Real estate firms are fleeing suburban DC to bid for offices near bike lanes
May 25, 2016
Michael Andersen, Green Lane Project staff writer
Location, location, location. Photo: Stewart Eastep.
Nobody sounds more surprised about Robert Milkovich's latest plan for maximizing profits than Robert Milkovich.
A Washington Post article tells his company's story. It's part of a report that writes that in Washington, DC's Northern Virginia suburbs, "record-high vacancies have become the new normal as employers curb their appetite for space and shift their attention to more urban locales."
Seven weeks ago, First Potomac Realty Trust, a half-billion-dollar Bethesda firm, jettisoned 26 office and industrial buildings in Chantilly, Herndon, Manassas, Merrifield and Reston, for $96 million.
The sale price was $26.5 million below what the company paid for them years before — an unfortunate buy-high, sell-low maneuver — but the buildings were about a quarter empty, and First Potomac chief executive Robert Milkovich says he plans on dumping another $200 million in similar properties the same way.
Instead, the company is focused on buying properties near Metro stations, restaurants and also bike lanes, a variable for evaluating office buildings that, Milkovich said in an interview, he had never previously considered in his 25-year career in Washington real estate.
“I’m just continually amazed at how many people are commuting around downtown by bicycle,” he said. “I don’t think that was the case even five years ago.”
The buildings First Potomac sold are “the poster child of suburban office space obsolescence,” said Greg Leisch of the research and brokerage firm NGKF.
So few companies are leasing space away from Metro stations and walkable neighborhoods that properties in office parks and in traffic-riddled corridors have become risky propositions for landlords even at bargain prices.
Milkovich is totally right — there weren't nearly as many people commuting around central DC by bicycle five years ago. In fact, there were approximately half as many. DC, one of the first U.S. cities to launch a large public bike-sharing program and to start connecting a protected bike lane network on busy streets, doubled its estimated bike-commuting rate from 2009 to 2013.
That's the result of thousands of individual choices to get to work on a bike.
Of course, this isn't great news for Chantilly, Herndon, Manassas, Merrifield or Reston.
Fortunately, there's nothing stopping these areas from creating their own comfortable, relatively low-cost biking networks. No metro area in the country, probably, has seen more enthusiasm in its suburbs for bike infrastructure. Arlington and Alexandria have dozens of bike-share stations; Montgomery County is working on an entire protected bike lane network in Silver Spring.
That's progress. Suburbs, even inner-ring suburbs, will never be the same as central cities, and of course a simple barrier between bike and car traffic wouldn't make them so. But it will make it easier for more people to get quickly and happily to a restaurant or a Metro station. That's something many of the region's residents, workers and employers seem to be looking for.
The Green Lane Project helps U.S. cities build better bike lanes to create low-stress streets. You can follow us on LinkedIn, Twitter or Facebook or sign up for our weekly news digest about protected bike lanes. Story tip? Write [email protected]
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