Market Assessment • Competitive Position Analysis

Market assessment • Competitive position analysis

2013 Prepared for the Golden Triangle BID 2 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Contents

Introduction 3

Demographic insight 5 Residential demographics 5 Employment demographics 6 Looking ahead 7

Economic conditions 9 Metro Washington economy 9 Golden Triangle economic forecast 10

Golden Triangle office insight 11 Office relocation analysis 11 Shifting office requirements 11 Rents 13 Ownership composition 13 Investor profile trends 14 Investment sales trends 14 Development 14

Retail and amenities 17 Retail spending potential 18

Planning, urban design and economic development 19 Planning 19 Case study: The Woodward Building 20 Urban design 20 Economic development 21

Conclusions 23

Appendix A: Employment comparison 24

Appendix B: Tenant mix 26

Appendix C: Office relocation analysis 27 Notable moves 28

Appendix D: Property owners 29 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 3

Introduction

The Golden Triangle is a thriving office district, containing a mix of sustained employment growth in existing and new business sectors, prestigious tenants, including the nation’s leading law firms, banking such as health care and social assistance. The fourth section examines and financial institutions, associations/unions, non-profits and consult- retail and other amenities in the neighborhood, noting that the retail ing groups. The Golden Triangle encompasses a quarter mile area of potential is present, but not fully realized. In general, the amount of Washington, DC’s central business district (CBD), shown in Figure 1. retail throughout the DC region is growing, as new retail areas emerge With its prime location near three metro lines and in close proximity to and existing areas expand. In light of the added retail supply in the major transportation routes, the CBD has long been one of the most marketplace, stores in the Golden Triangle are still successful. The desirable and top-performing submarkets in Metro Washington. As fifth section presents a perspective on planning, urban design and successful as it has been on the office side and even on the retail side, economic development considerations for the Golden Triangle. One of we believe the potential over the next three, five, seven and ten years the most significant planning and economic development opportunities, is even greater. The CBD’s success has been driven by office product. in response to the neighborhood’s primary challenge, lies in diversify- With the partnership of city government, we believe the potential could ing the neighborhood with other uses beyond commercial office space. diversify to the multifamily, hotel and retail markets, helping break the Several ideas, such as pocket parks, public art and residential uses are perception of the neighborhood as a 9 to 5 community. discussed in this section. The following study presents a market assessment and competitive Overall, the findings conclude that the Golden Triangle is a core market positioning analysis of the Golden Triangle. The first three sections in the city and that the District as a whole will benefit greatly from evaluate residential and employee/office data, as well as the greater developing a more expansive base of amenities and mixture of uses economic forecast for DC, noting that the Golden Triangle is an office compared to what the neighborhood offers today. district with a diverse tenant mix amidst well-educated and affluent residential neighborhoods. In the greater economic context of the Washington, DC metro region, the Golden Triangle is poised for

Figure 1. The Golden Triangle is located within the CBD of Washington, DC. 4 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 5

Demographic insight

Demographics are important for determining how the Golden Triangle is Golden Triangle DC poised to attract top talent, employers and retail. As the first crossroad 0.5 miles 1.0 mile 1.5 miles for the Red Line from the Northwest and Suburban Maryland and the 2012 Population 16,138 56,272 101,637 617,405 Orange and Blue Lines from Northern Virginia, the Golden Triangle is 2017 Population 16,354 58,531 106,545 649,406 ideally situated for office and retail demand and growth. Thus far, the Percent Change 1% 4% 5% 5% focus of the Golden Triangle remains on its strong office product; the Figure 2. Residential population surrounding the Golden Triangle and projected population growth through 2017 Source: ESRI, Jones Lang LaSalle demographic profile of the Golden Triangle suggests excellent potential Custom Map for not only office, but also retail and residential, as younger genera- 2012 Median Household Income (Esri) by Block Groups tions are attracted to mixed-use environments. Residential demographics The Golden Triangle boundaries are defined by the commercial office buildings in this area; however, it is important to consider the adjacent Golden Triangle residential areas within walking distance. These nearby neighborhoods - Dupont Circle, Foggy Bottom, West End and Georgetown - are 0.5 Miles established and continue to attract a mix of people. An estimated 1 Mile 2012 Median Household Income 16,138 people reside within half a mile of the center of the Golden 1.5 Miles $106,518 - $200,001 $79,999 - $106,517 Triangle, shown in Figure 2. Furthermore, 56,272 people (9.1 percent $57,085 - $79,998 $36,058 - $57,084 of the District of Columbia population) reside within a mile of the center $0 - $36,057

Figure 3. Income levels for areas surrounding the Golden Triangle. The areas immediApril- 06, 2013 of the Golden Triangle. To put this in context, one-sixth of the District of Made with Esri Business Analyst ately©2013 Esri surrounding the Golden Trianglewww.esri.com/ba BID 800-447-9778 have some Try itof Now! the most affluent householdsPage in 1 of 1 Columbia population resides within one and a half miles of the Golden Washington, DC. Source: ESRI, Jones Lang LaSalle Triangle. The residents in these neighborhoods have high disposable incomes to spend on neighborhood goods and services and constitute a well-educated and talented workforce. Figure 3 displays the median income levels for households around the Golden Triangle, confirming the potential for neighborhood expenditures. One of the biggest factors businesses consider when deciding where to locate is their proximity to and ability to attract a talented workforce. Within one mile of the Golden Triangle, 75.4 percent of residents over 25 have a bachelor’s degree or higher. This is substantially higher than the 50.4 percent with a bachelor’s degree or higher in the District of Co- lumbia. The educational attainment surrounding the Golden Triangle is also higher than that of Arlington County (70.4 percent), Fairfax County (59.3 percent) and Montgomery County (57.0 percent). Further bolstering the Golden Triangle demographics are two world- class universities located within one and a half miles - The George Washington University and Georgetown University. At a half mile radius around the Golden Triangle, half the residential population consists of people aged 15-24, representative of the George Washington Univer- sity student body, with more than 10,000 undergraduate students (The George Washington University total student body consists of more than 24,000 undergraduate and graduate students). These students are a strong demographic to recognize just outside the Golden Triangle. 6 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

The population of the one-mile radius surrounding the Golden Trian- Golden District of East Loop Financial District Triangle Columbia Chicago Boston gle will increase 4.0 percent between 2012 and 2017, according to Total businesses: 5,731 35,086 3,434 5,495 third-party growth estimates; the projected population increases lag be- Total employees: 81,532 629,192 84,805 116,039 hind the 5.0 percent population growth for the rest of Washington, DC. Total residents: 384 606,719 4,029 3,779 Population projections are lower around the Golden Triangle, because Employee/resident ratio: 212.15 1.04 21.05 30.70 it is a well-established neighborhood and other parts of the District are Employment density (per square mile): 301,970 9,212 385,477 351,633 experiencing greater amounts of mixed-use residential development; Figure 4.The Golden Triangle has an extremely high employment density. certain parts of Washington, DC, including the East End, are project- Source: ESRI, Jones Lang LaSalle ed to experience population growth as large as 8.4 percent. There is the potential though for the Golden Triangle to tap into the District’s substantial in-migration of young professionals in the past decade. These younger generations are attracted to living and working in urban, Golden Triangle walkable places with amenities, presenting a prime opportunity for the Employees Percent Golden Triangle. The strong demographics of the people living immedi- Professional, scientific and tech services 29,111 35.7% ately adjacent to the Golden Triangle boundaries implies that the area Other services (except public administration) 13,035 16.0% Accommodation & food services 5,341 6.6% is likely to attract a similar or even better demographic profile within the Information 5,211 6.4% boundaries, bringing with them additional jobs, spending, and taxes. Finance and insurance 4,594 5.6% Employment demographics Public administration 2,385 2.9% The approximately 5,731 businesses contained within the Golden Tri- Management of companies and enterprise 77 0.1% Figure 5. Selected industries in the Golden Triangle. The professional, scientific and angle employ approximately 90,000 people. Figure 4 shows how these technical services sector contains the largest number of employees. Source: ESRI, Jones statistics compare to the District of Columbia and other central business Lang LaSalle districts across the country. When compared to other parts of downtown Washington, DC, the Golden Triangle has an extremely high employment density, over 300,000 employees per square mile, on par with downtown areas with established shopping districts such as Boston’s Financial District and parts of the Chicago Loop, implying that the area can support additional retail. The leading business sectors in the Golden Triangle include professional, scientific & technical services and other services (includes organizations, foundations and associations). Combined, these two occupational sectors employ over half the employees in the Golden Triangle. The next largest sectors in the Golden Triangle include information, finance and insurance and accommodation and food services. The legal services category, a subset of the professional, scientific and tech services, employs 19.7 percent of the employees in the Golden Triangle. Finally, the Golden Triangle contains a smaller percentage of public administration employees, including the federal government, when compared with other employment centers in Washington, DC. Figure 6. Line map displaying counties where Golden Triangle employees live. Counties This has made the area relatively immune to the effects of sequestra- in darker shades of blue indicate greater numbers of employees. Source: U.S. Census tion and federal government relocations. Figure 5 shows a comparison Bureau, CES of employment by sector. Employees in the Golden Triangle commute from all over Metro Washington (Figure 6). The majority of Golden Triangle employees reside within the District of Columbia. The remaining employees are roughly split between Northern Virginia and Suburban Maryland, with Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 7

28.7 percent commuting from Arlington, Fairfax, Alexandria or Loudoun County Percent and 29.6 percent commuting from either Montgomery County or Prince District of Columbia, DC 28.3% George’s County (Figure 7). Almost two-thirds of employees reside Montgomery County, MD 15.3% within 10 miles of the Golden Triangle. Morning Peak Metro ridership Prince George's County, MD 14.3% shows that on an average weekday, in May 2012, 32,251 trips termi- Fairfax County, VA 13.6% nated at Farragut North or Farragut West. This suggests that roughly Arlington County, VA 7.8% 40.0 percent of employees commute to the Golden Triangle using the Alexandria city, VA 4.1% Prince William County, VA 1.6% Metro. Figure 8 shows the entrance points for these trips; the top five Anne Arundel County, MD 1.6% trip origination stations are Shady Grove, Union Station, Vienna, Silver Loudoun County, VA 1.5% Spring and West Falls Church; Union Station includes transfers from Charles County, MD 1.4% regional service including MARC, VRE and Amtrak. While the Metro All other locations 10.4% system carries such a high number of people during the peak work day Figure 7. Counties where Golden Triangle Employees reside. Source: U.S. Census hours, the infrastructure is not being maximized during off hours; the Bureau, CES existing transportation infrastructure could accommodate additional uses and trips during the evenings and on weekends without additional resources. Looking ahead Currently, the Golden Triangle is a bustling employment center comprised of a well-educated workforce and surrounded by residential neighborhoods. While the high concentration of office employees creates a very active environment during business hours, the activity lessens during evening hours as employees go home. The number of visitors in the northern portion of the Golden Triangle bordering Dupont Circle is sustained in the evening, as people visit restaurants, nightclubs, and bars. Without a collection of cultural amenities or more retailers and restaurants to retain or attract people, the full potential of the neighborhood is not realized during the early evening and weekend times. With 25,000+ parking spaces, six metro station exits accommo- dating three metro lines that connect to most of the region, and direct road access, the transportation network is underutilized during off-peak hours. The infrastructure exists to easily move people into and out of the Golden Triangle, and additional potential is evident, especially Figure 8.Entrance points for Metro trips terminating at either Farragut North or Farragut West. Source: WMATA, Jones Lang LaSalle on weekends and evenings when the system is not maxed out by the office and employee population. If the growing population and residential demand was leveraged to integrate apartment or condominiums into the Golden Triangle, then the Golden Triangle and neighboring residential areas would all benefit. This could happen by creating mixed-use buildings with both office and residential. The District, Golden Triangle and property owners should strategize on ways to capitalize on this potential. Some options may include attracting more cultural amenities, retailers and restaurants or considering more residential opportunities to serve an ever-growing urban residential population and employment base. 8 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 9

