Image: Rendering of 935 Prose in Pike and Rose Federal Realty
Developers in the D.C. region have made a U-turn and are now focusing on Montgomery County. As workers continue to work remotely, COVID-19 rules have ravaged the office sector across the area. In D.C. and northern Virginia, millions in negative office space absorption is at record highs, but the Capital Region of Maryland has been an odd outlier. Year-to-date, absorption in that section of the region has been favorable.
Medical offices has been a bright spot in the region as one of the few use-types in growth mode. It encompasses biotechnology, life sciences, and other health-related spaces, and it makes more sense to grow it in Montgomery County than anywhere else in the DMV. The COVID-19 pandemic, on the other hand, has boosted the County’s commercial real estate growth potential.
At least one developer saw the County’s potential and was never convinced otherwise. Federal Realty (NYSE:FRT) has built some of the top mixed-use developments in the County, region, and country, including Bethesda Row and Santana Row in San Jose, California. The “development seeds” sown at Pike and Rose are paying off, and the developer is set for one of the most exciting prospects in the D.C. region.
Now Federal is making an almost unheard-of decision in the County, dropping plans for a residential structure, and replacing it with an office building.
The aim is to construct a 10-story state-of-the-art office and lab facility for the life sciences at 935 Prose. It aims to bridge the gap between the major bio clusters in Gaithersburg and North Rockville and the down County regions, which include the National Institutes of Health (NIH) just outside of Bethesda.
935 Prose would be in the heart of a mixed-use hotspot, with North Bethesda’s lively Pike & Rose earning regional and national acclaim. Other developers and organizations have been drawn in by the unique combination of shopping and entertainment options available nowhere else in the region, as well as architecturally attractive structures.
Choice Hotels International (NYSE:CHH), for example, was so delighted with the project that it opted to relocate from its Rockville offices to a soon-to-be-built office complex at 915 Meeting Street, just a few miles north. The hospitality giant made the announcement less than 10 years after its current Class-A building was leased. Federal Realty had its selection of locations around the country for its headquarters, but it is so confident in the project that it opted to anchor the second office building at 909 Rose, which is already 90% occupied.
In addition to a dedicated website, the Federal Realty issued a statement with further details about the initiative. The 260,000square-foot structure will have floor-to-ceiling heights of 15 to 20 feet, tenant-supplied specialty/pure water systems, and pH neutralization. Back-of-house rooms on the ground floor for chemical storage, lab waste disposal, air compressor, and recycling, as well as MEP systems specifically intended to suit lab tenants, are among the LEED-certified building’s strengths. Federal is dis aiming to raise the design bar by employing international architect Gensler.
In addition to commercial tenants, it is also rumored that a national body entrusted with the preparation for a future health-related epidemic could be housed in the building.
Federal’s Jay Brinson remarked, “We are leading the way in the expansion of the life sciences corridor down Interstate 270 into North Bethesda.” “This innovative and exemplary building offers exceptional amenities for life science and biotech tenants that are not found in the region. Located in a convenience-rich, lively neighborhood, Pike & Rose looks forward to welcoming new business partners.”