Weekend Interview: Michael Graves’ Sean Pichon On Taking The Office-To-Residential Leap

This series goes deep with some of the most compelling figures in commercial real estate: the dealmakers, the game-changers, the city-shapers and the larger-than-life personalities who keep CRE interesting.

Over three decades, Sean Pichon has designed dozens of multifamily and mixed-use buildings across D.C. — two of those decades as founding partner of D.C.-based PGN Architects and more recently at Michael Graves.

But one of his most recent projects holds a particular significance, a building that represents the city’s hopes for its postpandemic future.

Pichon wielded the pencil for Elle, the District’s first major office-to-residential conversion downtown, a former Peace Corps building now transformed into 163 apartments with a rooftop pool, outdoor fire pits and grilling stations, a dog park, pet spa and coworking areas.

It’s one of the first strokes on D.C.’s blueprint to reimagine its business core: transforming increasingly vacant and aging office buildings into an invigorated mixed-use neighborhood filled with housing.

“This was the first of its kind,” Pichon told Bisnow.

Pichon, a graduate of Howard University, which is celebrating its 100th homecoming this weekend, said he has been studying office conversion projects for years but never before had a developer pull the trigger.

“As the developers were trying to make decisions around where to spend their money, there were no comps to look at,” he said. “And that's where a lot of decision-making is driven from, your comps in terms of what are the prices you're getting for other residential units of this type in this neighborhood. They didn't have that. But now they do.”

Pichon spoke with Bisnow about being a conversion canary in the coal mine, his advice to those who will follow in his wake, and PGN’s merger with Michael Graves last year.

This interview has been edited for length and clarity. 

Bisnow: I want to talk about Elle because so much of D.C. leadership’s vision for downtown is to convert some of these older office buildings and make it a more mixed-use neighborhood. And these kinds of conversions make up that vision. So I wanted to hear about your experience with the Elle and how it all came about.

Pichon: We worked with the developer, Willco. They're long-term owners of the building. They built it originally in 1968, and for the last couple of decades, it was occupied by the Peace Corps, and they moved out. They moved over to NoMa and left the building empty and sort of used and worn down. So the ownership had to make a decision in which direction they were going to go.

They spent a couple of years trying to lease it out to new office tenants, unsuccessfully. So the question and conversation started with us about a conversion to residential. So we worked with them for quite some time to help them understand what that means in terms of what the residential floor plate is and helping them understand some of the things that go into residential developments that are different from the office sector. And part of that was a learning process. 

Bisnow: We hear so much about how it's so difficult to convert office to residential. How difficult was this project?

Pichon: This project was unique. One fact that made it a little bit easier than most, there were four sides of air and light to the building. There's a private alley on one side, there's a public alley on the back side, and then there's two streets. So it's on the corner. That allowed us to make use of most of the interior space, without a lot of dead light space or dead air and light space within the building that would challenge a lot of other buildings. 

Being on the corner is a plus. Buildings on corners are definitely at a premium when you talk about conversions. Where you run into a lot of challenges are the midblock buildings that present more of the issues that the conversions tend to have. And that's just around being able to break the floor plate up and to get the right amount of air and light into the building to make the apartments or the units usable. In this case, we didn't have that challenge.

Some of the other challenges we had were just the age of the building. It was built in 1968, so there were a lot of unforeseen challenges during construction that we have to deal with on the fly. For instance, the leveling of the slabs. For some reason, over the years, over 50, 60 years of its existence, the building had started to sag in between columns, and significantly enough that we had to correct it. So that was a challenge in making sure that we didn't put too heavy of stuff on there to where the existing structure couldn't hold it.

Then the other part of it was really just getting the amenities to function properly structurally, on top of the building, because we're putting a lot of weight at the top of the building. And transferring that all the way down was a bit of a challenge, and it was a pretty significant cost to the construction budget.

Bisnow: D.C. has touted this project, the first major office-to-residential conversion downtown. It was a pretty big deal for the city. How did it feel to be the architect and the visionary behind this project?