Economic conditions

Percent Sector 2012 2018 The economy of the Golden Triangle is largely reflective of the perfor- change mance of the Washington DC Metropolitan area. After a year of uncer- Administrative and support and waste manage- 47.20 67.68 43.4% tainty around federal spending, a clearer horizon is emerging. The Metro ment and remediation services DC region is expected to maintain its historical average of creating Construction 13.29 17.37 30.7% 40,000 jobs per year in the year ahead. Professional and business ser- Construction, natural resources and mining 13.29 17.37 30.7% Professional and business services 150.18 185.30 23.4% vices will be at the forefront of new hiring over the next 24 to 36 months, Health care and social assistance 65.78 76.38 16.1% followed by non-cyclical segments of the economy such as education Professional, scientific and technical services 100.99 115.67 14.5% and health services. The diversified labor force, favorable demographics Wholesale trade 4.54 5.18 14.0% and federal government presence will continue to ensure the resiliency State & local government 35.56 39.49 11.0% and stability of the Washington economy. Service providing private 476.32 527.95 10.8% Metro Washington economy Arts, entertainment, and recreation 7.12 7.87 10.6% Information 18.23 19.74 8.2% The Washington DC Metropolitan economy continued to outperform Educational & health services 121.19 130.84 8.0% nearly all of the nation’s top cities in 2012 despite political and macro- Manufacturing, durables 0.45 0.48 5.5% economic headwinds. Despite contraction in the federal government Transportation and warehousing 2.21 2.33 5.4% and rightsizing by government contractors, the region held the lowest Real estate and rental and leasing 10.48 11.04 5.3% unemployment rate at 5.8 percent when compared to other major U.S. Transportation, trade and utilities 27.24 28.69 5.3% cities – Los Angeles topped the charts at 10.0 percent, Chicago at 9.9 Military 17.99 18.84 4.7% percent and New York at 9.4 percent – which is also well below the Leisure & hospitality 63.33 66.22 4.6% national rate of 7.7 percent. Retail trade 18.63 19.34 3.8% Accommodation and food services 56.21 58.34 3.8% The unique nature of the Metro Washington economy benefits from the Manufacturing 1.02 1.04 2.5% presence of the most stable and massive growth engine in the U.S. Transportation, warehousing and utilities 4.08 4.16 2.2% economy, the federal government. The presence of the federal gov- Other services 69.37 70.76 2.0% ernment allowed the area to see stable growth during the recession, Manufacturing, nondurables 0.56 0.56 -0.2% while the rest of the nation was plagued with stubborn slow growth and Financial activities 26.78 26.41 -1.4% contraction. Even highly cyclical industries like finance are more stable Utilities 1.86 1.83 -1.7% in the District than other parts of the country because a large portion Educational services 55.42 54.46 -1.7% of those jobs are directly or indirectly tied to the more stable federal Management of companies and enterprises 1.99 1.95 -2.1% government. Government 245.07 237.06 -3.3% Finance and insurance 16.29 15.37 -5.7% Metro Washington added an estimated 36,100 jobs during the 12-month Federal government 209.51 197.58 -5.7% period ending in March 2013, even as government contractors and Natural resources and mining 0.00 0.00 federal agencies braced for sequestration. Since going into effect on Agriculture, forestry and fishing 0.00 0.00 March 1, 2013, the automatic spending cuts have had limited immediate Total nonfarm 735.69 783.43 6.5% consequences on the fundamentals of the regional economy. Non-manufacturing 734.67 782.38 6.5% While the federal government is the major growth engine for DC, the Figure 9. Employment projections by sector for the District of Columbia. Source: IHS Global Insight, Jones Lang LaSalle private sector is expected to also drive future growth. With the exception of the regulatory expansion in the Federal Deposit Insurance Corpora- tion, the Federal Reserve and the Commodity Futures Trading Commis- sion, all of which are CBD and Golden Triangle tenants, notable growth sectors include professional and business services and information industries. 10 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Professional and business services sector, a major user of office space, Compared to the Washington metro area, the Golden Triangle is most increased by approximately 7,000 jobs between March 2012 and March concentrated in professional, scientific and technical services; other 2013. The sector is projected to add over 100,000 jobs over the next services (including associations, foundations and organizations); arts, three years, growing 14.8 percent. This growth should continue to entertainment and recreation; information and finance and insurance. diversify the economy, while also sustaining office demand in Metro DC Shift-share analysis plots the relative concentration of businesses over the long term. The high-tech sector, which falls into professional against projected employment growth (Figure 10). Shift-share analysis and business services and information, has emerged as the leading is a special analysis too that links projected changes in employment to growth industry across the national economy. Washington, DC has an the employment composition of the city or region by category (relative established tech scene, particularly cyber security, and will continue to the nation). to benefit from that growing segment of the market. Figure 9 shows Shift-share reveals that the Golden Triangle is well positioned because employment projections for the District of Columbia. the neighborhood is already home to high-growth employment sectors. Looking ahead, job growth in the region is expected to continue, albeit The upper left quadrant of Figure 10 shows sectors that should be at a slightly lower than average rate over the next two years. While targeted to diversify the tenant base; these currently have low em- businesses will continue to face uncertainty regarding future federal ployment concentrations and are projected to experience increases in budget cuts, the impact on spending should not be as severe as some employment. Notable opportunities include increases in health care and fear. Targeted cuts generally apply only to projected increases to future social assistance and construction employment. The Golden Triangle spending, and a deceleration in the rate of growth is more likely than is best poised to capture some of the projected employment growth in outright program cancellations and department closings. A worst case the health care and social assistance sector due to its proximity to the scenario would most likely return federal spending to 2006 levels, an George Washington University Hospital. outlay sufficient to drive the regional economy forward assuming the The concentration of professional, scientific and technical services also private sector maintains its current growth trajectory. indicates that the Golden Triangle is well positioned to capture future Golden Triangle economic forecast growth in that sector. Compared to other parts of Washington, DC, the Golden Triangle has higher concentrations of people employed in se- The Golden Triangle is well positioned ahead of the structural changes curities brokerage, insurance, professional, scientific and tech services, facing the Metro Washington economy. Most notably, the Golden Trian- arts, recreation and entertainment and legal services. The Golden gle has shed some low-growth government tenants in recent years, so Triangle also has a lower concentration in accommodation, public it will not be as susceptible to the Office of Management and Budget’s administration and management of companies and enterprise. These footprint freeze as other areas of the city. Fewer than 20 federal tenants business sectors are projected to grow through 2018 and the Golden lease space in private buildings in the Golden Triangle and most of Triangle’s lack of concentration in these sectors suggests opportunity these tenants are seeing budgets grow (think financial regulatory agen- for solid growth. cies we mentioned prior) due to increased emphasis on regulations and financial oversight.

50.0%

Administrative & support services 40.0%

30.0% Construction

20.0% Professional, scientific and technical services Health care and social assistance Wholesale trade Arts, entertainment and recreation 10.0% Transportation and warehousing Information Retail trade Real estate, rental and leasing Accommodation and food services Other services 0.0% Manufacturing Utilities Management of companies and enterprise Projected employment growth (2012-2018) Educational services Finance and insurance -10.0% - 0.50 1.00 1.50 2.00 2.50 3.00 Location quotient Figure 10. Shift-Share analysis for the Golden Triangle, showing relative concentration of business sectors compared to projected growth. The upper right quadrant shows sector expected to grow most significantly where employment is concentrated. Larger bubbles denote more growth, black bubbles denote employment losses. Source: Jones Lang LaSalle Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 11

Golden Triangle office insight Washington, DC’s CBD is primarily comprised of the Golden Triangle s.f. area. For this reason, statistics from the CBD are used to convey office 18.0 M 16.6 M 15.6 M trends in the Golden Triangle by the real estate community. Other major 16.0 M office markets in DC are defined as East End, Capitol Hill and NoMA, 14.0 M Trophy 5.2 M among others. (Depicted in Figure 1) The CBD has consistently been a 12.0 M tight office market in Washington, DC. It consists of approximately 35.3 10.0 M million square feet of office space, of which 90.0 percent is contained in 8.0 M the Golden Triangle and assessed at approximately $14.0 billion. 6.0 M Class A 10.3 M The breakdown of the CBD’s office space by class, shown in Figure 4.0 M 3.0 M 11, includes 44.0 percent either Trophy or Class A, 47.2 percent Class 2.0 M 0.0 M B and 8.6 percent Class C. The mix of classes and therefore price Class A Class B Class C points in the CBD provides space options across the spectrum of Figure 11. Office inventory by class in the CBD, which contains the GoldenT riangle. Source: Jones Lang LaSalle business categories: legal, banking and finance, associations, media, technology, non-profit, consulting and government. Of the tenant mix in the CBD larger than 20,000 square feet, law firms are the largest and most numerous tenants. Unlike other parts of Washington, DC, the CBD’s tenant mix larger than 20,000 square feet also includes a number of professional and business services, financial, associations and non-profits. For a more detailed overview of the tenant mix, see Appendix B. Office relocation analysis It is also important to consider how existing office tenants move within the District’s various submarkets. The recent moves of law firms such as Covington & Burling and Arnold & Porter warrant an in-depth review of major leasing transactions. Yes, there is a movement east, but most of the eastern movement is originating in the East End and simply going even farther to the East End. When looking at comparisons from submarket to submarket, this analysis reveals that since August 2006, more tenants are moving from the East End into the CBD than vice versa. Additionally, while high-profile tenant moves generate media buzz, 82.0 percent of tenant moves actually occur within their current submarket - the law firms noted above, moved farther east within their current submarket, the East End. The trend of intra-submarket moves bodes well for the Golden Triangle, considering the large number of businesses already located in the CBD. The full analysis is shown in Appendix C. Shifting office requirements An emerging theme among office tenant requirements is a shift to newer, more efficient buildings with open floor plates and minimal structural columns breaking up the space. This trend has been most noted in law firm leasing activity where firms look to right-size, shedding between 15.0 percent and 25.0 percent of space requirements. Rightsizing 12 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

includes turning to smaller offices, moving back-office responsibilities to cheaper markets and eliminating libraries and other common spaces. The higher concentration of large law firm tenants and larger floor plate buildings in the East End make some of those buildings susceptible to firms’ right-sizing efforts. These changing demands have made many second-generation buildings less desirable to law firms over the past several years and thus could prompt continued redevelopment and repositioning, as has been occurring in the CBD for the past 10-plus

years. Figure 12. LivingSocial’s Washington, DC office shows the efficient, open spaces that tenants increasingly seek. Source: Jones Lang LaSalle Law firms are not the only tenants with shifting space requirements. Many tenants, notably technology firms and incubators, are pushing for architecturally-unique, open, collaborative spaces with workstations, cubicles and natural light (Figure 12). Startup and technology tenants,

who seek out affordable, centrally-located spaces, might be attracted to Vacancy unique second generation buildings, like those found in the CBD. For 18.0% CBD District of Columbia Metro Washington example, recently a new DC-based venture capital start-up focused on 16.0% enterprise technology services chose to locate in the Golden Trian- 14.0% gle. Tech startups are also looking for neighborhoods with personality 12.0% and amenities, however affordable rents and flexibility are critical as 10.0% startups need to be able to grow or shrink rapidly. We believe the south 8.0% Dupont area is well-positioned for technology demand even more so 6.0% than the Gallery Place niche market, which has attracted a fair amount 4.0% of that demand to date. Dupont Circle delivers a metro-accessible, 2.0%

0.0% amenity-rich, creative demographic market unmmatched in most other 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 parts of the City and region. However, there has been an overall lack of Figure 13. Average vacancy rates for the CBD compared to the District of Columbia and Metro Washington. Source: Jones Lang LaSalle branding of Dupont Circle for years. While the retail market is promot- ed, we think there is uncaptured office market opportunity in Dupont Circle based on the presence of existing amenities tenants want and the potential for future development. Vacancy rates Vacancy rates in the CBD largely reflect the rates in the District of Columbia as a whole; in 2012 vacancy rates averaged 12.0 percent and 11.0 percent, respectively. It is important to note that while the 2012 CBD and District vacancy rates are higher than in years past, the whole region has experienced an increase in vacancy rates since 2007. Both the CBD and District, however, have a track record of much lower rates than the region, averaging only 8.6 percent since 1998 (Figure 13.) Additionally, in 2012 the metro region’s vacancy rate was 15.0 percent. Much of CBD’s vacancy is concentrated in its older generation Class A and Class B properties, which typically have larger floor plates and inefficient column spacing that tenants no longer desire. As landlords redevelop these older properties with modern amenities, they will again be able to compete for tenants seeking efficient spaces with modern- ized systems, in a central location. Landlords could aggressively offer vacant commodity space to other types of businesses in the short- term, helping startups locate in the CBD opposed to other areas of the District. Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 13

Rents Rent $60 CBD District of Columbia Metro DC Washington, DC and the CBD have seen an upward trend in asking District of Columbia historic average asking rent ($41.80) $50 rents since 1998. The historical average asking rents in the CBD are $42.28 per square foot, $0.50 per square foot more than the historical $40 average asking rent in Washington, DC (Figure 14). In terms of rent $30 growth, the average annual asking rent in the CBD increased by $21.61 per square foot since 1998, about two dollars more than the increase $20 across the city as a whole. $10 Looking at all property classes, rents in the CBD range from an average $0 of $72.24 per square foot for Trophy product to $39.81 per square for 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Class C product (Figure 15). From the tenant perspective, this spread Figure 14. Average asking rents for the CBD compared to Washington, DC. Source: Jones Lang LaSalle allows the CBD to remain a competitive option, not just because of its central location, but also through its rental rates, which is an increasing- Rent $80 ly important factor as more tenants look to cut operating costs. Further- $74.24 more, the variety of office product available at varying classes and price $70 $60 points make the CBD attractive to a range of tenants from international $51.85 professional firms to start-up and technology companies. $50 $44.60 $39.81 $40 From the landlord and investor perspective, the CBD’s strong rent growth and ability to command high asking rates in Trophy and Class A $30 product, make it an attractive investment option, stabilized by its central $20 location, established office product and tenant base. $10 $0 Ownership composition Trophy Class A Class B Class C Figure 15. Average 2012 rents by class for the CBD. Source: Jones Lang LaSalle Looking specifically at the Golden Triangle within the CBD, property owners include developers/property companies, private investors, 7% real estate investment trusts (REITs), institutional investors, users and 8% foreign investors. Figure 16 shows the current ownership composition, 28% based on assessed values, for properties within the Golden Triangle. Developer/Property Company Private Developers and property companies own the largest share of prop- 15% REIT erties, based on assessed value, at 28.0 percent. Private investors Institutional make up the second largest share of property owners, followed by User REITs, institutional investors, users and finally foreign investors. Not all Foreign owners are large companies, REITs, trusts, etc. with large commercial 18% 24% properties; some are individual owners of small spaces. For a complete ownership list, see Appendix D. Figure 16. Ownership composition in the Golden Triangle. Source: Jones Lang LaSalle The top five property owners within the Golden Triangle are Tishman Speyer, Vornado, Lerner Enterprises, Brookfield Office Properties and Boston Properties. Tishman Speyer, a private company, holds the largest amount of square footage and assessed values. Three of the top five property companies are REITs and one owner is local to Wash- ington, DC. Approximately 40.0 percent of properties within the Golden Triangle are owned by investors based in Washington, DC. Fifty-two percent of properties are owned by national investors and 8.0 percent of properties are owned by international investors. 14 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Investor profile trends Foreign REIT User Developer/Property Company Institutional Private The CBD is viewed among the safest and most attractive markets for 100% 90% investment on a global basis. Investor profiles change year-over-year 80% and Figure 17 shows the CBD investor profile since 2001. In 2012, 70% 60% foreign and developer/property company investors accounted each 50% for 41.0 percent of investment sales in the CBD. The percentage of 40% private, institutional and REIT investment in the CBD declined in 2012; 30% 20% these investors, however, remained active in other parts of the city. 10% The Association of Foreign Investors in Real Estate (AFIRE) recently 0% rated Washington, DC the fourth most attractive market in the world for 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Figure 17. Investor profile for the CBD. Source: Jones Lang LaSalle investment in 2013, behind just New York, London and San Francisco. Given the lack of investment opportunities elsewhere, foreign investors look to Washington, DC and the CBD as stable places for real estate $2.0 B $700 investment. With a prime location within the CBD, the Golden Triangle Sales volume PSF should continue to capture a dominant share of investment activity from $600 $1.5 B all types of investors. $500 Investment sales trends $400 $1.0 B $300 Investment sales in the CBD, which includes the Golden Triangle, $200 totaled approximately $701.7 million in 2012, up slightly from 2011 (Fig- $0.5 B ure 18). Furthermore, in 2012 foreign investment in the CBD properties $100 reached the highest level in the past 10 years with $285.0 million in $0.0 B $0 sales. Three of the top 10 highest price per square foot transactions 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 occurred in the CBD and properties traded at an average of $528 per Figure 18. Investment sales trends by sales volume and p.s.f. in the CBD. Source: Jones Lang LaSalle square foot. The investment sales activity shows that despite the greater macroeconomic uncertainty around government spending and the election in 2012, Washington, DC is still a relatively attractive market. This is underscored by investor focus on core properties, which drove Notable investment sales in the Golden Triangle BID: cap rates to near record lows. The flight to core assets also bolstered investment activity in centrally located areas, such as the Golden Tri- • In June 2013, The Kuwait Investment Authority purchased 1200 19th Street, NW from angle, where the price per square foot of transactions in the CBD rose Hines. The 334,175-square-foot building traded at $886 per square foot. • In January 2012, Vico Capital sold 2099 Pennsylvania Avenue, NW to Paramount 49.0 percent compared to 2011. There is the potential that prices could Group for $155.0 million, the 206,573-square-foot building sold for $750 per square appreciate even more if cultural, retail and residential amenities were foot. fostered in the CBD. • Deka Immobilien purchased a 136,389 –square-foot building at 2175 K Street, NW from Minshall Stewart for $86.0 million ($633 per square foot). Development • JBG purchased 1920 N Street, NW from WTG Properties for $45.4 million ($398 per square foot). The 114,005-square-foot building was 99.0 percent leased at the time The CBD has witnessed more redevelopment activity in the past five and traded at a 6.3 percent cap rate. years (Figure 19) than most other parts of the city and more new • 2001 L Street, NW was purchased by Heitman for $61.8 million ($403 per square development than the East End. A total of 19 new construction or re- foot). The 153,161-square-foot building traded at 6.7 percent cap rate. development projects have delivered in the CBD since 2007 – roughly • JBG also purchased 1233 20th Street, NW for $64.7 million. The 154,584-square- foot building traded for $419 per square foot at a 6.5 percent cap rate. 4.4 million square feet of new supply added in the past five years. Eight • Rockrose agreed to purchase 1900 M Street, NW from Dweck for $55.0 million ($488 of the 19 total deliveries in the past five years in the CBD delivered per square foot). The 112,687-square-foot building was 89.4 percent leased at the between 2008 and 2009. time of sale. • First Potomac sold a 95.0 percent stake in 1200 17th Street, NW to Mitsui for $43.7 million ($271 per square foot FAR). The former National Restaurant Association Building currently sits on the site, and the existing building will reportedly be razed to make room for a new 170,000-square-foot building, in which Pillsbury is under a letter of intent to become the anchor tenant. Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 15

