But larger trends can not be ignored and it is clear that the suburban office market has entered into a Darwinian spiral — only the newest properties, located in mixed-use complexes and close to mass transit will survive. 4 Research Park was developed in 1968.

And so the 82,000-square foot building become Washington Property Co.'s first office-to-self-storage-facility conversion project. The four story building has 715 climate-controlled storage units and is being managed by CubeSmart.

Self-storage, of course, has a steady performer – even out-performer — among the commercial real estate food groups in this cycle. In a market research report on national trends, Marcus & Millichap predicts that occupancy and rent levels are both expected to rise this year. It also notes that:

The positive economic environment and demographics sustaining multifamily demand is also boosting the self-storage sector. Temporary storage required by more transient residents remains one of the main demand drivers for the sector. Additionally, the tighter living spaces offered by rental housing, particularly in urban locales, often cannot accommodate all of a resident's belongings.

There are number of multifamily projects, incidentally, underway in Rockville, Twinbrook and other nearby submarkets.

One Research Court

WPC, though, has not lost hope on the suburban office market's business case as can be seen by its recent purchase of the adjacent One Research Court for $17 million. It acquired the building in a joint venture with Baltimore-based Alex. Brown Realty.

The 113,620-square foot building was built in 2001 and is 89% occupied by 14 tenants. The new owners plan to make upgrades to this building and seek out tenants that are price sensitive. (Sound familiar?)

“The difference between the two buildings is simply one of age and obsolescence,” says WPC Principal Andrew Eshelman in a prepared statement.

“We converted 4 Research Place to self-storage use because it was built in 1968 and had become obsolete, contributing to the growing vacancy rate in Montgomery County's suburban office markets along with the decline in Federal leasing.”

“One Research Court, on the other hand, was built in 2001 and has a strong existing tenant base as well as amenities such as an onsite fitness center and deli,” Eshelman continued. “We believe that our planned value-add improvements, along with a dearth of new supply, will increase this property's appeal to small- and medium-sized businesses, including those in the life sciences.”

ROCKVILLE, MD–Suburban office properties that have some mileage on them are in trouble. Many are vacant, are located in office parks with few amenities nearby, and must be reached by car. Few people want to work in such an environment — but they have little problem storing their extra belongings in such a building.

Enter Washington Property Co. and its solution for 4 Research Place, an erstwhile office building it acquired in 2006. During that time period — 2006 to 2007 — the company, in fact, bought a handful of suburban offices including 1390 Piccard Dr., 15201 Diamondback Dr. and Washingtonian South. Its plan was to rehab and reposition them for price-sensitive tenants who wouldn't mind being located in refurbished buildings because they were relatively close to Washington DC, Downtown Rockville and Silver Spring.

In the case of 4 Research Park, the plan work — the building was fully leased four months ahead of schedule.

A Darwinian Spiral

But larger trends can not be ignored and it is clear that the suburban office market has entered into a Darwinian spiral — only the newest properties, located in mixed-use complexes and close to mass transit will survive. 4 Research Park was developed in 1968.

And so the 82,000-square foot building become Washington Property Co.'s first office-to-self-storage-facility conversion project. The four story building has 715 climate-controlled storage units and is being managed by CubeSmart.

Self-storage, of course, has a steady performer – even out-performer — among the commercial real estate food groups in this cycle. In a market research report on national trends, Marcus & Millichap predicts that occupancy and rent levels are both expected to rise this year. It also notes that:

The positive economic environment and demographics sustaining multifamily demand is also boosting the self-storage sector. Temporary storage required by more transient residents remains one of the main demand drivers for the sector. Additionally, the tighter living spaces offered by rental housing, particularly in urban locales, often cannot accommodate all of a resident's belongings.

There are number of multifamily projects, incidentally, underway in Rockville, Twinbrook and other nearby submarkets.

One Research Court

WPC, though, has not lost hope on the suburban office market's business case as can be seen by its recent purchase of the adjacent One Research Court for $17 million. It acquired the building in a joint venture with Baltimore-based Alex. Brown Realty.

The 113,620-square foot building was built in 2001 and is 89% occupied by 14 tenants. The new owners plan to make upgrades to this building and seek out tenants that are price sensitive. (Sound familiar?)

“The difference between the two buildings is simply one of age and obsolescence,” says WPC Principal Andrew Eshelman in a prepared statement.

“We converted 4 Research Place to self-storage use because it was built in 1968 and had become obsolete, contributing to the growing vacancy rate in Montgomery County's suburban office markets along with the decline in Federal leasing.”

“One Research Court, on the other hand, was built in 2001 and has a strong existing tenant base as well as amenities such as an onsite fitness center and deli,” Eshelman continued. “We believe that our planned value-add improvements, along with a dearth of new supply, will increase this property's appeal to small- and medium-sized businesses, including those in the life sciences.”