Skadden decides to stay put, opt out of CityCenterDC, sources say
The law firm Skadden, Arps, Slate, Meagher & Flom has decided to maintain its Washington offices at 1440 New York Ave. NW, according to sources familiar with the deal, dashing the hopes of developers of D.C.'s old convention center site who had hoped a lease would kick-start construction there.
The sources, who spoke on the condition of anonymity because they are not authorized by the companies to discuss the deal, said the law firm considered moving to the new offices planned by Houston-based developer Hines Interests but decided in June to stay in place when Hines and its partner, Archstone, a housing developer based in Englewood, Colo., did not secure construction financing.
Neither Skadden, based in New York, nor Hines would comment on the deal.
Skadden currently occupies portions of both 1420 and 1440 New York Ave. NW, near the White House, with a lease that expires in 2013. On June 10, Tishman Speyer, owner of 1420 New York Ave., completed a $700 million equity infusion into its Washington area portfolio that, according to sources, allowed the developer to negotiate an extension with Skadden in earnest. A Tishman Speyer spokesman declined to comment. (ING Clarion owns 1440 New York Ave.)
For Hines and Archstone, the deal means a return to the starting blocks. Their CityCenterDC project is to include six buildings in the heart of D.C., at one of downtown's last undeveloped sites, across Mount Vernon Square from the new convention center. Bordered by New York Avenue to the north, H Street to the south and 7th and 9th streets to the east and west, it is slated for 2.5 million square feet of development at a cost approaching $1 billion and is one of Mayor Adrian M. Fenty's top economic development priorities. The site has been used as a parking lot and as a temporary home for entertainment, such as Washington Kastles tennis matches, while Hines and Archstone look for financial backers.
Skadden was on the hunt for 350,000 square feet -- slightly more than half the office space that Hines and Archstone plan.
Had it moved, the law firm would have joined a bevy of other firms that have opted for new digs in the down real estate market. Fried Frank, Novak Druce and Quigg, and Sutherland Asbill & Brennan recently signed new leases while Hunton & Williams, Squire Sanders, Perkins Coie, and Arent Fox have moves underway.
Richard Bradley, executive director of the Downtown Business Improvement District, said he had heard that Skadden had pulled out but that he was optimistic about improvements in the financial markets. "Things are changing fairly quickly in the real estate marketplace," he said. "There is a lot of capital out there."