16 16

12 B 12 B 1 18 8 1 18 19 3 17 8 G 28 19 3 17 15 G 28 6 14 13 11 2 15 24 6 14 13 11 2 24 29 5 29 27 5 21 4 27 25 21 7 9 4 E 25 7 9 E D F 10 D F 10 32 32 20 23 20 23 22 30 22 30 31 33 31 C 33 C 26 26

2012 delivery 2011 delivery 2010 delivery 2009 delivery 2008 delivery 2007 delivery 2013 delivery (UC) 2014 delivery (UC) 2012 delivery 2011 delivery 2010 delivery 2009 delivery 2008 delivery 2007 delivery 2013 delivery (UC) 2014 delivery (UC) Figure 19. In the past five years, the CBD has seen 4,329,752 s.f. of new supply, which delivered 48.3 percent preleased. The East End has added 3,371,703 s.f. since 2007, which delivered 61.1 percent preleased. Source: Jones Lang LaSalle

CBD newCBD supply new (2012supply – (2012 2007) – 2007) East EndEast new End supply new (2012supply – (2012 2007) – 2007) 1 1140 191th Street,1140 19 NWth Street, (RBA: NW70,501 (RBA: s.f. 70,501 – preleased: s.f. – preleased:38,582 s.f. 38,582 – rehab) s.f. – rehab) 20 733 10th20Street,733 10 NWth Street, (RBA: NW169,038 (RBA: s.f. 169,038 – preleased: s.f. – preleased:144,336 s.f. 144,336 – spec) s.f. – spec) 2 1000 Connecticut2 1000 Connecticut Avenue, NW Avenue, (RBA: NW385,791 (RBA: s.f. 385,791 – preleased: s.f. – preleased:319,576 s.f. 319,576 – spec) s.f. – spec) 21 425 Eye21 Street,425 Eye NW Street, (RBA: NW363,041 (RBA: s.f. 363,041 – preleased: s.f. – preleased:280,667 s.f. 280,667 – rehab) s.f. – rehab) 3 2055 L 3Street,2055 NW L Street, (RBA: NW223,780 (RBA: s.f. 223,780 – preleased: s.f. – preleased:127,571 s.f. 127,571 – rehab) s.f. – rehab) 22 1155 F22 Street,1155 NW F Street, (RBA: NW250,000 (RBA: s.f. 250,000 – preleased: s.f. – preleased:150,320 s.f. 150,320 – spec) s.f. – spec) 4 815 Connecticut4 815 Connecticut Avenue, NW Avenue, (RBA: NW213,191 (RBA: s.f. 213,191 – preleased: s.f. – preleased:113,993 s.f. 113,993 – rehab) s.f. – rehab) 23 700 6th23Street,700 6NWth Street, (RBA: NW300,000 (RBA: s.f. 300,000 – preleased: s.f. – preleased:102,271 s.f. 102,271 –spec) s.f. –spec) 5 2200 Pennsylvania5 2200 Pennsylvania Avenue, NW Avenue, (RBA: NW432,900 (RBA: s.f. 432,900 – preleased: s.f. – preleased:360,519 s.f. 360,519 – spec) s.f. – spec) 24 901 K Street,24 901 NW K Street, (RBA: NW260,843 (RBA: s.f. 260,843 – preleased: s.f. – preleased:47,333 s.f. 47,333 – spec) s.f. – spec) 6 2175 K 6St reet,2175 NW K St (RBA: reet, NW47,577 (RBA: s.f. 47,577 – preleased: s.f. – preleased:47,577 s.f. 47,577 – rehab) s.f. – rehab) 25 455 Massachusetts25 455 Massachusetts Avenue, NW Avenue, (RBA: NW250, (RBA:000 s.f. 250, – preleased:000 s.f. – preleased:15,000 s.f. 15,000 – spec) s.f. – spec) 7 800 17th7 Street,800 17 NWth Street, (RBA: NW365,000 (RBA: s.f. 365,000 – preleased: s.f. – preleased:136,978 s.f. 136,978 – spec) s.f. – spec) 26 450 5th26Street,450 5NWth Street, (RBA: NW482,131 (RBA: s.f. 482,131 – preleased: s.f. – preleased:482,131 s.f. 482,131 – rehab) s.f. – rehab) 8 1129 208th Street,1129 20 NWth Street, (RBA: NW176,000 (RBA: s.f. 176,000 – preleased: s.f. – preleased:12,646 s.f. 12,646 – spec) s.f. – spec) 27 1099 New27 1099York NewAvenue, York NW Avenue, (RBA: NW177,506 (RBA: s.f. 177,506 – preleased: s.f. – preleased:91,842 s.f. 91,842 – spec) s.f. – spec) 9 801 17th9 Street,801 17 NWth Street, (RBA: NW244,812 (RBA: s.f. 244,812 – preleased: s.f. – preleased:12,457 s.f. 12,457 – spec) s.f. – spec) 28 1331 L28 Street,1331 NW L Street, (RBA: NW170,704 (RBA: s.f. 170,704 – preleased: s.f. – preleased:56,926 s.f. 56,926 – BTS) s.f. – BTS) 10 1775 Pennsylvania10 1775 Pennsylvania Avenue, NW Avenue, (RBA: NW153,984 (RBA: s.f. 153,984 – preleased: s.f. – preleased:24,340 s.f. 24,340 – rehab) s.f. – rehab) 29 1050 K29 Street,1050 NW K Street, (RBA: NW136,574 (RBA: s.f. 136,574 – preleased: s.f. – preleased:70,237 s.f. 70,237 – spec) s.f. – spec) 11 1801 K11 Street,1801 NW K Street, (RBA: NW76,018 (RBA: s.f. 76,018 – preleased: s.f. – preleased:0 s.f. – spec 0 s.f.rehab) – spec rehab) 30 975 F Street,30 975 NW F Street, (RBA: NW177,198 (RBA: s.f. 177,198 – preleased: s.f. – preleased:138,281 s.f. 138,281 – spec) s.f. – spec) 12 1200 1912th Street,1200 19 NWth Street, (RBA: NW308,394 (RBA: s.f. 308,394 – preleased: s.f. – preleased:82,668 s.f. 82,668 – spec s.f.rehab) – spec rehab) 31 620 F Street,31 620 NW F Street, (RBA: NW120, (RBA:000 s.f. 12 –0, preleased:000 s.f. – preleased:120,000 s.f. 120,000 – spec) s.f. – spec) 13 1999 K13 Street,1999 NW K Street, (RBA: NW249,000 (RBA: sf.. 249,000 – preleased: sf.. – preleased:249,000 s.f. 249,000 – spec) s.f. – spec) 32 777 6th32Street,777 6NWth Street, (RBA: NW192,000 (RBA: s.f. 192,000 – preleased: s.f. – preleased:54,957 s.f. 54,957 – spec) s.f. – spec) 14 2121 K14 Street,2121 NW K Street, (RBA: NW51,999 (RBA: s.f. 51,999 – preleased: s.f. – preleased:0 s.f. – spec) 0 s.f. – spec) 33 505 9th33Street,505 9NWth Street, (RBA: NW322,668 (RBA: s.f. 322,668 – preleased: s.f. – preleased:311,249 s.f. 311,249 – spec) s.f. – spec) th th 15 1030 1515 Street,1030 15 NWStreet, (RBA: NW328,218 (RBA: s.f. 328,218 – preleased: s.f. – preleased:0 s.f. – spec) 0 s.f. – spec) East EndEast under End construction under construction 16 1225 Connecticut16 1225 Connecticut Avenue, NW Avenue, (RBA: NW243,442 (RBA: s.f. 243,442 – preleased: s.f. – preleased:243,442 s.f. 243,442 – rehab) s.f. – rehab) D 800 10Dth Street,800 10 NWth Street, (RBA: NW224,228 (RBA: s.f. 224,228 – preleased: s.f. – preleased:154,429 s.f. 154,429 – spec) s.f. – spec) 17 2021 L17 Street,2021 NW L Street, (RBA: NW73,226 (RBA: s.f. 73,226 – preleased: s.f. – preleased:40,498 s.f. 40,498 – rehab s.f.) – rehab) E 850 10thE Street,850 10 NWth Street, (RBA: NW238,300 (RBA: s.f. 238,300 – preleased: s.f. – preleased:238,300 s.f. 238,300 – spec) s.f. – spec) 18 1152 1518th Street,1152 15 NWth Street, (RBA: NW390,000 (RBA: s.f. 390,000 – preleased: s.f. – preleased:200,500 s.f. 200,500 – spec) s.f. – spec) F 801 7thFStreet,801 7NWth Street, (RBA: NW100,000 (RBA: s.f. 100,000 – preleased: s.f. – preleased:93,209 s.f. 93,209 – rehab) s.f. – rehab) 19 2101 L19 Street,2101 NW L Street, (RBA: NW372,422 (RBA: s.f. 372,422 – preleased: s.f. – preleased:119,601 s.f. 119,601 – spec) s.f. – spec) G 1100 VermG 1100ont Avenue, Vermont NW Avenue, (RBA: NW67,906 (RBA: s.f. 67,906 – preleased: s.f. – preleased:0 s.f. – rehab) 0 s.f. – rehab) CBD underCBD construction under construction B 1200 17Bth Street,1200 17 NWth Street, (RBA: NW170,000 (RBA: s.f. 170,000 – preleased: s.f. – preleased:105,000 s.f. 105,000 – spec) s.f. – spec) C 1700 NewC 1700York NewAvenue, York NW Avenue, (RBA: NW121,937 (RBA: s.f. 121,937 – preleased: s.f. – preleased:101,315 s.f. 101,315 – spec) s.f. – spec) Washington, DC core development sites – under construction and proposed

Washington, DC core development sites – under construction and proposed

Under construction/renovation A 1700 New York Avenue, NW (Carr) 130,000 s.f. – Under Construction / Sullivan & Cromwell / SmithGroup

16 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 B 1200 17th Street, NW (Akridge/Mitsui) 170,000 s.f. – Under Construction / Pillsbury

Under construction/renovationC 1100 Vermont Avenue, NW (K&M) 79,510 s.f. – Renovation A 1700 New York Avenue, NW (Carr) 130,000 s.f. – Under Construction / Sullivan & Cromwell / SmithGroup D 800-850 10th Street, NW (Hines) 514,700 s.f. – Under Construction / Covington & Burling / AHA

B 1200 17th Street, NW (Akridge/Mitsui)E 675 170,000 H Street, s.f. NW – and Under 801 7thConstruction Street, NW (Jemal / Pillsbury) 100,000 s.f. Renovation / Alliance of Auto Manufacturers Comparatively, the East End had 14 deliveries in the past five years, 5

C 1100 Vermont Avenue, NW (K&M)F 79,510Square s.f. 451 – AAMC Renovation Headquarters (Jemal) 300,000 s.f. Under Construction / AAMC with a total of 3.4 million square feet – nine buildings between 2007 4 B G 440 1st Street, NW (First Potomac) 140,000 s.f. – Renovation and 2008, and only two buildings that have delivered since 2009. This 3 8 D 800-850 10th Street, NW (Hines) 514,700 s.f. – Under Construction / Covington & Burling / AHA 2 CBD proposed developments 12 E 675 H Street, NW and 801 7th Street,1 Square NW ( Jemal75 – 2150) 100,000 Pennsylvania s.f. Avenue, Renovation NW (George / Alliance Washington of Auto University) Manufacturers 255,550 s.f. means that the bulk of the CBD’s recent deliveries are newer than the 5 9 6 9 2 2100 M Street, NW (Hines) 390,000 s.f. F Square 451 AAMC Headquarters (Jemal ) 300,000 s.f. Under Construction / AAMC bulk of the East End’s recent deliveries. Additionally, 14 of the new 10 C 3 4 F 12 4 B 3 2020 M Street, NW (Tishman Speyer) 155,000 s.f. 10 G 440 113st Street, NW (First Potomac) 140,000 s.f. – Renovation CBD deliveries were located in the Golden Triangle, likely a result of the 7 4 2001 M Street, NW (Brookfield) 284,000 s.f. 3 8 1 11 6 11 area’s exceptional access and strong employment market. 2 CBD proposed developments 5 1920 N and 1233 20th Street, NW (JBG) 600,000 s.f. 12 Square 75 – 2150 Pennsylvania Avenue, NW (George Washington University) 255,550 s.f. D 1 6 1900 L, 1020 19th & 1920 L Street, NW (Zuckerman Gravely) 600,000 s.f. E 8 Looking ahead, the delivery of CityCenterDC in the East End in 2013 9 7 6 9 2 2100 M Street, NW (Hines) 390,000 s.f.1990 K Street, NW (Bernstein Properties) 270,000 s.f. C 10 3 4 F 12 8 th will have a major impact on the downtown marketplace. This project 3 2020 M Street, NW (Tishman Speyer)1150 155,000 17 and s.f. 1726 M Street, NW (Vornado) 412,707 s.f.