Pichon: Pretty good. We've been around as PGN, now as Michael Graves, for quite some time in the city, and we've had a lot of firsts in the city. So this just goes onto our list of another first that we've done. We were the first firm to actually do Type IIIA construction in the District, but we have a list of things that we've been the first at. 

So it's not new to us, but being on the pioneering side of a major issue that's confronting the city is very rewarding to have such a successful product at the end of it that everyone can look at and take note and take the pros and cons from it to apply to other future projects. 

And that leads back to one of the major challenges that I left out, was the fact that this was the first of its kind. As the developers were trying to make decisions around where to spend their money, there were no comps to look at. And that's where a lot of decision-making is driven from, your comps in terms of what are the prices you're getting for other residential units of this type in this neighborhood. They didn't have that. But now they do.

I think that's a very important part of the District moving policies forward, is to have the Elle be the comp for all the new developments that are coming through. Now they have something to reference. We have something tangible that's just delivered, and this is what the numbers are saying they are, so people have more confidence in investing in it.

Bisnow: How replicable is this? You mentioned some of the benefits from the building itself being on the corner and the four sides. But how often can this occur again and again in D.C.’s downtown like the local government is pushing for? 

Pichon: There are a lot of opportunities still within the District, as is shown by the number of projects that are out there that are going through the conversion leap. We actually have another one that's under construction currently on Vermont Avenue that's converting from office to hotel use, but it's still set up like residential units. And I know that there's several others that are underway, either in planning or in permitting. So there are opportunities out there. 

Each one is going to be unique in terms of the challenges. But the ability to have comparables that are leading to decisions helps that decision-making process. Where we were kind of left to make decisions on our own, now they actually have something to — even though it may not be exactly the same — there's actually a reference point that you can point investors to, whoever is unfamiliar with the circumstances, you can point them to. And it helps you make your decisions better and easier through your design process or development process. Where there are going to be buildings that just are not going to work from a conversion standpoint, there's still a significant number of them in the District that will.

Bisnow: What advice can you give somebody who's doing a conversion project?

Pichon: “Location, location, location.” No, I do think that having an evaluation of, when you're looking at a building, to have an understanding of the challenges that lie ahead, that there are certain buildings that will scale better or score better than others and having that weigh into your decision-making. We’ve studied, over the last 10 years, to be honest, a lot of conversions. Even though the pandemic kind of exacerbated this situation, this downturn in downtown vacancy has been going on for quite some time. 

We were working with a group maybe six, seven years ago pretty intently around studying so many buildings, building after building after building, about this conversion process. They were particularly looking at a certain model. But we were able to look at buildings from every different aspect, whether they were middle-of-the-block buildings or corner buildings or in between. We learned a lot about the fact that where there are challenges, you have to be creative. So on the creative side, there may be some times when you have to create space that doesn't exist currently in the marketplace, but you have to understand that some of these things will translate into positives at the end of the day. 

So we were always looking at it from a very creative standpoint, whether it means you're adding in more group-type spaces within each floor plate that go up the building to kind of take care of some of that internal space and spread your amenities out vertically, as opposed to having them stacked on one floor — that was one idea that we looked at. So there are creative ways to approach this. But from an advice standpoint, I would just say each building is going to have its own challenge, and you're definitely going to have to dig in and be creative when you're evaluating it.

Bisnow: Zooming out, we've seen so much change over the last few years in the city, and you've had a long history of designing buildings and placemaking. How does this moment compare to your experience with the city? Anything unique in this moment in 2024?

Pichon: That's an interesting question. Let me see if I can pinpoint something that's unique, because the city has experienced various waves, obviously. We were around when the crash of ’04, ’08, happened, ’12. So we lived through a lot of these waves of economic turmoil. And this one is unique in the sense that what has triggered it is different from the others, from our perspective. But the result is the same, that there has been a slowdown in the amount of projects moving forward. There's been a lot of critical thought being placed on the marketplace in terms of whether or not things will pencil out. 

