MBA Real Estate Club explores DC market

An 18x6' scale model of The Wharf redevelopment managed by PN Hoffman and Madison Marquette

An 18×6′ scale model of The Wharf redevelopment managed by PN Hoffman and Madison Marquette

The UNC Kenan-Flagler MBA Real Estate Club recently made its second career trek to Washington DC.

The trip began with a late afternoon visit to the DC office of Boston Properties, a self-managed real estate investment trust, where we met with Pete Otteni (MBA ’00), vice president of development; Caitlin Shelby (MBA ’12), project manager; and Jake Stroman (MBA ’05), senior project manager. They walked us through a day in the life of a developer and explained what it really means to be a true generalist and project manager. They also described the different levels of engagement required when dealing with projects at various stages, including entitlement, underwriting, construction and punch-list.

After the office visit, we headed to Café Deluxe for an evening of networking with DC-area alumni and members of the Undergraduate Real Estate Club.

Friday morning began with a presentation from HFF, one of the largest and most successful commercial real estate capital intermediaries in the U.S. HFF gave presentations on their major business lines, including office investment sales, net lease and multi-family. Dek Potts (BA ’81) and Jim Meisel (BA ’80), who work with the office investment sales team, discussed their investment strategies and shared their insights on the state of the DC-area office real estate market. While certain suburban office markets have been suffering due to government consolidation and larger trends – such as law firms requiring less space – Dek and Tim said urban office space sales within the District have been strong.

HFF Senior Managing Director Tim Hall (MBA ’88) talked us through the relationship between private equity and real estate. His net lease team uses sale leasebacks – which allow operating companies to sell real estate they own to free up capital and enter into long-term leases with the buyer – to benefit all parties. This allows the operating companies to focus on execution and creates new investment opportunities for high-value real estate. Senior Managing Director Dave Nachison, who leads the multi-family housing investment sales and project capitalization team, explained how the availability of capital in the latest real estate cycle has helped boost multi-family assets to trade at all-time low cap rates and shared insights on his group’s strategy.

During our visit to The JBG Companies, we had the opportunity to learn about one of the firm’s unique projects – redeveloping the retail corridor surrounding Nationals Park, the Major League Baseball (MLB) stadium that’s home to the Washington Nationals. Kai Reynolds (MBA ’00) – a partner at the firm – and Senior Development Analyst Matt Davis shared a summarized version of the memo they presented to their investment committee to gain final approval for the project. To help the investors understand the potential impact the project would have on the community, Kai and Matt looked at interesting measurements – such as population and average spending within certain distances of the stadium – and compared them to the retail areas surrounding the top 10 MLB baseball parks in the U.S. These metrics allowed JBG to demonstrate the level of economic vitality that could be achieved in the area surrounding the stadium if the real estate development is managed properly.

Next, we travelled to DC’s Union Market to meet with EDENS, a leader in retail development in primary markets along the East Coast. As it stands today, Union Market is an indoor artisanal market where visitors can purchase organic groceries, semi-prepared and prepared food from an eclectic mix of vendors. EDENS is known for their development strategy of creating buildings that support vibrant living, working and shopping, combined with public space.

Reynolds Allen, vice president of development, showed us aerial photos and overlays of the Union Market area while explaining the firm’s plan for transforming the warehouse district. The firm’s unique design will leave the original building intact and add an office building and movie theater on top of the existing structure.

The final stop on our DC trek was The Wharf, a major mixed-use waterfront redevelopment managed by PN Hoffman – one of DC’s premier developers of urban residential and mixed-use neighborhood transformation projects – and Madison Marquette, a private investment and operating company focused on infill mixed-use projects in the major and gateway markets of the U.S.

PN Hoffman associate Matt Steenhoek presented the vision for the site’s redevelopment with an 18×6’ scale model. One of the major features of the redevelopment plan will be pedestrian-friendly waterfront streets that can convert to pedestrian-only streets during major events. The redevelopment will be in two phases. The first phase includes constructing new office, multi-family and ground floor retail, as well as a hotel and music venue. Phase two will include additional office and apartment development.

By Richie Lim (MBA ’16)