110 13 7 1 9 1050 17th Street, NW (Lenkin) 150,000 s.f. was primed for development by the District as a single 10-acre land 7 4 2001 M Street, NW (Brookfield) 284,000 s.f. 10 1 11 6 11 5 1001 Connecticut Avenue and 1701 K Street, NW (Zuckerman Gravely) 280,000 s.f. mass in the business core of the city. CityCenterDC will add 514,700 th 2 5 1920 N and 1233 20 Street, NW (JBG) 600,000th s.f. A 11 900 16 Street, NW Church Site (JBG / ICG) 125,000 s.f. square feet of office space, 295,000 square feet of retail space, 458 D 6 1900 L, 1020 19th & 1920 L Street,12 NWWashington (Zuckerman Post Site Gravely) (Washington 600,000 Post) 500,000 s.f. –800,000 s.f. E 8 apartments, 216 condos and a 1.5 acre public park to the downtown 7 1990 K Street, NW (Bernstein Properties)East End270,000 proposed s.f. developments 1 Armenian Site 14th & G Street, NW (Armenian Museum & Memorial) – 150,000 s.f. marketplace. As this project matures, the District should stay attune to 8 1150 17th and 1726 M Street, NW2 (Vornado1301 Pennsylvania) 412,707 Avenue, s.f. NW (Quadrangle) – 225,000 s.f. Capitol Hill proposed developments opportunities that might have similar positive economic impacts. 3 1201 K Street, NW (JBG) 256,170 s.f. 1 1 200 Massachusetts Avenue, NW I-395 Ramp7 Site (PGP) 2,160,000 s.f. 9 655 New York Avenue, NW (Jemal) 380,000 s.f.9 1050 17th Street, NW (Lenkin) 150,000 s.f. 1

4 1099 K Street, NW – Hostel Site (Jemal) 300,000 s.f. 2 801 New Jersey Avenue, NW (JBG /Bennett & Owen) 550,000 s.f. 10 601 Mass Avenue, NW (Boston Properties) 478,00010 s.f./ Arnold & Porter The CBD development pipeline has approximately 379,000 square feet 5 1001 Connecticut Avenue and 1701 K Street, NW (Zuckerman Gravely) 280,000 s.f. 11 5 3 660 North Capitol Street, NW (Republic) 200,000 s.f. 600 Massachusetts Avenue, NW (Gould) 400,000 s.f. 1000 F Street, NW – Lincoln Building (Jemal) 86,818 s.f. 2 900 16th Street, NW Church Site (JBG / ICG) 125,000 s.f. under construction or renovation, including 1700 New York Avenue, A 12 11 6 700 Pennsylvania Avenue, SE (EastBanc/Stanton) 150,000 s.f. (not shown) 500 New York Avenue, NW (Steuart / JBG) 535,000 s.f. 900 New York Avenue, NW (Gould) 620,000 s.f. – old Convention Center site

12 7 NW and 1200 17th Street, NW. Currently 12 new developments are Figure 20. New development pipeline Likely first buildings to deliver 13 Mt. Vernon Place (Quadrangle / Wilkes) 1,000,000 s.f.Washington – up to 4 buildings Post Site (Washington Post)900 G 500,000 Street, NW–800,000 (ASB/MRP s.f. Realty) 112,000 s.f. in the late 2014, 2015 and 8 2016 timeframe 627-631 H Street, NW (Monument) 60,000 s.f. proposed in the CBD, shown to the right. These include substantial Under construction/renovation East End proposed developments 1 th Armenian Site 14 & G Street, NW (Armenian Museum & Memorial) – 150,000 s.f. A. 1700 New York Avenue, NW (Carr) 130,000 s.f. renovations to existing buildings or new construction. These pipe- Updated March 25, 2013 – Under Construction / Sullivan & Cromwell / SmithGroup 2 1301 Pennsylvania Avenue, NW (Quadrangle) – 225,000 s.f. line projects have strong preleasing activity, with 70.7 percent of the B. 1200 17th Street, NW (Akridge/Mitsui)Capitol Hill 170,000 proposed s.f. developments 3 1201 K Street, NW (JBG) 256,170 s.f. – Under Construction / Pillsbury1 200 Massachusetts Avenue, NW I-395 Ramp Site (PGP) 2,160,000 s.f. 9 655 New York Avenue, NW (Jemal) 380,000 s.f. inventory under construction already committed. As of the first quarter

C. 1100 Vermont Avenue, NW (K&M) 79,510 s.f. – Renovation 4 1099 K Street, NW – Hostel Site (Jemal) 300,000 s.f. of 2013, 1200 17th Street, NW was 61.8 percent preleased to the law 2 801 New Jersey Avenue, NW (JBG /Bennett & Owen) 550,000 s.f. 10 601 Mass Avenue, NW (Boston Properties) 478,000 s.f./ Arnold & Porter Proposed 3 11 5 1000 F Street, NW – Lincoln Building (Jemal) 86,818 s.f. firm Pillsbury. The other office project under construction, 1700 New 1. Square 75 – 2150 Pennsylvania660 Avenue, North Capitol NW Street, (George NW (Republic) Washington 200,000 University) s.f. 600 Massachusetts Avenue, NW (Gould) 400,000 s.f.

255,550 s.f. 12 6 700 Pennsylvania Avenue, SE (EastBanc/Stanton) 150,000 s.f. (not shown) 500 New York Avenue, NW (Steuart / JBG) 535,000 s.f. 900 New York Avenue, NW (Gould) 620,000 s.f. – old Convention Center site York Avenue, NW was 93.1 percent preleased to the law firm Sullivan 2. 2100 M Street, NW (Hines) 390,000 s.f. 13 7 3.Likely 2020first buildings M Street, to deliver NW (Tishman Speyer) 155,000 s.f. Mt. Vernon Place (Quadrangle / Wilkes) 1,000,000 s.f. – up to 4 buildings 900 G Street, NW (ASB/MRP Realty) 112,000 s.f. Cromwell and SmithGroup. These indicators point towards a tight and in the late 2014, 2015 and 8 4.2016 timeframe2001 M Street, NW (Brookfield) 284,000 s.f. 627-631 H Street, NW (Monument) 60,000 s.f. thriving office market in the CBD and Golden Triangle. 5. 1920 N and 1233 20th Street, NW (JBG) 600,000 s.f. 6. 1900 L, 1020 19th & 1920 L Street, NW (Zuckerman Gravely) 600,000 s.f. In addition, several developers have created development options Updated7. March1990 25, K 2013 Street, NW (Bernstein Properties) 270,000 s.f. 8. 1150 17th and 1726 M Street, NW (Vornado) 412,707 s.f. through land assembly, including JBG at 19th and N; Zuckerman 9. 1050 17th Street, NW (Lenkin) 150,000 s.f. Gravely at 19th and L and Vornado at 17th and Rhode Island. JBG’s 10. 1001 Connecticut Avenue and 1701 K Street, NW (Zuckerman Gravely) 280,000 s.f. proposed 1920 N demonstrates the site assembly process undertaken 11. 900 16th Street, NW Church Site (JBG / ICG) 125,000 s.f. 12. Washington Post Site (Washington Post) 500,000–800,000 s.f. by one developer in the CBD. To assemble the site for 1920 N Street, NW, JBG first acquired 1920 N Street, NW and 1244 19th Street, NW. Over the course of a year, the JBG purchased the Lion Building ($67.0 million, $418 per square foot) allowing for increased development density along N Street. Through fortuitous timing, non-historic row houses adjacent to the site went up for sale and JBG spent an additional $3.0 million to create a full-block site along N Street. Options for site assembly still exist within the Golden Triangle; however, as shown in this example, site assembly may take time and investment. Often the process is organic and occurs by chance and can require a careful eye for historic preservation issues and zoning opportunities. A strategic assessment may find opportunities for site assembly and redevelopment that could have a significant impact in the neighborhood and maximize real estate values. Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 17

Retail and amenities

The Golden Triangle’s streetscape includes a mix of retail, salons and grooming services, banks, bars and restaurants. The mix includes several high-end, luxury retailers such as the Tiny Jewel Box, Brooks Brothers and Thomas Pink, as well as a handful of mid-priced national retailers including Nordstrom Rack, Gap, Ann Taylor and Jos. A. Bank. On the restaurant scene, in addition to established destinations, such as Equinox, Morton’s and The Palm, several new restaurants have opened in the Golden Triangle; these include Mari Vanna, The Gryphon and Boqueria, which cater to the area’s younger population, office ten- The crowd at the much-anticipated opening of Nordstrom Rack in the Golden Triangle, a ants and tourists. While stores and restaurants in the Golden Triangle potential retail anchor. Source: Jones Lang LaSalle perform well and in some cases outperform sister stores in other parts of the country, the potential retail demand generated from the strong visitor market, large employee base, and affluent residential population is not fully capitalized. In order to capitalize on the latent retail demand, a critical mass of retail and restaurants should be in place, thus creating a defined retail district in the eyes of the customer. A collection of many retailers and restaurants or one or two major destinations can help create this retail environment. When looking at Connecticut Avenue, the Golden Triangle’s highest concentration of retail, only 17 clothing stores are present between K Street and Dupont Circle. Comparatively, the same area hosts 12 bars and 23 fast casual food options, which range from frozen yogurt and cupcakes to hamburger places and quick-service New York City’s popular Shake Shack opened its first DC location at 1150 Connecticut dining. While fast casual dining is active during the day, many establish- Avenue, NW in May 2011. Source: Jones Lang LaSalle ments are closed in the evening and weekends due to a lack of activity. Furthermore, the large number of banks along several key streets creates dead zones during non-business hours. While the opening of the much-anticipated Nordstrom Rack has potential to serve as an anchor within the CBD and the soft goods retail mix is expanding, the number of retailers is still less than in Georgetown and the East End. The lessons learned from the successful retail incentives in the East End can be applied in the CBD. Like the East End, the CBD is home to pent-up demand and potential. With the right strategic catalyst, the area could take off and become an even greater economic generator for the city than it already is. Beyond the number of stores, people like to spend time in neighborhoods with cultural attractions, other amenities, activity and most notably other people. These factors would all complement and help foster a sense of place where people want to spend their time, and money. The surrounding households are a great asset, but if more residential was integrated into the fabric of the neighborhood, there would be more life on the streets during the evening, not to mention more households with 18 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

disposable income. As for other cultural attractions, the Golden Triangle $36,000 $35,000 Retail Goods is home to DC Improv and National Geographic’s exhibits, lectures, $34,000 $33,000 concerts and movies, but it lacks the major amenities found in the East $32,000 $31,000 End that attract visitors and help establish a critical mass. Some of $30,000 $29,000 the amenities found in the East End include the Smithsonian National $28,000 $27,000 Portrait Gallery, the International Spy Museum, the Verizon Center and $26,000 0.5 miles 1.0 mile 1.5 miles the National Museum of Crime & Punishment. With the central location, Golden Triangle BID Washington, DC transportation infrastructure, nearby residents, captive office market Figure 21.Residents living in proximity to the Golden Triangle have high retail spending when compared to the District of Columbia. Source: ESRI, Jones Lang LaSalle and more there is an opportunity in the CBD for strategic incentives or catalytic projects to produce results exponentially greater than the initial investment. Retail spending potential There are three major sources for retail customers in the Golden Trian- gle: employees, residents and visitors. The combined annual income of employees in the Golden Triangle is estimated to be $8.2 billion. This is a captive audience with money to spend provided they are tempted by products that appeal to their preferences and lifestyles. Households within one mile of the Golden Triangle on average spend approximately $34,894 on retail goods annually, higher than the averages for the District of Columbia (Figure 21). In addition, the Golden Triangle plays host to many District of Columbia visitors, who are potential customers. The area contains over 1,500 hotel rooms in seven properties. These properties include the esteemed Hay-Adams Hotel, the 731-room Re- naissance Mayflower Hotel and the extended stay AKA White House. Some of Washington, DC’s other premier hotels are also located immediately in the vicinity, further increasing the visitor population. High employee incomes, consumer spending habits of households near the Golden Triangle, and a robust visitor market could provide support for more retail and other amenities. Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 19

