It took a while, but the developer that spent millions gutting and rebuilding an empty downtown Bethesda office building is finally filling it with tenants.
Akridge, which bought and rebuilt the old NIH office building at 7550 Wisconsin Avenue, announced on Monday it has signed six new leases. The 10-story, 110,000- square-foot building in the heart of downtown Bethesda — the first new Class A office space in the area since 2001 — is now 65 percent full.
And after years of growing office vacancy rates around the Washington area, developers are hopeful the trend is about to reverse.
“We’ve been following the Akridge and Carr buildings and rooting for them,” said Greg Rooney, vice president of development for the Bernstein Companies, “We’re looking for a lift to come any time now.”
The Bernstein Companies has long planned an office building and hotel project at 7740 Wisconsin Ave., just a few blocks down from the property Akridge showed off in February 2013.
Rooney spoke as a panelist on Friday at the Bethesda-Chevy Chase Chamber’s Annual Real Estate Update. The lack of demand for new office product was once again a popular topic.
There are 190 office properties totaling 8.3 million square feet in downtown Bethesda, according to the Montgomery County Planning Department. Nearly half of that inventory is in 19 large Class A office buildings in the Central Business District.
At the end of 2013, the average office vacancy rate in downtown Bethesda was 10.7 percent. Infill properties long ago envisioned as new offices in Bethesda’s “Metro Core” are now being pitched as mixed use residential buildings.
Bernstein’s project has shifted from predominantly office to featuring a Westin hotel, with office.
Carr Properties’ nearly complete 220,000-square foot building at 4500 East-West Highway will be Bethesda’s first new office building since 2001. The developer went into construction without any major tenants signed on.
With the federal government looking to shed office space and companies as a whole looking to use less space, building new office space in Montgomery County has been a difficult challenge.
In March, Montgomery County announced a rental assistance program aimed at small companies to help reduce the county’s 13.5 office vacancy rate.
Landover-based L-Soft International, an online marketing firm with about 15 employees, was the first to take advantage. It will move into a 4,900-square foot office at the Akridge building with $20,000 in county money.
Federal Realty is building an 80,000-square-foot office building as part of Phase 1 of its Pike & Rose project on Rockville Pike, part of what the developer there described as integral to the project’s work-live-play concept. It just so happened the Chamber’s event was split into three panels: work, live and play.
“There’s clearly a need to increase office traffic in general in the county,” said Federal Realty’s Evan Goldman at Friday’s event. “What we found generally works for office and residential is pretty similar. If you have a great environment on the first floor, pedestrian-oriented streets, the right kind of urban park spaces, it works.”
Goldman said the building is between 50 and 75 percent leased.
Carnemark Systems and Design, KVS Title, and SunEdison are among the other new tenants announced for the Akridge building, which sat vacant for nearly eight years before Akridge and Rockwood Capital bought it for $12.5 million in a federal auction in 2010.
“The signing of these leases demonstrates the enormous interest in trophy-class properties in high demand locations. Downtown Bethesda, with its desirable urban mix of office, residential, retail, and entertainment appeals to a wide range of companies seeking to tap the outstanding talent pool in the greater D. C. area,” Rockwood managing director Joe Gorin said in a press release. “We are delighted to bring in new tenants who will enjoy all this area has to offer.”
Others are hoping the office interest doesn’t stop there.
“The action at Akridge is a good incidator,” Rooney said.
