(Read more on the multifamily market.)
WASHINGTON, DC-San Francisco-based MacFarlane Partners and local developer JBG Cos. are partnering for the first time to develop an ambitious office, retail, hotel and multifamily portfolio of 93 developments at 43 sites throughout the Greater DC area. The duo says these assets, which JBG contributed to the venture, will be valued at $10 billion once the development and extensive renovations planned are complete. The joint venture, called JBG Urban, will be seeded with $2.6 billion from a variety of sources including investment entities managed by MacFarlane Partners, investors in JBG Investor Funds I through V, JBG's principals, and the Morgan Stanley Special Situations Fund.
The investment profile of the fund is to target "smart-growth" development and redevelopment in the Washington, DC area, Victor B. MacFarlane, managing principal, chairman and CEO of MacFarlane Partners, says. "Our investment will further the development of high-density, commercial and residential space around transit hubs, which we believe will encourage residents to use the Metro system as a primary means of transportation," he says in a statement. It's the largest investment to date made by the company, he adds.
MacFarlane Partners' capital allocation is being made on behalf of both MacFarlane Urban Real Estate Fund II--a recently formed, closed-end commingled fund that invests in urban and high-density suburban real estate development, redevelopment and repositioning projects--and its venture with the California Public Employees' Retirement System. JBG Urban will also pursue new development and investment opportunities with $300 million of the JBG Urban capital set aside for this purpose.
Twenty-five of the 42 development sites are located in northern Virginia (Alexandria, Annandale, Arlington, Falls Church, Reston and Vienna), 13 are in Maryland (Bethesda, Bowie, Gaithersburg and Silver Spring) and four are within the District of Columbia. These assets do not fall in any particular category: the office, hotel, multifamily and mixed-use projects are in various stages of stabilization; some are slated for demolition, others are close to being repositioned for value add, yet others are undeveloped urban infill sites.
Development plans call for the construction or renovation of approximately 8.5 million sf of office space, 2.2 million sf of retail space, 13,200 multifamily units (both rental apartments and for-sale condominiums) and 2,500 hotel keys. Work on a number of the sites already is under way, with delivery from 2008 to 2013. Projects include:
- Mark Center, a 150-acre, mixed-use, retail-multifamily campus in Alexandria, VA, that will be redeveloped to add additional multifamily units;
- Twinbrook Commons, a mixed-use transit village under development on 26 acres around the Twinbrook Metrorail station in Rockville, MD, that will feature rental apartments, retail and office space;
- The 225-key Bethesda North Marriott will be expanded to include an additional 225 new rooms, as well as rental apartments;
- Central Place I and II, which will entail the redevelopment of a city block directly above the Rosslyn Metrorail station into a mixed-use project with office, retail and multifamily space;
- Rosslyn Gateway North and South, two class B office buildings near the Rosslyn Metrorail will be redeveloped into a mixed-use project with class A office, retail, hotel and multifamily space;
- Capitol Square, a planned, 1.6-million-sf, mixed-use development in NoMA, which will feature retail, office, hotel and multifamily space.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