But we've always come to these points where we have to kind of shift our train of thought, like what we were doing a year ago isn't working now. So how do you adjust and respond to that? With every downturn, there's always opportunities. Right now, the conversions are a huge market to explore and tap into. And it’s not just the District, it’s DMV-wide. I just was reading an article that Arlington was instituting some changes to their zoning regulations, similarly to help to speed some of these conversion projects along. So it's a metro area experience that we're going through.

So I would just say that every time we've experienced a downturn in the market, there's always an opportunity that pops out of that. Before, we did a ton of affordable housing projects during the time when the condo regime kind of fell apart. When all the market-rate stuff was going downhill, the affordable stuff was going strong. So, like I said, there's always opportunities whenever there's a downturn in the market. So you've just got to be on the lookout for that.

Bisnow: You mentioned the slowdown in construction over the past few years. You're on the front lines of development starts, and with the slowdown, how has that affected you?

Pichon: It's been difficult. There's been a definite impact, especially locally. Just to put some perspective to it, this time last year, we probably had 10 projects go on permanent hold because of funding issues. So that immediately has an impact on you. 

Thankfully, we had gone through a merger with Michael Graves, which for us was exciting and rewarding because it allowed us to kind of refocus our brand and expand our outreach. So we've been able to pivot, and we're not as reliant on just projects in the District and DMV area. We can do work in places that need our expertise that we weren't able to tap into before. So that's helped us a lot. We have projects now in Charlotte, North Carolina, and Tennessee in Nashville and Knoxville. So expanding our marketplace and our outreach has been a huge benefit for us, and that's all coming from our merger with the Michael Graves brand.

Bisnow: With the 50-basis-point interest rate cut, do you expect to see that shift demand at all, with new construction activity starting up?

Pichon: I do. We’ve talked to a lot of people in the construction industry, and especially on the development side as well. There's already been a sort of rightsizing of pricing, construction pricing, because that was part of the issue. We have seen land values spike as well as construction costs spike, all at the same time, that just made deals unattainable. But we are seeing now that some of that stuff is leveling out. And that there are more projects now looking at potential restarts or starts than we were getting maybe six, seven months ago. So there is definitely a wave towards a more positive future happening. 

Bisnow: I wanted to talk about PGN’s merger with Michael Graves. It’s been a year and a half since the transition. How’s it been going? 

Pichon: The merger has been great. We spent some time before evaluating this merger that we kind of had a lot of confidence going into it, and I mean, we’ve just proven ourselves right in that sense. But we spent some time to really make sure that we were on similar sort of design philosophies and work approach with the Michael Graves company. And a lot of the values that we held true, they also shared in their approach as well, which are making sure that we're staying client-centric in our approach to our services. We had no vision of becoming a corporate client-driven design firm. We wanted to retain our sort of boutique approach to it. And Michael Graves similarly has the same approach. There's many studios within our company in different regions, and each one has the ability to give their clients the same level of services. 

But then under the brand, so then that's where the benefit for us comes in, joining an international brand that has gold medals within their design repertoire. It's been around for years. I studied Michael Graves in school when I was learning architecture 30 years ago. So this is a very rewarding merger for me in the sense that me and my partner were able to merge with such a renowned name brand. And then that allows us to elevate our PGN brand.

The other side of it is that Michael Graves sought us out in the sense that they really wanted an expert in the housing market that was local to D.C., and we presented an opportunity to them to capture an expertise in a market that they needed some additional strength in. So we complemented each other very well in that sense. 

Bisnow: Give us a bold prediction for the rest of 2024.

Pichon: My bold prediction is that Downtown D.C. will see a resurgence, transforming into a mixed-use destination highlighting projects like the Elle with record-breaking leasing and ROI, welcoming new residents that will in turn maintain and bring back a reasonable balance of office use.

Bisnow: What is your weekend routine?

Pichon: Rest and relaxation. The weeks are so draining sometimes that it gets to Friday afternoon and I really can't do much more. But thankfully, I have a family that keeps me getting up on Saturday mornings and active. So it's really centered around family activities once the weekend hits. Little bit of trying to stay connected to what's going on in the workplace, keeping things moving, but it's really reenergizing with family for me.