Planning, urban design and economic development

Planning and urban design can have a large impact on the ability of an area to attract businesses, retailers and residents. The commercial development and continued strength of the Golden Triangle is closely linked to its geographic location as a transportation hub for the Washington area with major routes to Northern Virginia, three Metro lines connecting DC and Maryland neighborhoods, and over 25,000 parking spaces. The Golden Triangle BID adds value by cleaning the streets, marketing businesses, holding events, and making infrastructure improvements. These assets provide a solid foundation for the Golden Triangle and they also provide a great opportunity for the future development of the area building on continued trends in residential development and urban design. Planning As previously discussed, demographic trends suggest to a shifting preference for walkable, mixed-use environments (Figure 22). The District of Columbia Office of Planning is currently revising the zoning code to promote denser, mixed-use development in parts of the city with transit access. The revised zoning code allows for a mix of uses in most of the Golden Triangle. Residential development in the northern portion of the Golden Triangle near Dupont Circle can reach a FAR of 6.5 in some places and other portions along K Street can be developed to an 8.5 FAR, making redevelopment an attractive option for some property Figure 22. Younger generations have displayed a preference for mixed-use, walkable environments, such as those found in the northern portions of the Golden Triangle. Source: owners. The FAR for the Golden Triangle is among the highest in the Jones Lang LaSalle District and comparable to the East End as are land values calculated on a dollar per FAR basis. A mix of office, retail and residential uses helps create a live-work-play environment that is attractive to all users of space. As buildings are considered for redevelopment, one option is to consider the economic impact and viability of developing residential along key corridors in the Golden Triangle. This could be explored as converting total buildings to residential or by integrating floors of residential into office buildings. A larger residential base would create more activity during the nights and weekends when the office tenants are gone. Despite substantial apartment construction around metro Washington, continued demand for centrally-located multifamily product for the city’s growing population exists. Most of the new apartment supply delivering to the District of Columbia is in emerging submarkets such as NoMa, Southeast and Mt. Vernon Triangle, where land prices are lower and the city is supporting the growth through incentives, such as a 10-year tax abatement at 2 M Street, NE, a 314-unit apartment building. 20 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

The Golden Triangle’s central location in the CBD, near Dupont Circle Case study: The Woodward Building and Georgetown as well as close proximity to three metro lines, ideally

positions the area to accept multifamily redevelopment. Previous office-to-residential conversions in the District have been successful. More information is shown in the Woodward case study to the right. Outside of DC, from New York to Philadelphia to Baltimore and Los An- geles, cities are offering property owners incentives and tax abatement of up to 10 years to re-purpose older, more obsolete office buildings into re-invigorated residential uses based on the global, domestic and local demand from residents to live in the heart of the city. The East End has seen tremendous success with luring new residents to the area over the past 10 years. Even “highways” like Massachusetts Avenue (3rd to 5th Streets) and New York Avenue (5th to 4th Streets) have seen the Original construction: 1911 influx of several thousand residents over the course of the past decade. Renovation: 2008 If a major thoroughfare that in many ways can be seen as a highway Cost: $45.0 million is successful, there is no reason Rhode Island Avenue, 17th Street or Current owner: SJG Properties Connecticut Avenue cannot be…owners just need the support of the Asking rates: $2,373 to $5,950 per month city to make sense of those investments from a financial standpoint. Overview: In 2008, SJG Properties redeveloped the former Woodward office Urban design building into centrally-located, high-end luxury apartments. Through a $45.0 Urban design - attractive building facades; interesting and unique public million renovation, SJG Properties converted the building’s obsolete floor plate into a 189-unit apartment building with studios, one-bedroom, two-bedroom and spaces, including every sidewalk, and public art - affects the vibrancy three-bedroom units. and competitiveness of the Golden Triangle. The urban design in the Units at the renovated Woodward building began at $1,780 for a 455-square-foot Golden Triangle presents challenges to attracting people and develop- studio in 2008; since then, rent has increased to $2,375 for a similar-sized studio, ment. Aside from Connecticut Avenue, many streets are lined entrances a 33.4 percent increase. to parking garages or long facades without entrances to storefronts. Urban retail is most successful on a “shopping street” in a prominent location with continuous retail on both sides of the street for a two to three-block length. Additionally, the large number of banks along K Street, which are closed at night and during the weekends, creates additional dead zones. Some ways to improve the urban design include adding architectural features and pedestrian-oriented lighting to building facades, activating existing parks, promoting sidewalk cafés, adding visual interest or public art to sidewalks. Not every street needs to be lined with retail, but the dead zones, as shown in Figure 23, can be re- duced, making every street an attractive place to visit. A growing trend in major cities is the conversion of a small area such as a single parking space or a section of sidewalk into a pocket park or “parklet,” creating a break from the perceived uniformity of the downtown area. On a larger scale, active parks with public art, such as the “Bean” in Chicago’s Millennium Park, can also serve as anchor attractions.

Figure 23. Lined with entrances to parking garages and single-use buildings, this street in the Golden Triangle BID does not promote a live-work-play environment. Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 21

Economic development The District of Columbia has a variety of incentives to promote economic development. Some incentives include tax increment financing, tax abatement and grants. As previously mentioned, the Golden Triangle is a high density commercial area directly adjacent to a high density and high earning residential area. With the addition of a strong retail and residential base, this combination would provide an excellent opportunity for a thriving mixed-use neighborhood. The city’s retail incentive act of 2004 authorized the creation of a $30.0 million tax increment financing fund to finance new downtown stores and attractions. The fund provided $13.9 million for the National Museum of Crime & Punishment, H&M, Zara and the Madame Tussauds wax museum through tax increment financing. Several of these TIF-funded stores and attractions serve as anchors for the East End. Similar economic development incentives could be used to create anchor spaces in the Golden Trian- gle, allowing it to become an even more active and fully mixed-used neighborhood in metro Washington. The same type of incentives could be given to owners looking at multifamily conversions as well. 22 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

LIVE? Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 23

Conclusions

Within the Washington, DC marketplace, the CBD, and thereby the Golden Triangle, is a competitive office market situated amidst residential neighborhoods with a strong demographic profile. The neighborhood’s biggest challenge is expanding the types of uses and amenities to increase activity during off-business hours, thus creating an attractive live-work-play environment. When it comes to attracting office tenants and investors, the Golden Triangle and the CBD are very successful. The Golden Triangle features a prestigious and diversified tenant mix, is less reliant on the federal government and contractors than other parts of the region, and is well-positioned to receive future growth in certain sectors. The strong demographics and central location should leverage a critical mass of retail, restaurants, cultural and arts amenities and increased residents. However, a catalytic project and/or incentives that expand the types of uses beyond office may be required to jumpstart the next phase of growth and development. The Golden Triangle is poised to be more than just a successful office market. The transportation infrastructure and access to/from different parts of the region via various modes (metro, car, bike, bus) is unbeatable. The growing number of nearby residents, 90,000 employees and strong visitor market are in place. Additionally, continued redevelopment and renovation of second-generation office space, as well as public space enhancements, create opportunities for a whole host of improvements. These potential opportunities include building small parks in public space, assembling small properties to maximize real estate values, integrating residential uses in the neighborhood, attracting retailers and restaurants and more. Mov- ing forward, it seems clear that with strong public-private partnerships, there are future growth and development opportunities in the Golden Triangle that could help the neighborhood realize its full potential and provide maximum benefits to the residents, employees, businesses and District government. 24 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Appendix A: Employment comparison Golden Triangle Businesses Employees by NAICS Codes (subsectors in italics) Number Percent Number Percent Agriculture, forestry, fishing & hunting 3 0.0% 11 0.0% Mining 4 0.1% 32 0.0% Utilities 8 0.1% 61 0.1% Construction 139 2.4% 1,329 1.6% Manufacturing 72 1.3% 968 1.2% Wholesale trade 75 1.3% 481 0.6% Retail trade 235 4.1% 2,199 2.7% Motor vehicle & parts dealers 8 0.1% 104 0.1% Furniture & home furnishings stores 6 0.1% 21 0.0% Electronics & appliance stores 43 0.7% 580 0.7% Bldg material & garden equipment & supplies dealers 11 0.2% 51 0.1% Food & beverage stores 22 0.4% 101 0.1% Health & personal care stores 33 0.6% 220 0.3% Gasoline stations 2 0.0% 8 0.0% Clothing & clothing accessories stores 40 0.7% 360 0.4% Sport goods, hobby, book, & music stores 19 0.3% 269 0.3% General merchandise stores 4 0.1% 111 0.1% Miscellaneous store retailers 40 0.7% 226 0.3% Nonstore retailers 8 0.1% 149 0.2% Transportation & warehousing 64 1.1% 509 0.6% Information 269 4.7% 5,211 6.4% Finance & insurance 383 6.7% 4,594 5.6% Central bank/credit intermediation & related activities 132 2.3% 1,046 1.3% Securities, commodity contracts & other financial investments & other related 193 3.4% 2,408 3.0% activities Insurance carriers & related activities; funds, trusts & other financial vehicles 58 1.0% 1,139 1.4% Real estate, rental & leasing 215 3.8% 2,740 3.4% Professional, scientific & tech services 1,752 30.6% 29,111 35.7% Legal services 763 13.3% 16,042 19.7% Management of companies & enterprises 7 0.1% 77 0.1% Administrative & support & waste management & remediation services 281 4.9% 3,625 4.4% Educational services 105 1.8% 1,557 1.9% Health care & social assistance 360 6.3% 3,610 4.4% Arts, entertainment & recreation 54 0.9% 3,200 3.9% Accommodation & food services 244 4.3% 5,341 6.6% Accommodation 20 0.3% 1,407 1.7% Food services & drinking places 225 3.9% 3,934 4.8% Other services (except public administration) 977 17.1% 13,035 16.0% Automotive repair & maintenance 3 0.0% 6 0.0% Public administration 116 2.0% 2,385 2.9% Unclassified establishments 367 6.4% 1,458 1.8% Total 5,731 100% 81,532 100% Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 25

Appendix A: Employment comparison District of Columbia Businesses Employees by NAICS Codes (subsectors in italics) Number Percent Number Percent Agriculture, forestry, fishing & hunting 27 0.1% 954 0.2% Mining 14 0.0% 88 0.0% Utilities 53 0.2% 1,816 0.3% Construction 1,340 3.8% 19,560 3.1% Manufacturing 416 1.2% 7,465 1.2% Wholesale trade 631 1.8% 8,502 1.4% Retail trade 2,922 8.3% 28,570 4.5% Motor vehicle & parts dealers 105 0.3% 750 0.1% Furniture & home furnishings stores 131 0.4% 849 0.1% Electronics & appliance stores 228 0.7% 2,470 0.4% Bldg material & garden equipment & supplies dealers 112 0.3% 942 0.2% Food & beverage stores 641 1.8% 6,659 1.1% Health & personal care stores 254 0.7% 3,271 0.5% Gasoline stations 120 0.3% 639 0.1% Clothing & clothing accessories stores 475 1.4% 3,443 0.5% Sport goods, hobby, book, & music stores 198 0.6% 1,947 0.3% General merchandise stores 98 0.3% 2,050 0.3% Miscellaneous store retailers 507 1.4% 3,316 0.5% Nonstore retailers 53 0.2% 2,234 0.4% Transportation & warehousing 576 1.6% 6,202 1.0% Information 1,357 3.9% 39,488 6.3% Finance & insurance 1,519 4.3% 21,097 3.4% Central bank/credit intermediation & related activities 721 2.1% 8,667 1.4% Securities, commodity contracts & other financial investments & other related 522 1.5% 5,918 0.9% activities Insurance carriers & related activities; funds, trusts & other financial vehicles 276 0.8% 6,512 1.0% Real estate, rental & leasing 2,209 6.3% 20,796 3.3% Professional, scientific & tech services 6,153 17.5% 107,785 17.1% Legal services 2,041 5.8% 51,064 8.1% Management of companies & enterprises 28 0.1% 1,874 0.3% Administrative & support & waste management & remediation services 1,387 4.0% 14,741 2.3% Educational services 1,022 2.9% 46,437 7.4% Health care & social assistance 2,448 7.0% 75,125 11.9% Arts, entertainment & recreation 659 1.9% 17,075 2.7% Accommodation & food services 2,486 7.1% 58,963 9.4% Accommodation 209 0.6% 20,174 3.2% Food services & drinking places 2,277 6.5% 38,789 6.2% Other services (except public administration) 5,826 16.6% 67,258 10.7% Automotive repair & maintenance 176 0.5% 749 0.1% Public administration 2,272 6.5% 76,843 12.2% Unclassified establishments 1,741 5.0% 8,553 1.4% Total 35,086 100% 629,192 100% 26 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Appendix B: Tenant mix

The CBD (left) has a total of 207 companies greater than 20,000 s.f. compared to the 227 companies greater than 20,000 s.f. in the East End (right).

CBD East End Transportation 0 Transportation 1

Energy/Engineering/Infrastructure 1 Healthcare 2

Healthcare 2 Education 5

Government contractor 2 Policy think tank 7

Technology/Communications 3 Energy/Engineering/Infrastructure 7

Government light 6 Creative - Advertising/Architecture/PR 7

Policy think tank 7 Government light 8

Media 7 Technology/Communications 10

Education 7 Government contractor 10

Consulting 15 Consulting 11

Non-profit 16 Non-profit 14

Creative - Advertising/Architecture/PR 16 Banking/Finance/Insurance/Real Estate 14

Association/Union 19 Media 16

Banking/Finance/Insurance/Real Estate 28 Association/Union 31

Law firm 78 Law firm 84

0 10 20 30 40 50 60 70 80 90 0 10 20 30 40 50 60 70 80 90 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 27

Appendix C: Office relocation analysis An in-depth review of major leasing transactions since August 2006 indicates that the CBD has benefited from more cross-border relocations than the East End. Within a sample size of the 141 most recent office moves over 20,000 square feet, representing a total of 7.5 million square feet of transactions, the CBD has witnessed an in-migration rate of 54.7 percent relative to 45.3 percent for the East End (based on square footage leased). Statistics have shown that the CBD holds an even greater edge among large tenants, with groups over 50,000 Moves to CBD square feet in size favoring the CBD over the East End at a rate of 60.1 Moves to East End to 39.1 percent, respectively. When comparing these two office markets alongside one another, it is important to note that the most likely result of a leasing decision – in the Figure 24.The CBD received more tenants from the East End than vice versa (by square footage). Source: Jones Lang LaSalle event of all transaction types including relocations – will be for a tenant to remain within its current/existing submarket. When including this data set, 82.0 percent of tenants elect to stay within the same submarket when they relocate to another building. Recently, the East End has witnessed a migration of tenants within the submarket to points east – as office demand has shifted from Pennsylvania Avenue and Metro Center to the Mount Vernon Triangle and Gallery Place. Those notable intra-market moves – by the likes of Moves to CBD Covington & Burling and Arnold & Porter – fall within the conventional boundaries of the East End submarket, and thus do not affect the Moves to East End Relocations to another building occupancy flow statistics from one submarket to another (factoring into within the same submarket the 82.0 percent figure referenced above). Figure 25. Most tenants overwhelmingly opt to stay within the bounds of their existing For the purposes of this analysis, we examined relocations of 20,000 neighborhoods when intra-market relocations are included. Source: Jones Lang LaSalle square feet and greater, with moves planned or executed over the past five years. Since this study attempts to quantify the flow of office occu- 90.0% pancy between the CBD and East End, new branch offices, startups 80.0% CBD and relocations from jurisdictions outside of the immediate region are 70.0% East End excluded from the sample. Statistical conclusions from this exercise 60.0% validate the fact that more core Washington, DC tenants are electing to 50.0% relocate to the CBD from the East End at a greater rate than vice versa. 40.0% Over the past five years, the CBD has seen a bigger influx of tenants 30.0% move from the East End than vice versa (by square footage). (See 20.0% Figure 24) Although when including intra-market relocations (i.e. relo- 10.0% 0.0% cations to alternate buildings within the same submarket), most tenants Relocations to buildings within the Moves to a competing submarket same submarket overwhelmingly opt to stay within the bounds of their existing neighbor- Figure 26. Core Washington, DC tenants prefer to stay within the same submarket hood (See Figure 25). when moving to a new building (by square footage, excluding renewals). The average tenant size in the East End is larger than the average tenant size in the The most likely scenario in the event of a new relocation is for the CBD, thus intra-market retention stats are skewed slightly. When comparing based on tenant to stay within the same submarket. Tenants are roughly four number of transactions, rather than square footage, the CBD and East End feature times more likely to relocate to another building within the confines of an identical statistical likelihood of retaining tenants upon relocation (77.8 percent). When including renewals, that retention statistic increases to approximately 97.5 its existing submarket than to relocate to another building elsewhere percent. Source: Jones Lang LaSalle (See Figure 26). 28 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Appendix C: Office relocation analysis

Notable inbound moves to the East End from the CBD Notable inbound moves to the CBD from the East End (Representing 553,455 s.f.) (Representing 669,103 s.f.)

