Facing GSA Departures, Pembroke Launches Full-Scale Renovation Of 1201 New York Ave.

When Boston-based Pembroke Real Estate bought the 430K SF office building at 1201 New York Ave. NW in 2006, the adjacent CityCenterDC was still in the planning stages, and central business district rents were still low enough to fill buildings with federal government tenants. 

Now, CityCenter's completed first phase has brought life to the area, and the second phase is under construction. But government tenants have begun to flee to more affordable neighborhoods like Southwest DC and NoMa. After losing a 110K SF government tenant and with another major departure looming, Pembroke is launching a full-scale renovation of the property.

The company invited 150 local brokers to a launch event Wednesday to show off its plans, which include a 13-story glass atrium above the two-story lobby, a new 15K SF indoor-outdoor rooftop deck, a 6K SF fitness center and new floor-to-ceiling windows that will give it a shiny glass exterior. 

"When we bought the building, there were a lot of government tenants, and we knew long term as the area improved that government tenants have a limited ability to stay in the core," Pembroke vice president and head of DC region Cory Saunders said. "The long-term plan here was to see if there was an opportunity to cater to private sector tenants."

The building has not been renovated since it was built in 1989, Saunders said. Its ground floor is home to the popular Bobby Van's Grill, which Pembroke is partnering with to cater events for the office tenants. Pembroke also adopted the park in front of the building between I Street NW and New York Avenue NW from the National Park Service, offering to maintain the green space in exchange for the ability to host events on it. 

The owner had been planning a major renovation for years, but the catalyst came in 2015 when the Corporation for National and Community Service vacated its 110K SF office to move to 250 E St. SW. The building's 12th and 13th floors will become empty in 2019 when the Department of Homeland Security's lease expires. 

Since Pembroke began planning the renovation, it has signed two leases with Accenture and Subject Matter, bringing the building to 72% occupied before the DHS departure. It is marketing the entire 10th floor, a majority of the 11th floor and various other 10K to 15K SF suites throughout the building. 

When the renovation is complete in 2020, much of the building's exterior will have new floor-to-ceiling glass windows, matching the glossy style of today's new trophy buildings. Since the building is nearly three decades old, Saunders said he does not expect to command trophy-level rents after the renovation, but he hopes the makeover will give the property a significant boost. 

"We’re spending a lot of diligent time and resources here to try to create value for existing and future tenants," Saunders said. "Hopefully it’s acknowledged in the marketplace that the building is worth more to somebody now that this renovation is happening." 

The exterior portion of the renovation will not begin until 2019 after the first phase, which includes the lobby and amenity spaces, is completed. 

By installing inward-facing floor-to-ceiling glass in the building's 13-story atrium, the renovation's first phase will bring more light from the sunroof into the offices and give the lobby a more modern feel. 

The lobby will have two floors filled with collaborative workstations. Saunders said the grand marble lobbies many DC buildings have can help make a statement, but they are often wasted space that never gets used by the office tenants.

"We’re going more toward a warmer, inviting lobby that encourages you to spend time in it and not just pass through it," Saunders said. 

By traveling to see Pembroke's global office portfolio, Saunders has seen innovative ways to use lobbies in cities like Sydney and Melbourne, Australia, that he hopes to replicate in DC. 

"The way they’ve created amenity-rich and usable lobbies, particularly in Australia they started to get the service element correct as to how you not just provide these amenities but how you provide your tenants with access to high-end services that allow them to really leverage them," Saunders said. 

Following this trend, the building will have a full-time amenity coordinator who will help book events and catering with Bobby Van's, in addition to the full-time property management staff. 

The renovation's first phase will also more than double the size of the gym, creating a 6K SF fitness center. It will feature a Wellbeats on-demand fitness system allowing users to customize their workouts. The gym will include more open space for dynamic workouts and fewer stationary machines, a recent trend Saunders has seen emerging. 

Despite its prime location, the building has an orange mansard roof with no access for its office tenants to enjoy the views. The renovation's first phase will change that, creating a 15K SF indoor-outdoor roof deck. The indoor portion will have conference space that can fit up to 140 people, plus a clubroom with table games. The outdoor portion will be landscaped and have seating areas with views of the Washington Monument and overlooking the nearby activity at CityCenter. 

"The area has become more compelling with time since 2006 in a really cool and interesting way," Saunders said. "It’s allowed us to also push the envelope on what we can do and leverage all the excitement here and build a roof deck that captures some of it visually by exposing some of the views."