By Gail Kalinoski, Contributing Editor
International law firm Covington & Burling L.L.P.’s search for its new global headquarters in Washington, D.C., has ended with it agreeing to become the anchor office tenant in the $950 million CityCenterDC mixed-use project.
The law firm, which was founded nearly 100 years ago in Washington, D.C., and has more than 800 attorneys in offices around the world, has signed a letter of intent to lease about 420,000 square feet at the 10-acre complex that has been under construction for about a year. Covington currently rents space at 1201 and 1275 Pennsylvania Ave. NW. It plans to move to CityCenterDC in 2014.
“CityCenterDC offers a modern, efficient space from which our lawyers and staff can deliver the highest possible level of service to our clients around the globe,” said Timothy Hester, chair of the Covington management committee. “We look forward to being part of the revitalization of this historic neighborhood in downtown D.C.”
Once the lease is executed, the office space at One and Two CityCenter will be more than 80 percent pre-leased, according to Hines, which is developing the site along with Archstone and the TFI US Real Estate Fund, a sovereign wealth fund of Qatar. Other possible tenants for the office space have not been announced, but marketing materials describe the target tenants as law firms, professional organizations and government affairs offices.
Located on the site of the former Washington Convention Center, the 2.5 million-square-foot development area is a 4.5-block parcel bounded by New York Avenue, 9th, H and 11th streets NW. Phases One and Two will have more than 295,000 square feet of retail space at the base of seven buildings with 520,000 square feet of office space, 458 rental apartments, 216 condominium units, a 350-room luxury hotel and nearly an acre of open space. Construction on Phase One began in March 2011 on two office buildings, two apartment buildings and two condominium buildings. These buildings are expected to be “topped out” by the fall and start accepting tenants by the third quarter of 2013.
The retail component is expected to have over 60 stores, restaurants and cafes featuring a mix of local, national and international brands. Hines stated that initial leases are being finalized and it expects to have commitments by the fall with openings as early as fall 2013. The Washington Post reported that Del Frisco’s Double Eagle Steak House is leasing 17,000 square feet but the developers have not confirmed that information.
Archstone CityCenter will feature 458 apartments – 92 are considered affordable with the remainder renting at market rate. Both the apartments and condominiums – The Residences at CityCenter – are expected to be ready by fall 2013.
Foster + Partners of London and Washington, D.C.-based Shalom Baranes Architects are the master-plan architects. A joint venture between Clark Construction Group and Smoot Construction, both of Washington, D.C., is the general contractor.
Hines is a privately owned real estate firm involved in real estate investment, development and property management around the world. Its portfolio includes 1,192 properties with more than 482 million square feet of real estate valued at nearly $23 billion.
Archstone is an industry leader in apartment investment and management and owns or had an ownership position in 434 apartment communities in the United States and Europe. The portfolio has more than 73,000 units developed and under construction.
TFI (The First Investor) is a leading investment company in Qatar and is a wholly owned subsidiary of Barwa Bank. TFI is co-investing in CityCenterDC along with the fund’s anchor investor, Qatari Diar, the real estate arm of the Qatar Investment Authority. More money is flowing into the U.S. from sovereign wealth funds, particularly into real estate. Preqin, which researches the alternative asset industry, notes that North America is the most popular region for sovereign wealth funds to invest in private real estate funds. Some also invest directly into real estate or through listed real estate funds. The CityCenterDC is QIA’s first real estate investment in the U.S., according to Preqin, which estimates QIA had approximately 32 percent of its total assets invested in real estate as of the fourth quarter of 2011.
