington/Wheaton" vacancy rate of 21% (still well below most NoVa submarkets) that's due to the fact the submarket is almost exclusively suburban/nowhere near a metro station. The submarket even stretches north of the ICC - that's how not "mixed-use" and "right on Metro" it is. The office space near the Wheaton metro, again, only has a 1.3% vacancy rate. It really would be nice if you were even half as educated as the commenters on this site, Dyer. As is, you honestly sound like a moron more often than not.

Anonymous said...

That Wheaton Metro vacancy rate of 1.3% is compared to 11.4% around the Bethesda metro; it's almost like you went out of your way to say something nonsensically stupid by pointing at Wheaton as being a "bad office market."

Anonymous said...

Cleveland has a lot of land set aside for industrial use. Property is affordable there.

Anonymous said...

"You can get a private company to build [the Outer Beltway and the new Potomac River crossing] for free as a toll facility. Very little displacement and no rezoning. The rights-of-way are already there."

There is no right-of-way at all between Great Seneca Highway and Virginia Route 7. A desire line on a 50-year-old map does NOT equal a "right-of-way". In fact, there was never even a final route, or location for the bridge selected. Building would involve taking an enormous amount of private land, and demolition of many existing structures.

You whine about a tiny industrial site being converted to residential instead of parkland, but you want to wipe out thousands of acres of parkland in Sligo Creek, Northwest Branch, Wheaton Regional Park, and Matthew Henson Park, for your 1960s freeways. You're such a hypocrite.

Anonymous said...

I-270 Corridor North: 83.1% vacancy

The extreme outlier that is skewing the results for the entire county. The next highest number is Wheaton/Kensington at 21.4%. All other areas are below 20%. Funny how Dyer doesn't mention that. People are just sick of driving far away to sterile office parks.

Robert Dyer said...

12:33: It was completely coherent. I never said anything about affordable housing. What I said was, true stewards of the environment would have seized the opportunity to expand the park, and create a stream buffer. By declining to rezone the Betco plant for residential, the County could have kept the price of the land lower. It could then have acquired the land at the cheaper price to expand the park, and create a sizable buffer (as it acquired similar properties adjacent to the stream via the same method) for the stream. What is so hard to understand about that concept?

Robert Dyer said...

1:55: Talk about cooking the books. There's a whole office building at Georgia and Blueridge that is now being demolished and replaced with apartments. No way is Wheaton at 1.3%. That's like the fishy stat they give for "White Flint", which shows a huge lease-up when no major tenants moved into White Flint during that period. #Oops

Robert Dyer said...

1:57: Claiming Wheaton is a great office market when a whole office building walking distance to Metro, and on major Georgia Avenue bus routes, is being demolished for apartments is "nonsensically stupid" as well.

Robert Dyer said...

2:06: There are no structures on the parkland set aside for these highway facilities decades ago. Even the egomaniacal Matthew Henson action in Annapolis has a loophole to convert it back to a highway at any time. It sounds like your guys in the MoCo Machine are the hypocrites when it comes to building in parks - for a private profit developer, rather than for a public facility. #Oops

Robert Dyer said...

3:19: Your "extreme outlier" is the "live-work-play" fantasy you guys used 15 years ago to justify massive residential development in rural areas like Clarksburg. Are you now admitting you lied to the public? And do you acknowledge that ripping the "work" leg off that "smart growth" stool means the whole thing collapses, reduced to a live-drive-sprawl development.

People aren't sick of driving to sterile office parks outside of cities - they're doing that like mad in Silicon Valley every day.

People just aren't driving to the office parks here because the County has such a hostile business environment that there aren't any jobs in them.

Anonymous said...

Aren't they talking about only doing that in Silicon Valley cause there isn't enough housing?

Anonymous said...

So you are saying you don't know? Not to say there has to be an announcement to be true or not.

Anonymous said...

We see how well the ICC went going that route....

Anonymous said...

Dyer: "1:55: Talk about cooking the books. There's a whole office building at Georgia and Blueridge that is now being demolished and replaced with apartments"

Dyer: "Claiming Wheaton is a great office market when a whole office building walking distance to Metro, and on major Georgia Avenue bus routes, is being demolished for apartments is "nonsensically stupid" as well."

...you're talking about 11141 Georgia Ave...an office-residential conversion that started construction over 2 years ago and delivered a year ago. No one is "cooking the books" - you simply are YEARS behind on development news within Montgomery County. See, Dyer, this is why you're the dumbest one here - you talk about things that you literally know NOTHING about.

Anyways, in case you're curious, that $44M redevelopment added 7 stories to an existing (but supremely dated) 5 story building - nothing was "demolished," as you claim. Yes, I'm sure you'll try to twist a $44M redevelopment into proving how "moribund" our economy is. And we'll all continue to rightfully call you an idiot for it.

