Lunch at Joe's Stone Crab: Carr Race
Fresh off a $300M injection from an Israeli investor last year and continuing support from an open-ended JP Morgan fund plus its own family assets, Carr Properties was one of 2013's most active buyers. But as Oliver Carr III told us at lunch yesterday, the buying and development ain’t over.
We hosted Oliver, new Carr COO Dan Dooley, and starchitect Shalom Baranes at Joe's Seafood, Prime Steak and Stone Crab in the first in a lunch series we’ll be doing at the new 15th Street spot. But let's get right to the news: Oliver tells us the firm is under contract to purchase 2001 Pennsylvania Ave from a partnership including Property Group Partners, in a deal that'll close mid-July. It's the latest in a recent buying surge that includes the Washington Post site on 15th Street as well as interests in three R-B Corridor projects (2311 Wilson, 2025 Clarendon, and Two Liberty Center).
Here's 2001 Penn, which PGP picked up in '07 for $111M. (Oliver was mum on the price for the fully leased property—too bad folks don’t do those three martini lunches anymore.) The buy is all part of the firm's strategy to own high-quality urban core office product (eg, being walking distance to Metro, and having great light, air, and amenities).
Dan (who came over to Carr five weeks ago after 13 years with Tishman Speyer) and Oliver say that, given current “rich pricing” for existing buildings, the firm prefers new development—and they have land to support 1.5M SF of it including 900k SF at the Post site, which they envision as office, retail, and hotel; the hope to reveal a plan in about three to six months.
The pair is also excited about 4500 East-West Hwy, which when it delivers around Labor Day will be Bethesda's first ground-up office construction, as well as the neighborhood’s first LEED Platinum property. Law firms, financial firms, and associations are being targeted for the trophy building, Dan says. Meanwhile, Carr has enough dry powder for another $500M of action, given that they they don’t like to leverage more than 50%.
Starchitect Shalom Baranes did 4500, creating a multi-story lobby, and using high-quality exterior glass for striking appearance and views and long-span steel for column-free space. (Things haven't been this bad for columns since the day the Ottoman Turks decided to use the Parthenon as a gun magazine.) For that reason, Shalom says they build under FAR to increase dramatic volumetric space, which is not just an allure to tenants but can drive up land values. Oliver points out the strongest demand in this sluggish office market is for new high-end buildings. Although they will do some mixed-use, the plan for their current 22 building, 4M SF portfolio is to stick to “pure play best-in-class,” which they see as attracting the highest valuation for investors.
Joe's was a gracious host to us yesterday, and after lunch we snapped the new spot's manager, Travis Paez, flanked by maitre d's Ahmed Mohamed and Michael Flanagan. More info on the new restaurant.
