Bernstein drops $92M anchor in SE

The Bernstein Cos.' investment arm has paid $92 million for two office buildings in Maritime Plaza, a buy that breaks up the partially developed, mixed-use complex once expected to ignite a firestorm of retail and residential in Southeast.

The D.C.-based investor and developer takes control of the 345,736 square feet at 1220 12th and 1201 M streets from seller Lincoln Property, which retains control of undeveloped land with Washington Gas. The offices have a 50,000-square-foot vacancy, and include tenants such as General Dynamics, Northrop Grumman and Computer Sciences.

The Maritime Plaza offices are "well-located with a solid base of government contractors," says Gary Griffin, acquisitions director at Bernstein. "Our property ... brings the whole area together."

The deal was expected to close Feb. 12.

In addition to the two offices built in 2001 and 2003, the 12-acre site can accommodate three more buildings totaling about 600,000 square feet as well as a 300-room hotel.

At the time of its groundbreaking in 2000, D.C. Del. Eleanor Holmes Norton called Maritime Plaza one of the largest economic development projects in the city.

While retail and residential growth hasn't gone gangbusters in the three years since the first Maritime Plaza building opened, the Naval Sea Systems Command and many of the government contractors serving it have moved to the Navy Yard and its vicinity. NavSea relocated from Crystal City in 2002.

Griffin is confident NavSea will be a consistent draw for office tenants. And, because the residential market between Second and Fifth streets north of M Street is being redeveloped, he expects more retailers to move in.

Whether Maritime Plaza has lived up to expectations is a matter of perspective.

"Tenants didn't choose Maritime Plaza or the Navy Yard submarket because of the promise of future amenities," says David Houck, senior vice president at real estate firm Staubach. Houck brokered leases for Computer Sciences Corp. and Booz Allen Hamilton in the Maritime Plaza buildings. "Tenants choose that location because of its proximity to the Navy Yard, period."

Griffin says there have been no discussions regarding Bernstein buying the remaining parts of Maritime Plaza, or developing the proposed buildings.

Washington Gas owns all the land in the project and has retained its ownership, with Bernstein signing a 100-year ground lease.

Holliday Fenoglio Fowler represented both Lincoln and Bernstein's investment unit, Consortium Capital, in the transaction.

Source: Washington Business Journal
Author: Suzanne White