• Schiff Hardin: 1667 K Street NW to 901 K Street NW • Fried, Frank, Harris, Shriver & Jacobson: 1001 Pennsylvania Ave-

• Blackboard: 1899 L Street NW to 650 Massachusetts Avenue NW nue NW to 801 17th Street NW

• Nuclear Energy Institute: 1776 Eye Street NW to 1201 F Street NW • American Bar Association: 740 15th Street NW to 1050 Connecticut Avenue NW • Cooley: 1200 19th Street NW to 777 6th Street NW (subsequently moved again) • McKinsey & Company: 600 14th Street NW to 1200 19th Street NW

• Rothwell, Figg, Ernst & Manbeck: 1425 K Street NW to 607 14th • National Quality Forum: 601 13th Street NW to 1030 15th Street NW Street NW • Womble Carlyle Sandridge & Rice: 1401 Eye Street NW to 1200

• BP plc: 1776 Eye Street NW to 1101 New York Avenue NW 19th Street NW

• Media Matters: 1625 Massachusetts Avenue NW to 455 Massachu- • Squire, Sanders & Dempsey: 1201 Pennsylvania Avenue NW to setts Avenue NW 1200 19th Street NW

• National Committee for Quality Assurance: 2000 L Street NW to • Sheppard Mullin: 1300 Eye Street NW to 2099 Pennsylvania Ave- 1100 13th Street NW nue NW

• SmithGroup: 1850 K Street NW to 901 K Street NW • Vinson & Elkins: 1455 Pennsylvania Avenue NW to 2200 Pennsyl- vania Avenue NW • National Parks & Conservation Association: 1300 19th Street NW to 777 6th Street NW • International Foundation for Electoral Systems: 1101 15th Street NW to 1850 K Street NW • Sound Exchange: 1666 K Street NW to 733 10th Street NW • Ballard Spahr: 601 13th Street NW to 1909 K Street NW • StreamSage: 1016 16th Street NW to 1110 Vermont Avenue NW • The Avascent Group: 1225 Eye Street NW to 1615 L Street NW • Krooth & Altman: 1850 M Street NW to 1201 15th Street NW • SmithGroup: 901 New York Avenue NW to 1700 New York Avenue • Constantine Cannon: 1627 Eye Street NW to 901 15th Street NW NW

• Ruesch International: 700 11th Street NW to 1152 15th Street NW

• National Resources Defense Council: 1200 New York Avenue NW to 1152 15th Street NW

• Promontory Financial Group: 1201 Pennsylvania Avenue NW to 801 17th Street NW

• Lockton Companies: 1110 Vermont Avenue NW to 1801 K Street NW Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 29

Appendix D: Property owners

Address RBA Assessment Type Class Owner Owner Location Owner Type Sale Price Last Sale 1777 F Street, NW 59,858 $27,141,070 Office/Commercial A Council on Foreign Relations Washington, DC User $34,000,000 6/14/2007 1776-1742 G Street, NW 266,000 $88,272,830 Office/Commercial B WRIT Rockville, MD REIT $84,750,000 8/6/2003 1750 Pennsylvania Avenue, NW 281,624 $85,211,640 Office/Commercial B Vornado New York, NY REIT 1/4/2000 1730 Pennsylvania Avenue, NW 258,315 $124,151,290 Office/Commercial A Tishman Speyer New York, NY Private $30,584,050 1/5/2007 1700 Pennsylvania Avenue, NW 165,638 $88,504,470 Office/Commercial A Cloch Family Washington, DC Private 3/17/2010 1701 Pennsylvania Aveune, NW 206,442 $124,490,880 Office/Commercial A Grosvenor London, England Foreign 1717 Pennsylvania Aveune, NW 200,451 $100,861,900 Office/Commercial A Tishman Speyer New York, NY Private 1747-1755 Pennsylvania Avenue, NW 170,000 $66,351,560 Office/Commercial B Tishman Speyer New York, NY Private 1775 Pennsylvania Avenue, NW 153,984 $94,529,400 Office/Commercial Trophy Tishman Speyer New York, NY Private 1801 Pennsylvania Avenue, NW 187,485 $140,894,400 Office/Commercial Trophy Pembroke Real Estate Boston, MA Institutional $148,490,119 2/1/2006 1875 Pennsylvania Avenue, NW 283,792 $241,527,800 Office/Commercial Trophy Eastbanc Washington, DC Developer/Property Company $198,800,000 1/1/2006 1899 Pennsylvania Avenue, NW 206,164 $153,511,100 Office/Commercial Trophy Paramount Group Hamburg, Germany Foreign $151,100,000 9/16/2010 1901 Pennsylvania Avenue, NW 105,219 $29,110,160 Office/Commercial C WRIT Rockville, MD REIT 1911 Pennsylvania Avene, NW 45,475 $37,701,650 Office/Commercial A Embassy of Mexico to the United States Washington, DC User 1919 Pennsylvania Avenue, NW 274,532 $128,728,000 Office/Commercial A Tishman Speyer New York, NY Private $75,163,500 2/16/2001 2001 Pennsylvania Avenue, NW 157,666 $83,939,210 Office/Commercial A Property Group Partners New York, NY Private $111,500,000 7/18/2007 2099 Pennsylvania Avenue, NW 206,573 $158,127,800 Office/Commercial A Paramount Group Hamburg, Germany Foreign $158,000,000 1/31/2012 1615 H Street, NW 141,000 $60,055,970 Office/Commercial A US Chamber of Commerce Washington, DC User 1717 H Street, NW 320,032 $129,553,100 Office/Commercial B Marvin H Robertson Washington, DC Private 11/3/2004 1729 H Street, NW 57,096 $12,355,400 Office/Commercial B Oto Development Spartenburg, SC Developer/Property Company $16,550,000 1737 H Street, NW 17,836 $6,218,790 Office/Commercial B Scotia Valley NV McLean, VA 1750 H Street, NW 133,303 $57,235,130 Office/Commercial A First Potomac Realty Trust Bethesda, MD REIT $65,000,000 10/28/2010 1710 H Street, NW 163,000 $42,491,800 Hotel Korman Residential Properties Philadelphia, PA Developer/Property Company $39,222,300 5/18/2005 1600 Eye Street, NW 130,000 $52,464,878 Office/Commercial B Motion Picture Association of America Sheman Oaks, CA User 1620 Eye Street, NW 108,338 $42,412,000 Office/Commercial B TF Cornerstone, Inc New York, NY Developer/Property Company $193,000,000 8/1/2006 1625 Eye Street, NW 383,274 $279,577,550 Office/Commercial A Brookfield Office Properties New York, NY REIT $157,500,000 12/23/2003 1627 Eye Street, NW 110,000 $70,255,890 Office/Commercial A Beacon Capital Partners Boston, MA Private $6,350,000,000 4/24/2007 1634 Eye Street, NW 68,669 $24,000,000 Office/Commercial B Zuckerman Gravely Washington, DC Developer/Property Company $12,550,000 12/1/2000 1725 Eye Street, NW 241,695 $119,234,200 Office/Commercial A Cafritz Interests Washington, DC Developer/Property Company 7/1/1999 1775 Eye Street, NW 185,179 $91,854,800 Office/Commercial A Cafritz Interests Washington, DC Developer/Property Company 10/10/1997 1712 Eye Street, NW 53,034 $14,231,600 Office/Commercial B Zuckerman Gravely Washington, DC Developer/Property Company 9/30/1998 1720 Eye Street, NW 70,447 $20,414,190 Office/Commercial C Intrepid Real Estate LLC Washington, DC 5/19/1998 1722 Eye Street, NW 181,617 $51,194,000 Office/Commercial B Axent Realty Group Potomac, MD 1776 Eye Street, NW 225,666 $111,622,500 Office/Commercial A Rockrose Development Corporation New York, NY Developer/Property Company $119,785,609 3/12/2012 1800 Eye Street, NW 22,329 $5,505,800 Office/Commercial C 1800 Eye Street, Ltd. Washington, DC 1806 Eye Street, NW $705,000 Alibi Club of Washington Inc Washington, DC User 1808 Eye Street, NW 32,529 $20,922,500 Office/Commercial A Binswenger Philadelphia, PA Developer/Property Company $21,000,000 3/29/2009 1850 Eye Street, NW 477,446 $169,238,220 Office/Commercial World Bank Washington, DC User 1920 Eye Street, NW 5,000 $1,425,640 Office/Commercial C DCI Properties LLC Washington, DC $1,400,000 5/23/2005 1922 Eye Street, NW 2,133 $1,100,150 Office/Commercial JMG LLC Washington, DC 4/24/1998 1924 Eye Street, NW 2,300 $1,040,600 Office/Commercial JMG LLC Washington, DC 4/24/1998 1926 Eye Street, NW 2,871 $1,100,600 Store David Tabo Bethesda, MD 1928 Eye Street, NW 960 $542,640 Retail Anthony Boudouvas Arlington, VA 1913 Eye Street, NW 14,352 $7,653,000 Embassy Embassy of Uruguay Washington, DC User $4,100,000 2/28/2001 1915 Eye Street, NW 20,525 $7,406,000 Office/Commercial A Triad Communication Washington, DC $4,675,000 10/25/2002 1917 Eye Street, NW 5,100 $2,669,000 Office/Commercial Barac Company Washington, DC Developer/Property Company 1919 Eye Street, NW 1,822 $1,511,000 Restaurant Jean Louis Bosch Falls Church, VA 9/11/2006 1825 Eye Street, NW 423,205 $160,401,567 Office/Commercial A Tishman Speyer New York, NY Private $87,947,333 8/11/2006 1875 Eye Street, NW 307,026 $160,401,567 Office/Commercial A Tishman Speyer New York, NY Private 2011 Eye Street, NW 38,131 $10,502,150 Office/Commercial B Pepperdine University Malibu, CA User $17,400,000 4/28/2008 2015 Eye Street, NW 13,748 $13,564,000 Arts Club of Washington Washington, DC User 2019 Eye Street, NW 6,281 $18,363,000 Hotel R B Properties Washington, DC Developer/Property Company 1600 K Street, NW 86,606 $27,821,520 Office/Commercial C JBG Chevy Chase, MD Developer/Property Company $20,625,000 8/23/2007 1608 K Street, NW 20,000 $12,095,170 Office/Commercial B American Legion of Phoenix Phoenix, AZ User 1612 K Street, NW 75,515 $13,459,350 Office/Commercial C Leaf, LLC Washington, DC 4/22/1997 1666 K Street, NW 272,283 $161,081,330 Office/Commercial B 1620 K Street Associates Arlington, VA 5/24/2012 30 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Appendix D: Property owners

