The Best Value-Add Opportunity in the Washington, DC Metro Area Adjacent to Amazon HQ2. Executive Summary

Transcription

1 The Best Value-Add Opportunity in the Washington, DC Metro Area Adjacent to Amazon HQ2 Executive Summary

2 EXECUTIVE SUMMARY Reagan National Airpo $1 Billion Reagan National Airport Renovatio New Commuter Concourse Replacing 14 Outd Additional 150,000 Square Feet Long Bridge Park 1 49,000 VPD Pentagon ,546 VPD North District 4.1 MM SF OF OFFICE Owned and Funded by Amazon, Developed by JBG Smith Development Includes Over 300,000 of Total Retail Pentagon City Mall Over 170 Stores on 3 Levels 7 Story Garage 2

3 rt n Project oor Gates The Central District 500K SF Immediate Occupancy Creation of a vibrant public plaza 120K SF of retail delivering in K SF specialty grocery chain 50K SF Alamo Drafthouse Cinema New 43,900 SF community gathering place Outdoor entertainment, retail businesses, farmers markets, and water features AMAZON WILL IMMEDIATELY LEASE 500,000 SF OF EXISTING OFFICE SPACE AMAZON IS BUYING LAND ACROSS THE STREET FROM THE PROPERTY FOR 4.1 MILLION SF HEADQUARTERS OFFICE 3

4 EXECUTIVE SUMMARY INVESTMENT HIGHLIGHTS IDEAL VALUE-ADD OPPORTUNITY 95% Leased 534 Units 831 Avg SF per Unit HQ2 WALKABLE TO METRO 1.9MM SF OF RETAIL WITHIN 1 MILE RADIUS UNIQUE VALUE-ADD OPPORTUNITY IN A CORE SUBMARKET ACROSS THE STREET FROM WHOLE FOODS ROBUST EMPLOYMENT & POPULATION GROWTH PROXIMITY TO PROMINENT EMPLOYMENT WALKABLE TO PENTAGON STRONG IN-PLACE DEMOGRAPHICS WITH IDEAL RENTER PROFILE STRONG MARKET FUNDAMENTALS (10.3% RENT GROWTH SINCE Q1 2015) 4

5 #1 Best DC Suburb for Young Professionals (Movoto, 2015) Richest Millennials in the U.S. live in Arlington (ages 18 24) (Bloomberg, 2016) #1 Largest Percentage of Wealthy Millennials (Zillow, 2016) #1 Best City for Staying Healthy (AARP, 2015) #2 Best Place to Retire (Bankrate, 2015) #1 for Highest Percentage of Highly Educated Millennials (Redfin.com, 2014) #3 of the 100 Best Places to Live 8.7% of millennial households make more than $350,000 (Zillow, 2016) #6 Top Healthiest City (Livability, 2015) #1 Coolest City in the U.S. #3 Most Walkable Suburb (Redfin, 2015) (Livability.com, 2015) (Forbes, 2014) #8 Happiest Cities to Work In (Forbes, 2016) COMPELLING ARLINGTON COUNTY DYNAMICS COMMUTING Eight minute walk to Pentagon City and Crystal City Metro Stations. UNEMPLOYMENT RATE 2.2% WEALTHY The average household income within a mile of the Property is $147,406, well above the national average. HIGHLY EDUCATED 83% of residents maintain a bachelor s degree or higher within one mile of the property. 92% of the workforce holds a white-collar job. GROWING 20% population growth since 2010 and nearly 8% projected growth through

6 EXECUTIVE SUMMARY PENTAGON GEORGE WASHINGTON MEMORIAL PARKWAY 395 IMMEDIATE OCCUPANCY CRYSTAL CITY METRO STATION JEF FER S ON DA VI S HIG HW AY Drive Times From Meridian Pentagon City Location Reagan International Airport Rosslyn Washington DC (CBD) Old Town Alexandria Georgetown Time 5 minutes 8 minutes 9 minutes 10 minutes 11 minutes UNMATCHED ACCESSIBILITY Crystal City is equipped with the best transportation infrastructure in the entire Washington, DC region. Convenient Metrorail access is provided by the Crystal City Metrorail station and Pentagon City Metrorail Station (Blue and Yellow lines), which are both just an eight minute walk from the Property. Excellent vehicular access is provided by immediate proximity to major commuter thoroughfares such as I-395, Jefferson Davis Highway (Route 1), and the George Washington Memorial Parkway. The Virginia Railway Express Crystal City station is a five minute walk from the Property, providing convenient access to Union Station and by extension the entire Northeast Corridor. The Property is also just 1.5 miles and one Metrorail stop from Ronald Reagan Washington National Airport, which offers non-stop flights to more than 95 domestic and international locations on 8 airlines. 6

