Four years ago, two of the savviest and most well-capitalized developers in Washington were racing one another.
Both companies, Monday Properties and the JBG Cos., had properties immediately adjacent to the Rosslyn Metro station, directly across the street from one another. Both began plotting very similar buildings: 390-foot office towers that would change the Northern Virginia skyline.
Because of the bursting of the real estate bubble, very few new offices were under construction at the time. Executives at both companies saw the chance to build the first new high-end office destination for companies looking for new space as the economy recovered.
Which company could get their building up first? Monday Properties, and its pyramid-topped tower at 1812 North Moore? Or JBG, with its Central Place project, to be accompanied by a twin apartment tower?
The race was on. And then it wasn’t.
JBG, to the surprise of many, put on the brakes, deciding not to begin its building. Monday Properties did start, and it finished its 580,000-square-foot building last November. 1812 North Moore is now the tallest building in Arlington County.
JBG’s decision began to look smart as Congress put sequestration into effect, and law firms and government contractors began to cut back on real estate. But it looks exponentially better now that CEB has agreed to lease more than half of Central Place.
There’s a reason developers like Monday Properties construct office buildings “on spec” — meaning without any tenants lined up. For generations in Washington, companies like Lerner Enterprises and Trammell Crow made their names by building ahead of the market and beating the competition to tenants.
Officials at Monday Properties have been able to show off their building and its stunning views of downtown Washington in person. JBG’s team has not — they’re working with renderings and video montages.
Which makes JBG’s deal for CEB to lease 350,000 square feet across 15 floors of the 31-story building that much more stunning. In it, JBG retains some of its nicest floors, including stories 21 to 28, and the developer likely saves a bundle in construction costs because it can now build its apartment building and office buildings in tandem.
The competing office buildings are priced similarly. How did the one that’s not built yet beat out the brand-new, completely empty one?
The broker who represented CEB, Lou Christopher at CBRE, said that of all things, timing was one of the key factors. CEB doesn’t need to move until 2018, even though Monday Properties probably wanted them to move yesterday. “One is available today and one we’re not moving into until 2018,” Christopher explained.
It brings to mind an old Bob Dylan lyric: “And the first one now will later be last.”
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz