Old Money Takes Its Time At Chevy Chase Land Co.

By Jerry Knight
Monday, May 22, 2006

From Ed Asher's penthouse office on upper Connecticut Avenue, the canopy of leaves that covers Washington's suburbs rolls off in all directions like a verdant sea.

To the east and west, the emerald waves are broken by the high-rises of Silver Spring and Bethesda. To the south is the heritage that Asher oversees as chief executive of the Chevy Chase Land Co.

The blocks stretching to Dupont Circle were bought up more than a century ago by a U.S. Senator from Nevada who moonlighted as a land developer.

Nowadays, real estate deals by members of Congress attract grand juries, special prosecutors and ethics investigators, but in the 1890s no eyebrows were raised when Sen. Francis G. Newlands (D-Nev.) began buying farms in the boondocks of the District of Columbia and beyond.

He called his development Chevy Chase -- Chevy for Cheviot in Scotland, where his family came from, and Chase for the fox hunts he hoped to hold. By the time Newlands stopped buying, the Chevy Chase Land Co. owned 1,700 acres.

Today, Asher looks down on what's left of that land -- the old Chevy Chase Supermarket, a little shopping center with a Smith & Hawken gardening boutique, the T.W. Perry lumberyard and a filling station that proclaims it's "The Last Gas Before the Beltway."

"We're running out of inventory," Asher said, half-seriously.

The Chevy Chase Lake East shopping center and the adjacent property are the last remaining parcel of the original Newlands land that is waiting to be rebuilt now that "the land company" has completed the flashiest project in its far-from-glitzy history.

Over the summer, the final tenants will move into the radically renovated Chevy Chase shopping center at Wisconsin and Western avenues at the Friendship Heights Metro station.

It took 10 years to shepherd that project from inception to the grand opening of what instantly became Montgomery County's most upscale strip of stores. On paper the project looks like a "big box" center. But instead of Target, Linens & Things and the Sports Authority, the names on the boxes are Ralph Lauren, Louis Vuitton, Christian Dior, Max Mara and Jimmy Choo.

Money changes everything -- or at least a lot of things.

There's enough money in things like a pair of $400 Jimmy Choos or a $200 tank top from Barney's to pay for the four levels of underground parking and the other infrastructure needed to develop the long-neglected urban parcel into a boutique collection, a Giant supermarket and an office complex worth an estimated $500 million.

For decades the land was a parking lot because of a whimsical decision long ago by Montgomery County planners. Deadlocked over how to develop the land along Wisconsin Avenue just north of the District line, planners decreed high-rises for the west side of the street, low-rise for the east. The decision made Friendship Heights, on the west, the most densely developed place in the county, and probably the most valuable property. The east side was paved for parking and remained a surface lot for something like 30 years.

Only a privately owned company like Chevy Chase Land could have hung on for so long. And that is what's significant about the company's role in Washington area investment.

So much new money has been made here since I began writing about Washington business 28 years ago, old money gets overlooked -- and is underappreciated.

It's hard to believe that many of Washington's biggest and hottest companies today will be in business 100 years from now, still pursuing their founders' dreams.

I'm betting that Washington will soon forget America Online, the most innovative business created here during the technology boom of the 1990s. AOL was history the day the company merged with Time Warner Inc. For irresistible billions, AOL sold out its role as inventor of the Internet for the masses to become a cog in a corporate communications giant. Time Warner may make it to the next century, but if AOL hasn't been dumped, it will be a vestigial sideline.

Lockheed Martin Corp. and General Dynamics Corp. will doubtless be around. We can only dream of a world in which the military-industrial complex is obsolete.

Obsolescence might threaten The Washington Post Co. and Gannett Co. News will be around for the next century, but paper? The Post Co.'s long-term prospects are enhanced by ownership controlled by the Graham family, which views its publishing and education ventures as more than just a business.

The same "family values" mean that Marriott International Inc. might make it to 2100, even though the next head of the company won't be a Marriott. People gotta eat, people gotta sleep, and Chairman J.W. "Bill" Marriott clearly views the company as more a legacy than a meal ticket.

Sprint-Nextel Inc. looks like a survivor, but 50 years ago people would have said that about Western Union. After all, MCI Communications Inc, the inventor of telephone competition, had a lifespan of barely 20 years.

Building a business to last a century has never been a priority for the technopreneurs so beloved by the media. There are more than a few millionaires in this town who made their money off companies that are no longer in business. Some were bought out, some went bankrupt. Many of those vanished companies made their founders rich but left no legacy.

Today's prevailing philosophy is so shortsighted that many people who start companies include exit strategies in their business plans. While creating a company, they simultaneously plot how to sell out.

The people of the Washington area and the descendants of Francis Newlands can be grateful that the senator never thought about an initial public offering or an early exit strategy, instead leaving land to be developed patiently over the course of a century.

Now the company's holdings add up to 2 million square feet -- most of it in and around Washington. The Francis Newlands building in downtown Bethesda is the biggest holding. The Collection at Chevy Chase is the newest. The Chevy Chase Lake East Center is the next priority, and that could take years, but the company thinks that way.

Most amazingly, the Chevy Chase Land Co. remains privately owned. There are now 250 shareholders, mostly Newlands family descendants, spread over several generations. Gavin M. Farr, a grandson of the founder, is chairman of the board. Daily management is in the hands of veteran professionals -- Asher and senior vice president Michele Cornwell, neither of them family members. Just down the ladder is vice president David M. Smith, a great-great grandson of Sen. Newlands.

The company has made missteps -- such as investing in office buildings in downtown Richmond -- and has often generated community opposition. The neighborhood delayed the Collection at Chevy Chase for a decade and blocked plans to put the headquarters of the Pan American Health Organization next to the Chevy Chase Lake East Center. Even though the company has the zoning to redevelop that center, it will still face objections and delays.

But Asher is a patient man, and the people who own the company are patient investors. That patience may not be as lucrative as an instant IPO, but it is a virtue to anyone who lives or works or shops in Chevy Chase.

Jerry Knight's e-mail address isknightj@washpost.com.