Washington Business Journal: This empty Alexandria building undergoing a major makeover is part of a bid for HQ2

November 10, 2017:

Rubenstein Partners LP has launched a multimillion-dollar renovation of a former Department of Defense building in Alexandria with the hope of landing new anchor tenants, with Amazon’s second headquarters high on its wish list.

The Philadelphia-based developer included Carlyle Tower at 2461 Eisenhower Ave. in a joint bid with a neighboring property owner and the city of Alexandria seeking to land HQ2, as Amazon has dubbed its massive space requirement. Rubenstein, and its joint venture partner Northpoint Realty Partners, didn’t kick off its renovations with the hope of landing the highly coveted economic development prospect, and neither is it banking on that as its only prospect.

But it hasn’t ruled out the possibility of landing the major corporate enterprise.

Rubenstein acquired the property nearly two years before Amazon kicked off its search with the hope of benefiting from more immediate market forces, including the National Science Foundation’s new headquarters nearby and the tail of contractors expected to follow the NSF from Ballston to Alexandria. Still, Rubenstein’s D.C. market director, Steve Evans, said he believes the bid can meet the e-commerce and cloud computing company’s rather large space needs.

“All I can say is that we have the ability to accommodate HQ2, based on Amazon’s requirements,” Evans said, declining to disclose details of the proposal. “There’s a lot of development capacity in what Alexandria calls Eisenhower East that can meet the needs of large tenants.”

While Amazon While Amazon would help to fill the 14-story Carlyle Tower, Evans said he believes the building’s 335,000 square feet of vacant office space will appeal to a much broader base of prospective tenants than just Amazon. The building is steps from the Eisenhower Avenue Metro station, the NSF’s new headquarters and a base of shops and restaurants including the AMC Hoffman Center 22 movie theater. Then there’s StonebridgeCarras’ planned changes to Hoffman Town Center, widely expected to include a small-format Wegmans grocery store.

Rubenstein’s gut-and-rehab renovations, now underway, include upgrading the building’s mechanical systems and common areas and adding a new tenant lounge, fitness and conference center designed to appeal to tech tenants. After a major exterior renovation by the building’s prior owner, Evans believes the building offers tenants what will essentially feel like a brand new building but at more competitive rental rates than new construction. He declined to disclose the renovation costs or asking rents.

The developer has retained Newmark Knight Frank brokers Steve Hoffeditz, Andy Klaff and Ed Clark to market the space.

“It’s the largest block of almost-brand-new office space at a Metro station, at a discount to what it would cost if you had to really build from ground up,” Evans said. “We’ve seen more large tenants interested than originally anticipated, and we expect that interest to pick up much more.”

In addition to the office tower renovations, Rubenstein also plans to fill up what vacancies remain at the site’s Shops at Carlyle Tower, with about 22,500 square feet of existing retail space, and to develop a 7,500-square-foot retail pad site which could accommodate three new restaurants. Rubenstein expects to finish the base building renovations in the first quarter of 2018, followed by the existing retail by mid-year and the retail pad by late 2018 or early 2019.

All that would be subject to a change of plans in the event of HQ2, though the Alexandria bid faces steep competition. Amazon reported receiving 238 bids from across North America, including several from the D.C. metro area, which is considered among the top prospects for the requirement.

Carlyle Tower would be combined with Perseus Realty’s 200 Stovall St. — the subject of a planned conversion from a 610,000-square-foot office building into apartments with ground floor retail — and part of Alexandria’s larger Eisenhower East Small Area Plan, to meet Amazon’s long-term needs for around 8 million square feet.

Stephanie Landrum, president and CEO of the Alexandria Economic Development Partnership, declined to disclose what sites the city and partnership submitted in response to Amazon’s request for proposals. At the same time, she said the partnership identified a handful of areas in the city that are poised for growth including the Eisenhower Avenue corridor, Potomac Yard, the Landmark Mall site and space by the Van Dorn Street Metro.

“We scanned the city and tried to find all areas that could meet Amazon’s relatively detailed requirements and worked collaboratively with our Northern Virginia partners to really put forward a reasonable pitch,” Landrum said. As is its practice, she added, the partnership does not provide project-specific information on competitive procurements.