To make buildings stand out, floor space gets sacrificed

July 21, 2013

Land is commercial real estate’s raw material. When it is in short supply, and therefore extremely expensive, developers have sought to maximize the amount of rentable space by building out to the fully permissible floor area ratio — calculated by dividing the rentable building area by the land area. In other words, they build as high up and as far out to the legally imposed zoning boundary.

This is especially true in downtown Washington, where the building height restrictions impose a further limitation on the development capacity of land. One example is Arnold and Porter’s existing space at 555 12th St. NW in the East End, where the building occupies an entire block. Built in 1995, this building’s coverage is close to 95 percent of the lot size, with large interior space and floor plates surpassing 65,000 square feet on a lot measuring less than 70,000 total square feet.

Land scarcity (and the resulting impact on prices) is one reason why office development has continued to move east of the central business district to NoMa and, to a lesser extent, south to the Capitol Riverfront area.

However, developers of new high-end buildings are also trying to differentiate their projects and attract trophy tenants. One of the methods some developers have used to make their projects stand out is by bucking the commonly accepted practice of maximizing floor area ratio and purposely building less than the specified amount of space allowed by zoning. In doing so, the developer’s architect is able to add more design elements and exterior variation to help the building stand out.

While height is almost always maxed out to increase views, more developers of high-end properties appear willing to forego maximizing their lot coverage and incorporate a step-like recession in walls called setbacks. The variation enables developers to incorporate more glass exteriors and freestanding walls to bring in more natural light.

Glass curtain-wall exteriors are becoming much more commonplace; interiors are shrinking while perimeters and ceiling heights are increasing, mainly for the purpose of adding more natural light that tenants of trophy properties favor.

One recent example was the decision by the developers of the recently completed CityCenterDC in the East End to divide the total office portion planned for the site into two buildings rather than simply maximizing the site’s floor area ratio.

Hines left potential floor area ratio on the table for the sake of aesthetics and improved circulation through the site. In addition to providing amenities many large tenants prefer such as more natural lighting, improved sightlines and additional green space, developers hope the building can command a higher rent per square foot, cost less to build and result in an exceptional development that can stand the test of time.

D.J. O’Brien is a research manager with CoStar Group in Washington.

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