Address RBA Assessment Type Class Owner Owner Location Owner Type Sale Price Last Sale 1601 K Street, NW 215,000 $177,019,180 Office/Commercial Trophy Morgan Stanley New York, NY Institutional $150,351,509 9/30/2005 1625 K Street, NW 106,079 $22,299,680 Office/Commercial C Shorenstein Realty Services New York, NY Private $35,050,000 6/22/2006 1627 K Street, NW 66,936 $19,535,080 Office/Commercial B 16 Cobalt LLC Washington, DC $15,950,000 10/1/2004 1629 K Street, NW 105,721 $22,264,410 Office/Commercial C Floyd E. Davis Company Washington, DC 10/9/2001 1667 K Street, NW 183,043 $90,394,990 Office/Commercial A James Campbell Company Kapolei, HI Private 1/4/2006 1701 K Street, NW 62,251 $20,443,760 Office/Commercial B Zuckerman Gravely Washington, DC Developer/Property Company $15,000,000 9/12/2002 1700 K Street, NW 390,000 $287,195,800 Office/Commercial Trophy Commerce Building Associates Washington, DC 1750 K Street, NW 165,752 $67,428,700 Office/Commercial B Sumitomo Corporation of America Tokyo, Japan Foreign $72,000,000 4/30/2008 1776 K Street, NW 194,292 $88,149,100 Office/Commercial B 1776 K Street Associates, LP (Vornado) New York REIT 1735 K Street, NW 99,392 $14,006,700 Office/Commercial A FINRA Washington, DC User 1775 K Street, NW 170,940 $60,131,400 Office/Commercial B UFCW International Union Washington, DC User 12/9/2003 1801 K Street, NW 569,769 $253,614,600 Office/Commercial A Somerset Partners New York, NY Private $250,000,000 1/27/2006 1800 K Street, NW 206,314 $95,045,480 Office/Commercial B RREEF New York, NY Institutional $98,000,000 9/26/2006 1850 K Street, NW 428,970 $160,401,567 Office/Commercial A Tishman Speyer New York, NY Private $87,947,333 8/11/2006 1825 K Street, NW 237,746 $86,141,900 Office/Commercial B Cafritz Interests Washington, DC Developer/Property Company 1875 K Street, NW 199,435 $131,222,400 Office/Commercial A Shorenstein Realty Services New York, NY Private $113,100,000 3/15/2005 1900 K Street, NW 339,060 $223,869,930 Office/Commercial Trophy TIAA-CREF New York, NY Institutional $216,900,000 1/12/2005 1990 K Street, NW 269,000 $80,393,700 Office/Commercial B The Bernstein Companies Washington, DC Developer/Property Company 7/3/2001 1909 K Street, NW 239,128 $121,653,410 Office/Commercial A The Tower Companies Rockville, MD Developer/Property Company 1999 K Street, NW 250,345 $246,654,900 Office/Commercial Trophy Deka Immobilien Investment GmbH Frankfurt, Germany Foreign $207,751,142 9/1/2001 2000 K Street, NW 135,000 $65,529,400 Office/Commercial A 2000 K Street LLC $30,000,000 5/20/1997 2020 K Street, NW 398,286 $216,718,300 Office/Commercial A LaSalle Investment Management Chicago, IL Institutional $113,501,127 12/22/2003 2001 K Street, NW 235,311 $157,681,980 Office/Commercial Trophy Spitzer Enterprises New York, NY Private $95,000,000 8/6/2001 2021 K Street, NW 159,981 $69,684,100 Office/Commercial B TF Cornerstone, Inc New York, NY Developer/Property Company $70,000,000 9/15/2005 2029 K Street, NW 36,742 $7,739,000 Office/Commercial C TF Cornerstone, Inc New York, NY Developer/Property Company $10,825,000 7/2/2007 2033 K Street, NW 118,741 $44,705,100 Office/Commercial B American Realty Advisors Glendale, CA Institutional 6/25/2003 2100 K Street, NW 60,949 $16,080,100 Office/Commercial B Blake Real Estate, Inc Washington, DC Developer/Property Company 10/24/1990 2101 K Street, NW 8,000 $2,536,000 Retail Rare Properties, LLC Bethesda, MD 12/26/2002 2121 K Street, NW 190,458 $85,636,980 Office/Commercial A TF Cornerstone, Inc New York, NY Developer/Property Company $82,443,249 11/18/2010 2131 K Street, NW 88,070 $27,738,000 Office/Commercial B Universal Health Realty Income Trust King of Prussia, PA REIT $28,800,000 12/21/2011 1602 L Street, NW 51,907 $25,810,580 Office/Commercial A Independent Sector Washington, DC User $30,500,000 2/13/2008 1620 L Street, NW 176,464 $60,735,650 Office/Commercial B John Buck Companies Chicago, IL Private $61,000,000 9/5/2008 1660 L Street, NW 132,032 $42,870,540 Office/Commercial B Korea International Trade Association Seoul, Korea Foreign $52,000,000 12/2/2005 1615 L Street, NW 414,195 $188,757,150 Office/Commercial A Spitzer Enterprises New York, NY Private $180,000,000 3/5/2009 1625 L Street, NW 65,524 $13,508,470 Office/Commercial B AFCME User 1707 L Street, NW 102,631 $32,374,330 Office/Commercial C The Tower Companies Rockville, MD Developer/Property Company 8/3/2009 1801 L Street, NW 206,180 $83,094,540 Office/Commercial B Leonard Paul A Family Trust Berkeley, CA Private 1819 L Street, NW 51,122 $14,533,100 Office/Commercial B Sasakawa Peace Foundation USA Inc. Washington, DC User 1823 L Street, NW 86,200 $19,115,430 Hotel Cafritz Interests Washington, DC Developer/Property Company 1899 L Street, NW 152,500 $67,134,640 Office/Commercial B BlackRock, Inc New York, NY Institutional $43,700,000 11/5/2004 1828 L Street, NW 332,928 $108,124,580 Office/Commercial B The Tower Companies Rockville, MD Developer/Property Company 1900 L Street, NW 104,394 $35,429,460 Office/Commercial C Zuckerman Gravely Washington, DC Developer/Property Company $16,600,000 12/3/2001 1920 L Street, NW 101,317 $41,714,700 Office/Commercial B Zuckerman Gravely Washington, DC Developer/Property Company $47,500,000 10/5/2006 1901 L Street, NW 128,672 $48,592,850 Office/Commercial B McMorgan & Company San Francisco, CA Institutional $51,500,000 7/26/2005 2001 L Street, NW 153,161 $52,837,250 Office/Commercial B Heitman Chicago, IL Institutional $61,754,411 3/7/2012 2000 L Street, NW 383,000 $137,779,600 Office/Commercial B Brookfield Office/Blackstone New York, NY REIT 10/5/2006 2021 L Street, NW 73,226 $30,169,471 Office/Commercial B American Society of Hematology Washington, DC User $50,972,101 10/6/2008 2055 L Street, NW 259,902 Office/Commercial A Monument Realty/Angelo Gordon Washington, DC/New York, NY Developer/Property Company 2101 L Street, NW 379,837 $218,507,800 Office/Commercial A Vornado New York, NY REIT $77,016,000 8/4/2003 2100 L Street, NW 25,000 $4,791,200 Office/Commercial A Humane Society of the United States Washington, DC User 2120 L Street, NW 107,000 $38,233,400 Office/Commercial C Gelman Companies Washington, DC 1615 M Street, NW 183,282 $83,551,670 Office/Commercial A Boston Properties, Inc Boston, MA REIT 1215 17th Street, NW 16,125 $9,416,900 Office/Commercial B Boston Properties, Inc Boston, MA REIT 1711 M Street, NW 2,107 $1,919,360 Office/Commercial C Ascended Master I am Activity Washington, DC User 1726 M Street, NW 92,023 $26,716,410 Office/Commercial C Vornado New York, NY REIT $32,461,000 9/28/2006 1730 M Street, NW 186,293 $36,530,650 Office/Commercial B Vornado New York, NY REIT 11/1/1998 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 31

Appendix D: Property owners

Address RBA Assessment Type Class Owner Owner Location Owner Type Sale Price Last Sale 1800 M Street, NW 585,545 $183,489,300 Office/Commercial B Prudential Parsippany, NJ Institutional $139,000,000 6/30/2004 1850 M Street, NW 243,635 $97,368,040 Office/Commercial B Manulife Toronto, ON Institutional 1837 M Street, NW 26,735 $15,116,750 Retail Grosvenor London, England Foreign $19,300,000 10/26/2004 1900 M Street, NW 120,816 $45,041,880 Office/Commercial B Rockrose Development Corportation New York, NY Developer/Property Company $54,989,157 10/1/2012 1916 M Street, NW 1,817 $4,115,060 Retail Boo Rhee Kyung Fairfax, VA 1990 M Street, NW 105,152 $33,595,730 Office/Commercial B Dweck Properties Washington, DC Developer/Property Company $47,750,000 3/10/2006 1919 M Street, NW 279,507 $130,248,230 Office/Commercial A Vornado New York, NY REIT 2000 M Street, NW 227,000 $60,088,161 Office/Commercial B WRIT Rockville, MD REIT $73,500,000 5/7/2007 2020 M Street, NW 30,000 $19,000,000 Office/Commercial C CBS New York, NY User 2030 M Street, NW 115,610 $19,697,970 Office/Commercial B MCI Ashton, MD User $6,931,603 8/2/2005 2100 M Street, NW 301,346 $114,298,800 Office/Commercial B Hines Houston, TX Developer/Property Company $152,500,000 5/16/2007 2001 M Street, NW 229,234 $67,863,575 Office/Commercial A Brookfield Office Properties New York, NY REIT 2025 M Street, NW 195,624 $87,846,060 Office/Commercial B Carr Properties Washington, DC Developer/Property Company $37,850,000 5/1/2001 2033 M Street, NW 103,450 $39,505,870 Hotel Saint James Associates 1818 N Street, NW 117,000 $33,616,440 Office/Commercial B Lenkin Bethesda, MD Developer/Property Company 1920 N Street, NW 114,005 $42,470,530 Office/Commercial B JBG Chevy Chase, MD Developer/Property Company $45,379,000 1/6/2012 1928 N Street, NW $1,324,810 Retail JBG Chevy Chase, MD Developer/Property Company $2,955,000 12/28/2012 1705 DeSales Street, NW 34,010 $5,963,100 Office/Commercial B Trustco $6,300,000 6/2/2003 1717 DeSales Street, NW 95,000 $25,157,040 Office/Commercial A ABC, Inc Glendale, CA User 1725 DeSales Street, NW 70,724 $16,893,980 Office/Commercial B PMI, Inc. Washington, DC User 2/5/2008 750 17th Street, NW 126,932 $43,893,200 Office/Commercial A Manulife Toronto, ON Institutional 800 17th Street, NW 365,000 $226,429,000 Office/Commercial Trophy PNC Pittsburg, PA Institutional 801 17th Street, NW 230,995 $180,823,200 Office/Commercial Trophy Property Group Partners New York, NY Private $80,000,000 9/2/2005 888 17th Street, NW 116,778 $36,379,050 Office/Commercial B Brawner Coimpany Washington, DC User 839 17th Street, NW 161 Units $26,704,810 Hotel Rockwood Capital White Plains, NY Private $43,289,000 11/9/2005 900 17th Street, NW 146,648 $98,941,500 Office/Commercial A Generali Employee Benefits Brussels, Belgium Foreign $93,500,000 9/1/2010 910 17th Street, NW 93,915 $26,817,030 Office/Commercial C Self-Help Ventures Fund Washington, DC User $22,550,000 12/2/2003 1050 17th Street, NW 154,413 $34,006,210 Office/Commercial C Lenkin Bethesda, MD Developer/Property Company $5,000,000 7/25/2007 1100 17th Street, NW 146,472 $36,846,280 Office/Commercial B Liberty Property Trust Malvern, PA REIT $49,750,000 12/1/2011 1101 17th Street, NW 189,655 $74,614,200 Office/Commercial B Vornado New York, NY REIT 7/27/1995 1125 17th Street, NW 56,000 $19,087,689 Office/Commercial C International Union of Operating Engineers Washington, DC User 1130 17th Street, NW 40,000 $8,774,180 Office/Commercial B Defenders of Wildlife Washington, DC User $8,750,000 7/2/2002 1150 17th Street, NW 227,296 $85,482,410 Office/Commercial B Vornado New York, NY REIT 1200 17th Street, NW 170,000 $39,650,000 Office/Commercial A Mitsui Fudosan Tokyo, Japan Foreign $43,700,000 8/24/2012 800 16th Street, NW 39,000 $47,905,000 Hotel BF Saul Bethesda, MD REIT $55,986,441 3/24/2006 910 16th Street, NW 30,000 $8,678,600 Office/Commercial B JBG Chevy Chase, MD Developer/Property Company $9,000,000 4/12/2007 1112 16th Street, NW 58,049 $16,322,100 Office/Commercial C The William Calomiris Company, LLC Washington, DC Developer/Property Company $2,250,000 5/9/2003 1126 16th Street, NW 58,500 $18,115,700 Office/Commercial C National Council of La Raza Washington, DC User $13,900,000 4/12/2004 800 Connecticut Avenue, NW 127,393 $85,623,800 Office/Commercial Trophy Trust Estates 1 & 2 Washington, DC Private 815 Connecticut Avenue, NW 213,729 $75,000,000 Office/Commercial Trophy Alecta Stockholm, Sweden Foreign 12/26/2012 816 Connecticut Avenue, NW 24,000 $8,169,150 Office/Commercial A RECAP Frankfurt, Germany Foreign $7,510,000 12/20/2002 818 Connecticut Avenue, NW 90,017 $31,242,340 Office/Commercial B Cafritz Interests Washington, DC Developer/Property Company $14,104,000 10/1/2004 1000 Connecticut Avenue, NW 385,791 $226,780,700 Office/Commercial Trophy Potomac Investment Properties Washington, DC Developer/Property Company 1001 Connecticut Avenue, NW 155,214 $39,450,300 Office/Commercial C Zuckerman Gravely Washington, DC Developer/Property Company $23,000,000 12/4/2000 1025 Connecticut Avenue, NW 333,626 $137,292,950 Office/Commercial B Blake Real Estate, Inc Washington, DC Developer/Property Company 1050 Connecticut Avenue, NW 708,753 $411,014,200 Office/Commercial A Lerner Enterprises Rockville, MD Developer/Property Company 11/15/2012 1101 Connecticut Avenue, NW 187,879 $73,865,100 Office/Commercial B Penzance/Federal Capital Partners Chevy Chase, MD Developer/Property Company $51,000,000 5/10/2010 1100 Connecticut Avenue, NW 163,764 $53,611,440 Office/Commercial B 1100 Connecticut Avenue Associates Washington, DC Private 9/28/2005 1120 Connecticut Avenue, NW 303,921 $110,008,780 Office/Commercial C Blake Real Estate, Inc Washington, DC Developer/Property Company 1127 Connecticut Avenue, NW 583,918 $101,990,080 Hotel Rockwood Capital White Plains, NY Private $115,563,000 6/29/2005 1130 Connecticut Avenue, NW 229,625 $100,408,640 Office/Commercial B American Realty Advisors Glendale, CA Institutional $66,300,000 4/22/2004 1133 Connecticut Avenue, NW 175,000 $92,339,380 Office/Commercial A Lerner Enterprises Rockville, MD Developer/Property Company 1140 Connecticut Avenue, NW 186,721 $63,072,020 Office/Commercial B WRIT Rockville, MD REIT $35,918,000 1/11/2011 1141 Connecticut Avenue, NW 4,500 $2,801,930 Retail George Galich Properties Bethesda, MD Developer/Property Company $2,890,000 5/26/2005 1143 Connecticut Avenue, NW 4,886 $1,603,850 Retail The Jenco Group Washington, DC Developer/Property Company $1,350,000 3/6/2006 1145 Connecticut Avenue, NW 5,121 $2,153,390 Retail Rosenheim James S Life Tenant Washington, DC $2,000,000 3/6/2006 32 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

