Carr goes ahead with Bethesda project without tenants
Tally up the number of speculative office projects being built in the area — meaning those under way without any tenants committed to them — and you’ll find it’s a pretty short list.
Even shorter is the list of speculative construction projects that banks have been willing to finance.
Carr Properties joined both small groups last week when it broke ground at 4500 East West Hwy. in Bethesda, a 220,000-square-foot office building executives felt confident enough in that they began despite a flat leasing environment and the prospect of severe federal government cutbacks.
Carr acquired the properties needed for the project, including a McDonald’s and a real estate office, more than a year ago after another developer had been unable to start work. Nine months ago, Oliver Carr III, chief executive of Carr Properties, said the company began looking for financing.
Although Carr acknowledged the leasing slowdown, he said major tenants had made something clear despite the slow economy: a willingness to leave older accommodations for more space- and energy-efficient buildings.
He pointed to CityCenterDC, a Boston Properties project in Mount Vernon Square and Carr’s own 1701 New York Avenue project as examples of new buildings that drew major tenants from older buildings. His Bethesda project is slated to have glass from floor to ceiling, the highest available environmental rating (LEED platinum) and floor plates with so few columns that it could allow tenants to use much less space for the same number of employees. “This is the kind of building that tenants want to move to,” Carr said.
The other speculative office projects in the region include a mixed-use project by Macerich in Tysons Corner, a tower in Rosslyn by Monday Properties and two projects in NoMa, by Trammell Crow and StonebridgeCarras. Only the NoMa projects are backed by construction loans.
After speaking with multiple banks, Carr secured a loan from Wells Fargo that will cover about 55 percent of a total cost of just over $100 million. Carr said his company’s extensive balance sheet and long relationship with Wells was helpful. “It’s not easy out there,” Carr said. “I think it’s really difficult today to get one-off financing.”