‘We Need To Be Competitive’: Chevy Chase Land Co.’s John Ziegenhein At Bisnow’s Montgomery County Event

Neighboring the nation’s capital, Montgomery County, Maryland, remains one of the most popular spots in the D.C. region. As the area’s second-largest county, with just over 1 million residents, MoCo is known for its abundance of opportunity in the life sciences, healthcare and hospitality sectors — as well as its diverse and educated workforce.

County officials, however, have recognized that “job growth over the past two decades has been slow and household incomes have been flat.” Office vacancies in the county reached higher than 20% in Q2, and housing affordability has become a cause for concern, as it’s estimated that nearly 50% of renters in MoCo spend 30% or more of their monthly income on rent. 

This has pushed county executives to create new development plans that will create a brighter future for its residents and encourage economic prosperity.

“Montgomery County has a lot to offer,” said John Ziegenhein, president and CEO of The Chevy Chase Land Co. “The desire to be in a neighborhood that’s just outside of the city without the hassle of commuting downtown will benefit the county. There’s been a strong emphasis on residential development here recently, but the uncertain capital markets are making development more difficult.”

Ziegenhein will speak at Bisnow’s Thriving In 2050 And Beyond: The Latest On Development Plans In Montgomery County event on Sept. 6. Register here.

Bisnow spoke to Ziegenhein to find out more about obstacles in the county’s development pipeline, his hopes for the market’s future and what inspired him to speak at Bisnow’s upcoming event. 

Bisnow: How do you view the current state of development in Montgomery County?

Ziegenhein: Development is very challenging today in Montgomery County. Most of this is due to the capital markets, specifically the lack of debt and equity financing. More developers who have projects ready to come out of the ground are not moving forward because they don't have financing available. 

In the last 12 to 18 months, residential development has been a big topic of discussion. The county would like to have a consistent pipeline of residential units coming to the market to satisfy demand, but I think that's going to be on hold for at least the near term.

Once the capital markets correct themselves, we may see a flood of construction, which then could put more upward pressure on the cost of materials and labor. This may exacerbate the already high cost of rental units.

Bisnow: What are some of the development/economic challenges facing the county?

Ziegenhein: I can't emphasize enough what's happening in the capital markets. Many projects are not going to get financing unless there's something very special about them, or there’s a really strong, existing relationship with a financing institution.

There's obvious challenges facing today’s market: inflation, higher interest rates and a lot of uncertainty. The Chevy Chase Land Co. has a lot of office property here in Montgomery County, and the one thing that worries us the most is the future of office space. I'm hopeful that we're going to start to see more positive momentum on the office side as more companies require a return to the office.

Everybody in a county leadership role needs to recognize that this market has significant competition amongst the various jurisdictions, from Virginia to D.C. to here in Maryland. The county needs to be competitive if we want to attract businesses and investment. Economic development is going to sustain the growth here locally. We need to be proactive by looking at incentives that we can offer to attract the most skilled labor and help drive a thriving economy.

Bisnow: What developments are The Chevy Chase Land Co. working on?

Ziegenhein: The Chevy Chase Land Co. has several projects going on right now. We recently did a major renovation here at The Collection in Chevy Chase, and we're starting to see the benefits of it. We have several new restaurants that have opened here, and we have other retail tenants under construction that will be opening up next year. 

We're in the midst of an extensive renovation of 2 Bethesda Metro, which we built about 23 years ago. We're probably one of the few groups that's undergoing a major office renovation in this environment, but what makes it so special is there really hasn't been a well-thought-out amenity package for 2 Bethesda Metro since it was built. We had the opportunity to turn an annex building on the property into an amenity pavilion, as well as add a new lobby on Woodmont Avenue. We are repositioning the building to be oriented toward Bethesda Row, and our amenity package consisting of a large conference facility, lounge, fitness studio and rooftop deck will compete with newer trophy assets. 

In partnership with Bozzuto, we're close to finishing one of our largest projects to date at Chevy Chase Lake. This is a large mixed-use project with a grocery store, several restaurants and three residential buildings including new Ritz-Carlton condominiums. We’re also taking our Chevy Chase Lake West property, which is across from Chevy Chase Lake, through the preliminary plan of subdivision approval process with Montgomery County to tee up future development. We're hoping to have that process finished this year. 

Bisnow: Where do you see Montgomery County’s CRE market headed in the next few years?

Ziegenhein: Montgomery County is a great place to work and live. The county’s success in today’s market boils down to the leadership that will help position it to attract development and economic growth. We have all of the infrastructure in place to do this, it's just going to take all of us working together to make it happen.

Bisnow: What inspired you to speak at Bisnow’s Montgomery County event?

Ziegenhein: I spoke at last year's Montgomery County event, and I really enjoyed being back in a large group environment. We had a lot of local leaders and developers attend, which was great to see. Getting the chance to have an open discussion with my peers and talking about where we're seeing opportunities and how we can navigate challenges together was very productive.

This year, it's going to be a whole new conversation, given everything that we're seeing and dealing with today. We have increasing property taxes, continued inflationary pressure and now rent control legislation. It should be a vibrant dialogue.

This article was produced in collaboration between The Chevy Chase Land Co. and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.