With the Defense Intelligence Agency (DIA) set to vacate 221,000 square feet at the 3100 Clarendon building in the Rosslyn-Ballston Corridor, executives at Piedmont Office Realty Trust, Inc. (NYSE: PDM) are expressing excitement about the asset’s value-creation potential through redevelopment.
The Johns Creek, GA-based REIT also says it has some activity at 4250 Fairfax, where Qwest is reducing its occupancy.
While plans for the 3100 Clarendon building are not yet finalized, executives told analysts in their quarterly conference call that they have “a lot of boards” showing potential redevelopment ideas despite having limited access to the building due to security clearances.
“As soon as we can get in there, we are going to demolish the existing improvement on the typical office floors, which are 25 years old,” said Robert K. Wiberg, who joined Piedmont as its Executive Vice President for the Mid-Atlantic Region and Head of Development in late 2012. “The building is located on a metro stop [Clarendon Metro Station on the Orange Line] in what we believe is one of the most desirable submarkets in D.C.”
Wiberg said the firm will upgrade the mechanical systems, which are also 25 years old. The company also has plans for improvements to the lobbies and common areas, and is looking at what architectural treatments it may want to do with that property.
“It has so much potential that you have to really try to find what gives you the most boost in your office rents and fits within the kind of community of retail that’s out there,” Wiberg added.
Piedmont says it will get the space back at the end of this year and expects to have the property back online between September and November of 2014.
At 4250 Fairfax, Piedmont reported that it has “a fair amount of space coming back,” but of all the buildings in its D.C. portfolio, this building is the one that has the most activity.
“We’re working through a downsizing and renewal with Qwest,” said Wiberg. “We have some really good activity to, we hope, backfill a good part of that building.”
4250 Fairfax is a 14-story, 306,000 square foot, Class A office building in Ballston designed by Skidmore, Owens & Merrill. It features window views on all four sides, a landscaped one-acre park behind the building, and three acres of underground parking.
Marketwide, Wiberg told analysts that Washington, D.C. seems to be stabilizing, and that the market is at or near the bottom on vacancy.
“Things are pretty flat,” he said. “But I think it shouldn’t get really any worse than this, and that we should be on a fairly slow, but positive path toward recovery.”