Appendix D: Property owners

Address RBA Assessment Type Class Owner Owner Location Owner Type Sale Price Last Sale 1147 Connecticut Avenue, NW 5,619 $5,708,380 Office/Commercial Mark W Foster Trustees Falls Church, VA Private 1155 Connecticut Avenue, NW 95,536 $42,647,380 Office/Commercial A Stockbridge Capital Group San Francisco, CA Private 12/30/1998 1150 Connecticut Avenue, NW 170,000 $75,042,170 Office/Commercial B Blake Real Estate, Inc Washington, DC Developer/Property Company 1201 Connecticut Avenue, NW 168,549 $51,577,370 Office/Commercial B Mack-Cali Realty Corp Edison, NJ REIT $32,188,060 7/22/1999 1211 Connecticut Avenue, NW 125,119 $43,802,030 Office/Commercial B First Potomac Realty Trust Bethesda, MD REIT $49,500,000 12/9/2010 1215 Connecticut Avenue, NW 8,359 $2,809,150 Retail 3101 Rhode Island Ave LLC Washington, DC $2,300,000 1/28/2005 1217 Connecticut Avenue, NW 8,200 $4,100,690 Retail Sarv Inc. Washington, DC 7/30/1997 1219 Connecticut Avenue, NW 15,000 $5,251,300 Office/Commercial C Douglas Development Corporation Washington, DC Developer/Property Company $5,600,000 9/28/2007 1221 Connecticut Avenue, NW 13,527 $5,074,300 Office/Commercial C 1221 Planet F Washington, DC $2,300,000 3/3/2004 1223 Connecticut Avenue, NW 10,985 $4,114,870 Office/Commercial C George Galich Properties Bethesda, MD Developer/Property Company $3,460,000 5/26/2005 1225 Connecticut Avenue, NW 239,926 $212,485,180 Office/Commercial A World Bank Washington, DC User $216,000,000 12/13/2010 1218-1220 Connecticut Avenue, NW 11,370 $3,698,200 Office/Commercial C Circle Management Company Washington, DC Developer/Property Company 1250 Connecticut Avenue, NW 183,586 $73,406,200 Office/Commercial B Brookfield Office Properties New York, NY REIT 1300 Connecticut Avenue, NW 125,851 $78,896,690 Office/Commercial B Dividend Capital Total Realty Trust Denver, CO Private $63,600,000 3/11/2009 1301 Connecticut Avenue, NW 60,806 $21,532,920 Office/Commercial B Shorenstein Realty Services New York, NY Private $26,734,000 7/6/2011 1330 Connecticut Avenue, NW 252,136 $120,807,767 Office/Commercial A Boston Properties, Inc Boston, MA REIT $86,606,000 4/1/2004 1350 Connecticut Avenue, NW 190,389 $79,771,930 Office/Commercial B Peter Schwartz Companies Washington, DC Developer/Property Company 5/16/1994 1317 Connecticut Avenue, NW 5,545 $2,965,180 Retail Shorenstein Realty Services New York, NY Private 1319-1323 Connecticut Avenue, NW 20,000 $5,883,870 Office/Commercial C Randall H. Hagner & Company, Inc. Washington, DC Developer/Property Company $5,400,000 3/19/2010 1325 Connecticut Avenue, NW 3,811 $2,317,990 Retail Monika Ensey Culver City, CA Private 12/31/2012 1329 Connecticut Avenue, NW 8,500 $2,622,670 Retail Monika Ensey Culver City, CA Private 12/31/2012 1331 Connecticut Avenue, NW 6,112 $2,033,510 Retail George Thanos Washington, DC Private 1337 Connecticut Avenue, NW 37,125 $11,863,990 Office/Commercial B Endeka Enterprises Arlington, VA Developer/Property Company $5,400,000 10/19/2000 1341 Connecticut Avenue, NW 10,700 $3,966,190 Office/Commercial B Law Offices of Dodds and Associates Washington, DC User $3,450,000 1/8/2004 1345 Connecticut Avenue, NW 3,445 $1,524,490 Office/Commercial C Mary A Gerachis Potomac, MD Private 1347 Connecticut Avenue, NW 4,332 $1,786,350 Retail Stephanie G Hill Potomac, MD Private $820,000 9/12/2012 1363-1369 Connecticut Avenue, NW 22,801 $2,182,290 Office/Commercial C R B Properties Washington, DC Developer/Property Company 801 18th Street, NW 49,061 $13,166,200 Office/Commercial A Paralyzed Veterans of America Washington, DC User 818 18th Street, NW 55,403 $16,775,200 Office/Commercial C K and M Properties McLean, VA Developer/Property Company $17,800,000 11/13/2009 919 18th Street, NW 102,004 $39,414,800 Office/Commercial B Clarion Partners New York, NY Institutional $40,000,000 4/15/2005 1015 18th Street, NW 99,916 $27,451,500 Office/Commercial C Donohoe Real Estate Services Washington, DC Developer/Property Company $27,600,000 12/18/2003 1111 18th Street, NW 74,234 $24,317,370 Office/Commercial A Blake Real Estate, Inc Washington, DC Developer/Property Company 1150 18th Street, NW 179,000 $67,339,690 Office/Commercial A Rockrose Development Corporation New York, NY Developer/Property Company $21,700,000 12/23/2009 1200 18th Street, NW 177,643 $37,737,760 Office/Commercial B Ring Management Associates Washington, DC Developer/Property Company 1210 18th Street, NW 12,487 $4,915,860 Office/Commercial C Douglas Development Corporation Washington, DC Developer/Property Company 1212 18th Street, NW 19,884 $4,506,660 Retail Douglas Development Corporation Washington, DC Developer/Property Company 1214 18th Street, NW 7,865 $5,315,000 Retail Douglas Development Corporation Washington, DC Developer/Property Company 1216 18th Street, NW 10,556 $3,383,420 Retail Douglas Development Corporation Washington, DC Developer/Property Company 1312 18th Street, NW 8,642 $1,442,180 Office/Commercial C Alexander Realty Corp Washington, DC Developer/Property Company 1314 18th Street, NW 4,412 $1,397,780 Office/Commercial C Alexander Realty Corp Washington, DC Developer/Property Company 1322 18th Street, NW 3,452 $1,372,470 Office/Commercial C Organization of Chinese Americans Washington, DC User $4,100,000 9/22/2006 1324-1326 18th Street, NW 13,340 $2,287,460 Office/Commercial C Organization of Chinese Americans Washington, DC User 9/22/2006 1800 Massachusetts Avenue, NW 208,086 $68,063,590 Office/Commercial B Service Employees International Union Washington, DC User $61,000,000 12/12/2003 900 19th Street, NW 113,574 $50,563,700 Office/Commercial B Tishman Speyer New York, NY Private $11,265,387 1/5/2007 1020 19th Street, NW 108,000 $41,241,300 Office/Commercial B Zuckerman Gravely Washington, DC Developer/Property Company 6/19/2007 1111 19th Street, NW 271,251 $95,138,840 Office/Commercial B Clarion Partners New York, NY Institutional $115,000,000 2/22/2008 1112 19th Street, NW 20,105 $7,479,180 Retail 1112 Nineteenth St Associates Washington, DC 9/27/2006 1120 19th Street, NW 109,884 $42,580,330 Office/Commercial C Population Services International Washington, DC User $47,855,000 4/25/2007 1132 19th Street, NW 6,071 $1,350,890 Retail Bruzzo Washington, DC User $464,600 9/15/2000 1133 19th Street, NW 194,000 $47,832,800 Office/Commercial C The Tower Companies Rockville, MD Developer/Property Company 1136 19th Street, NW 3,600 $1,624,550 Retail Douglas Development Corporation Washington, DC Developer/Property Company $610,000 11/22/2011 1140 19th Street, NW 70,501 $17,476,310 Office/Commercial B American Real Estate Partners Management Herndon, VA Developer/Property Company $20,950,000 6/6/2011 1145 19th Street, NW 128,312 $39,618,740 Office/Commercial B Senior Housing Properties Trust Newton, MA REIT $40,114,721 5/22/2009 1146 19th Street, NW 48,202 $17,475,290 Office/Commercial B American Real Estate Partners Management Herndon, VA Developer/Property Company $19,550,000 6/6/2011 1200 19th Street, NW 334,175 $132,156,730 Office/Commercial Trophy Fosterlane Kuwait Foreign $296,000,000 6/26/2013 1215 19th Street, NW 13,200 $4,444,080 Office/Commercial C Roosevelt, LP Washington, DC $4,800,000 4/16/2004 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013 33

Appendix D: Property owners

Address RBA Assessment Type Class Owner Owner Location Owner Type Sale Price Last Sale 1220 19th Street, NW 102,304 $26,782,120 Office/Commercial B WRIT Rockville, MD REIT 1225 19th Street, NW 72,756 $27,900,250 Office/Commercial B Invesco Atlanta, GA Institutional $26,200,000 1/8/2009 1229 19th Street, NW 10,000 $2,457,110 Office/Commercial C Goldbery, Godles, Wiener & Wright Washington, DC User 1234 19th Street, NW 32,464 $10,906,720 Office/Commercial B Zuckerman Gravely Washington, DC Developer/Property Company 1244 19th Street, NW 4,928 $2,352,940 Office/Commercial C JBG Chevy Chase, MD Developer/Property Company 1300 19th Street, NW 120,096 $43,002,140 Office/Commercial B Lenkin Bethesda, MD Developer/Property Company 4/30/2001 1320 19th Street, NW 45,098 $9,060,708 Office/Commercial C Grew Management Washington, DC Developer/Property Company $730,000 5/28/2003 21 Dupont Circle, NW 43,392 $11,929,470 Office/Commercial B EFO Capital Management Company Washington, DC User 1200 New Hampshire Avenue, NW 359,073 $150,098,900 Office/Commercial A Carlyle Group Washington, DC Institutional $164,995,661 10/23/2007 1333 New Hampshire Avenue, NW 315,371 $169,475,440 Office/Commercial B Boston Properties, Inc Boston, MA REIT $111,550,000 10/8/2003 1111 20th Street, NW 162,764 $40,578,110 Office/Commercial C Willco Companies Potomac, MD Developer/Property Company 1129 20th Street, NW 176,350 $73,412,380 Office/Commercial A Liberty Property Trust Malvern, PA REIT $61,750,000 2/20/2007 1120 20th Street, NW 333,483 $127,272,780 Office/Commercial B Beacon Capital Partners Boston, MA Private $377,430,795 4/18/2008 1133 20th Street, NW 119,000 $48,062,990 Office/Commercial B NFL Players Association Washington, DC User $46,875,000 9/30/2005 1147 20th Street, NW 18,179 Office/Commercial C JBS Ventures Bethesda, MD Developer/Property Company 1233 20th Street, NW 154,584 $59,506,440 Office/Commercial B JBG Chevy Chase, MD Developer/Property Company $64,750,000 6/4/2012 1247 20th Street, NW 874 $1,184,510 Retail Antigone Rechachinas Washington, DC Private 1050 21st Street, NW 38,872 $31,612,030 School District of Columbia Washington, DC User 1133 21st Street, NW 145,219 $42,015,020 Office/Commercial B Beacon Capital Partners Boston, MA Private 4/18/2007 1155 21st Street, NW 258,186 $133,303,740 Office/Commercial B Beacon Capital Partners Boston, MA Private 4/18/2007 1836 Jefferson Place, NW 6,430 Office/Commercial C American Youth Policy Forum Washington, DC User 1820-1822 Jefferson Place, NW 8,950 $3,655,580 Office/Commercial C Hai Real Estate Holdings, LLC Ashton, MD Developer/Property Company $3,570,000 5/26/2005 1821 Jefferson Place, NW 3,194 $2,058,000 Office/Commercial C 1821 Jefferson Place LLC Washington, DC 10/14/2005 1823 Jefferson Place, NW 4,088 $2,095,380 Office/Commercial C Gorlitz Foundation Washington, DC User 5/30/1997 1824-1826 Jefferson Place, NW 10,600 $3,618,860 Office/Commercial C Hovde Financial, LLC Washington, DC User 1825 Jefferson Place, NW 3,824 $2,528,630 Office/Commercial C International Campaign for Tibet Washington, DC User $1,300,000 6/2/2003 1827 Jefferson Place, NW 5,600 $1,885,380 Office/Commercial C Delta Realty Group Potomac, MD Developer/Property Company 1832-1834 Jefferson Place, NW 3,127 Residential 1816 Jefferson Place, NW 6,794 $3,417,340 Office/Commercial C Association of Metropolitan Sewerage Agencies Washington, DC User $1,650,000 1/29/1999 1813 M Street, NW 8,583 $3,992,730 Retail 1813-1815 M Street, LLC Washington, DC $1,400,000 2/28/2000 1815 M Street, NW 9,754 Retail 1813-1815 M Street, LLC Washington, DC 1817 M Street, NW 3,877 $1,541,050 Retail Douglas Development Corporation Washington, DC Developer/Property Company 1819 M Street, NW 4,872 $1,836,820 Retail Power Block LLC Washington, DC 9/1/2004 1821 M Street, NW 1,341 $1,533,210 Retail Harold Luskin Bethesda, MD 1823 M Street, NW 6,350 $1,958,690 Retail David and Sandra Foley Union Bridge, MD 1827 M Street, NW 627 $2,972,550 Retail Ren Shoa-Sheng Gaithersburg, MD 1831 M Street, NW 548 $1,545,810 Retail Chreky LP 34 Jones Lang LaSalle • Market assessment • Competitive position analysis • Golden Triangle BID • Spring 2013

About Jones Lang LaSalle Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet. Its investment management business, LaSalle Investment Management, has $47.0 billion of real estate assets under management. For further information, visit www.jll.com.

About Jones Lang LaSalle Research Jones Lang LaSalle’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our 350 professional researchers track and analyze economic and property trends and forecast future conditions in over 70 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions.

1801 K Street, NW John Sikaitis Washington, DC 20006 Senior Vice President +1 202 719 5000 Director of Local Markets Research - Americas [email protected] www.us.joneslanglasalle.com/dc Scott Homa Vice President, Mid-Atlantic Research [email protected]

Jacob Anderson Research Analyst [email protected]

Summer Newman Research Analyst [email protected]

©2013 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained herein and no reliance should be placed on the information contained in this document.