Monday, December 22, 2008

Commercial real estate firm Monday Properties plans to announce today that Boeing will renew its lease for the entirety of a 12-story building in Rosslyn, securing a longtime tenant in the midst of a recession.

The deal is the biggest in Monday's December flurry of leases. But for the New York firm to fulfill its greatest ambition in the Washington area -- building a 30-story tower above the Rosslyn Metro station next year -- clients must step up and commit to some of the 580,000 square feet of office space so construction financing can be secured, said Tim Helmig, executive vice president and chief development officer of Monday.

Breaking ground "is subject to getting some good leasing done," he said.

Some analysts are skeptical that such ambitious projects will be able to secure financing.

"I will tell you this is a tough time -- this is going to be difficult," said Peter Slatin, editorial director for the commercial real estate research firm Real Capital Analytics in New York. "Rosslyn is a great market, but nobody is getting construction loans and tenants are pulling back faster than people are really aware. I think leasing is likely to continue to fall off quickly next year."

Despite a slow pace of leasing throughout the Washington area this year, the Rosslyn-Ballston corridor has held up. The corridor had a relatively low vacancy rate of 8.2 percent at the end of the third quarter, compared with 11.5 percent for the entire area, according to the Bethesda-based CoStar Group.

Boeing has been a tenant at the 144,000-square-foot office building at 1200 Wilson Blvd. for more than a decade. While Monday did not disclose financial details of the lease, Helmig called it a commitment to Rosslyn. He said the area was attractive to government contractors like Boeing and other clients because of its proximity to the Pentagon and Capitol Hill.

"What we've seen is not only the resiliency of Rosslyn during these economic times; the tenants remain extremely committed to this market," Helmig said.

Monday has strong connections to the Washington area. Stanley Westreich, a board member of credit card giant Capital One, founded Westfield Realty in Arlington, which built all 10 buildings in Monday's Rosslyn portfolio. The properties include the 31-story silver tower that was the former home of USA Today and the newspaper's parent, Gannett.

Westfield sold the portfolio for just under $1 billion to Beacon Capital Partners in May 2005. In June 2007, Anthony Westreich, Stanley's son and chief executive of Monday, paid about $1.1 billion to buy the properties back.

Monday bought the land for its planned tower on 1812 N. Moore St. in 2005.

The Boeing lease was just one of a handful of leases that Monday signed in December:

· Arlington County took 53,000 square feet of space at 1101 Wilson Blvd., where the Bodies science exhibit was displayed in 2007. The county has plans for Rosslyn Cultural Center, with theater, music, film, dance and other fine arts, and signed a $1-a-month lease for 10 years. That deal was part of a concession Monday made to get approval for its tower.

· Insurance company Professional Risk Management Services renewed and expanded at 1515 Wilson Blvd., taking 13,900 square feet on the first and eighth floors.

· The Department of Defense signed on for 21,000 square feet and five more years on the 10th and 11th floors of 1101 Wilson Blvd., where Monday is completing a $4 million lobby renovation.

· Activu, a software and services company, signed up for five years and 2,800 square feet; Quantum Research International, a defense contractor, signed up for 7,400 square feet and five years; and Freedom Technologies, which creates software for production lines, signed up for 3,330 square feet for three years, all at 1100 Wilson Blvd.