Most obvious among the company's strategic shifts is its orientation to developing multifamily projects instead of condo projects. "We pride ourselves on being flexible and able to adjust quickly to market demand," Chappelear tells GlobeSt.com. For example, there is a 318-unit multifamily project for Silver Spring, MD in the design stage that originally had been slated for condo development. That said, the majority of the projects slated for 2008 were multifamily--and were planned that way two years ago, he adds.
Other changes in 2008's pipeline include a greater number of mixed-use projects--a reflection of Kettler's growing preference for urban development--and its interest in developing green. "All of our new designs will have the ability to be LEED-certified," Chappelear says.
The groundwork for several of the projects planned for next year was laid in 2007. Earlier this year, Kettler acquired 19.6 acres in Pentagon City from affiliates of Vornado Realty Trust for approximately $220.4 million in a two-phase purchase, as GlobeSt.com previously reported. The company is about to begin construction there on one multifamily building--for the moment called Metropolitan Park II--that will deliver roughly 300 units at a development cost of $120 million. The company also plans to begin construction on a 411-unit, $170-million building adjacent to Met II next year. They will join Kettler's other developments there: Metropolitan at Pentagon Row, which delivered 325 units in 2002, and the Metropolitan at Pentagon City, which delivered 326 units in 2005.
Other developments in the pipeline include Midtown Silver Spring-Ripley Street, a 318-unit, $130-million apartment project; Excelsior Parc-Oracle, a 456-unit, $180-million multifamily in Reston; Ridgewood, a $135-million, 484-unit apartment in Fairfax; Largo Block B&C, a $160-million, 454-unit apartment project; Rockville Town Center, a $123-million, 291-unit project; and the Village at Leesburg, mixed-use residential project that will add 635 homes and some 970,000 sf to the Leesburg area at a development cost of close to half a billion dollars.
Next year the company also plans to begin the first phase of a multi-phase, 10-year project in Prince William County. Now called Potomac Harbor (it was originally Harbor Station), it is a mixed-use PUD development on 2,000 acres on the Potomac River. It will feature a golf course, 480-slip marina, its own commuter station, retail shopping and an anchor grocery store. It will also have some 4,000 residential units, a 350-key hotel, 1.8 million sf of office space and 200,000 sf of retail space. Development costs will easily come to $3 billion, Chappelear says.
Next year, as it finishes the land development and begins selling lots to home builders, the company expects to spend $400 million.
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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.