Robert Dyer said...

8:02: "Delivered a year ago"?!! At Georgia and Blueridge? The building was still all boarded up when I went by a couple weeks ago, and hasn't even begun yet. You must be talking about a different project than the one I was.

Indeed, it's such a moribund economic that the Metro accessible office building that couldn't attract tenants is now a stalled residential project.

A reflex to call those who recognize the current obstacles to economic growth in Montgomery County "idiot" is part of the reason you guys are stuck in neutral, as competing jurisdictions continue to stay far ahead of us in economic development.

Robert Dyer said...

5:22: I don't understand your question. The point was, the biggest tech companies are in isolated office park campuses in California. They're thriving, and totally contradict the claims made in this report.

Robert Dyer said...

5:25: The ICC was built by Maryland with public funds, not a private company.

Robert Dyer said...

5:24: There's no evidence of additional tenants in the last year. They very loudly announced the modest tenants they had secured for 65% lease-up. It wouldn't make sense for them to be silent on total lease-up. There's currently no evidence they are 100% leased.

Metro1 said...

1) "Was the Planning Department overstepping its authority when it previously had single-use zoning? Or conversely, in trying to prevent strip malls now?"

That's debatable, but I think most would agree that building low-density strip malls around transit stations is poor land use.

2) "I didn't say office sizes weren't shrinking. I'm simply making the point that the shrinkage factor alone isn't the reason Intelsat bailed on 4500 East-West for Tysons. Let's get to the real drivers of the problem."

I wouldn't say Intelsat "bailed" on 4500. As far as I know they were merely evaluating their options, and 4500 E-W was on the list. I can guarantee you that Intelsat would not have moved to the tower in Tysons Corner Center if their wasn't a Silver Line station next door.

Reduced GSA leasing, reduced contractor leasing, and shrinking office space are the real drivers of the problem.

3) "Do you have a theory as to why office space within walking distance of Wheaton Metro station is being converted to residential, if urban areas with Metro are preferred by companies?"

The office building at 11141 Georgia Ave (now the George Apartments) was a very outdated, inefficient office building in need of extensive rehabilitation, and had a narrow footprint conducive to residential use. Rehabilitating the building, doubling it's height, and converting it to apartments made the most financial sense. For every outdated Class B/C building that sits mostly empty in the region's urban areas there are probably five more in a suburban office park somewhere.

In addition, Wheaton is still in the midst of its revitalization, and even if the office market was not depressed (which we agree it is) it would be challenging to attract large Class A tenants to the area regardless.


"Regarding 7550 Wisconsin, who are the tenants that filled out the rest of the building? I haven't heard a public announcement since last June, when they had signed several tenants and had leased up to 65% of the building. Who are the new tenants? Why didn't Akridge announce the leases and the fact that they had fully leased up?"

SunEdison recently expanded their headquarters in the building an additional 16,000 sq ft to 50,000 sq ft. Steward Partners Global Advisory also recently leased 8,634 sq ft and Darcars moved their corporate hq to the building, leasing 11,000 sq ft.

Anonymous said...

I think a campus is a bit different than an office park.

Anonymous said...

It's funny how your requirements for evidence are totally polar opposite to your own opinion's necessity for evidence.

Peter said...

Ah the usual Dyer one-note ill-informed monologue about "the moribund MoCo economy."

I would throw in the point also that HHS is consolidating outlying sub-agencies such as AHRQ and SAMHSA at the Parklawn building at Twinbrook as that 5-year reno gets completed. This on top of all the other construction that has happened around there recently (includes the apartments and NIH Allergy Institute consolidation that's been built there the past 2-3 years.

Sometimes also the best re-use of old office space is loft/apartment conversions. Look at Downtown Manhattan as a great example. It's probably cheaper to build new Class A than upgrade old Class B/C to Class A.

Robert Dyer said...

Peter, you may not like it, but it's not "ill-informed." That the county has failed to attract a single major corporate headquarters in over a decade is not in dispute.

G. Money said...

Right, what is in dispute is that the ability to "attract" a major corporate headquarters (by which you mean a F500 company) is legitimately a major determinant of economic strength.

Anonymous said...

Dyer, in article: "Why are a gleaming new Class A office building at 4500 East-West Highway, and a revamped one at 7550 Wisconsin Avenue - both walking distance to the Bethesda Metro station, restaurants and nightlife - mostly vacant?"

Dyer in comment @ 9:40 PM: "Regarding 7550 Wisconsin, [they] had leased up to 65% of the building."

"65% leased" /= "mostly vacant", you dunce.