7 POTOMAC RIVER G E OR G RONALD REAGAN WASHINGTON NATIONAL AIRPORT (DCA) E WASH INGTO N MEM ORIA L PARK WAY REPRESENTATIVE CRYSTAL CITY TENANTS JEF F ERS O ND AV IS H 1.9 MILLION SF OF RETAIL IG HW WITHIN A 1 MILEAYRADIUS 12.5 MILLION SF OF OFFICE WITHIN A 1 MILE RADIUS DIVERSE & CONCENTRATED AMENITY BASE Within a ten minute walk of the Property, there are over 250 restaurants and dining options, 380 retailers, and 20 hotels. A 37,000 square foot Whole Foods Market is also less than a three minute walk. The Crystal City Shops, which include 10 restaurants, over 30 fast-casual dining options, and over 85 other assorted stores and retailers, are located immediately south of the Property. A major concentration of retail and mixed-use development is also located a half of a mile to the west of the Property around the Pentagon City Metrorail Station, including The Fashion Centre at Pentagon City (a 994,000 square foot super regional mall with a 365 room Ritz Carlton hotel) and Pentagon Row (270,000 square feet of retail, 830 multifamily units). 7

8 EXECUTIVE SUMMARY AMAZON HQ 2 IMPACT 25,000 employees with average salaries over $150,000 8 MILLION SF of office space OVER $5 BILLION in construction and other investments $1.4 BILLION in employee compensation $3.6 BILLION in business sales NATIONAL LANDING Central District: Entertaiment and Nightlife Hub $1 Billion Virginia Tech Campus New Crystal City Metro Entrance The D.C. Region is One Of The Country s Strongholds For Tech Talent With More Than 300,000 Tech Workers Multi-modal Transportation Hub JBG Smith: 6.2 Million SF Existing, 7.4 Million SF Additional Density Amazon Buying Adjacent Sites For 4.1 Million SF Headquarters Office PEN PLACE 8

9 RECORD DEFENSE SPENDING DRIVES DEMAND Defense Highlights The great outsourcing: Between 1980 and 2010 Federal procurement spending increased from $4.2 bn to $81.5 bn 1840% growth (60% per year). 17% goes to the DC Metro of which nearly 50% goes to Northern VA. In 2008, DoD spending accounted for 52% of all procurement spending. In 2016, that number went to 38.7%. Total Virginia Federal Spending (in billions of dollars) 14% INCREASE 2018 Budget allocates $700 billion to defense, a year-over-year increase of $70 billion DEFENSE PROCURMENT WELL ABOVE PRE-SEQUESTRATION LEVELS $10 billion JEDI defense contract VIRGINIA 9

10 EXECUTIVE SUMMARY RARE VALUE-ADD OPPORTUNITY IN CORE LOCATION Immense Rent Growth Potential: Current average market unit rents at Meridian at Pentagon City are 30%-40% below recently delivered Class A product. Core location enables stable rent growth opportunity. Stainless Steel Appliances Flooring Granite Countertops Cabinets Backsplash Flooring Lighting Fixtures Cabinets Vanity & Faucets MODERNIZE LOBBY WITH UPGRADED FLOORING, FURNITURE, & LIGHTING ADDITIONAL UPSIDE THROUGH FITNESS CENTER AND CLUBHOUSE RENOVATIONS. 10

11 McLean Kirby Rd Columbia Heights Woodland Acres Tysons 29 Million Office SF 66 Rosslyn-Ballston Corridor 25 Million Office SF Washington, DC 138 Million Office SF Capitol Hill 395 Fairfax / Merrifield / Falls Church 26 Million Office SF 7 Wilson Blvd Arlington Crystal City Pentagon 13 Million Office SF FIVE MILES THREE MILES 395 ONE MILE The Pentagon 25,000 employees 1 AMAZON 25,000 employees Reagan National Airport 1,300 employees 236 Department of Defense HQ Services 8,000 employees Old Town & Eisenhower 23 Million Office SF Alexandria Van Dorn Street Metro Station 95 National Science Foundation 4,200 employees Huntington Springfield Rose Hill US Patent & Trademark Office 10,000 employees MGM Resorts at National Harbour 4,000 employees 286 NGA 9,000 employees Groveton Joint Base Andrews 11,000 employees Fort Belvoir 51,000 employees 1 Fort Hunt 11

12 AMAZON HQ2 Arlington - TOD - Inside the Beltway - DCA (Core Components) Ideal Value-Add in a Core Location Outstanding Access Whole Foods Adjacent (1.9 Million SF of Retail in a 1-Mile Radius) G. WALTER COKER BRIAN J. CRIVELLA STEPHEN C. CONLEY MATTHEW LAWTON Holliday Fenoglio Fowler, L.P. Managing Director wcoker@hfflp.com Holliday Fenoglio Fowler, L.P. Senior Director (o) bcrivella@hfflp.com Holliday Fenoglio Fowler, L.P. Executive Managing Director (o) sconley@hfflp.com Holliday Fenoglio Fowler, L.P. Executive Managing Director mlawton@hfflp.com FINANCING JAMIE LEACHMAN Holliday Fenoglio Fowler, L.P Senior Director jleachman@hfflp.com NICOLE BRICKHOUSE Holliday Fenoglio Fowler, L.P Director nbrickhouse@hfflp.com 1775 Pennsylvania Ave NW, 5th Floor Washington, DC Holliday Fenoglio Fowler, L.P. ( HFF ) a Virginia licensed real estate broker. HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF, and neither Owner nor HFF, nor their respective equity holders, officers, employees and agents makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all reference to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a purchaser, and HFF, its partners, officers, employees and agents disclaim any liability that may be based upon or related to the information contained herein. Prospective purchasers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.