This column was corrected on Aug. 6. An explanation follows the column.
International food services giant Sodexo has given formal notice to exercise its early lease termination option at its North American headquarters in Gaithersburg, but it hasn’t ruled out a new rental deal, according to building owner CBRE.
As part of the process of weighing its options, the French company notified its landlord at One Washingtonian Center 60 days ago that it might move its 500-plus workers at the end of next year, said CBRE Executive Vice President Larry Thau, who heads the building’s leasing team.
“But that doesn’t mean they’re leaving,” he said. “They have a set of economic options they are considering, including staying in the building.”
Thau referred further questions to Todd Frye, a principal with CBRE Investors LLC-Strategic Partners, who did not return a call for comment. CBRE Investors paid $90 million last year to buy the 315,929-square-foot office building at 9801 Washingtonian Blvd.
“Like all companies, we are always exploring opportunities to serve our customers and our employees,” said Sodexo spokesman Enrico Dinges.
But he had no comment on whether the company is considering renegotiating its existing lease or any incentives offered to remain in the county.
"I can confirm they have terminated their lease," said broker Jack McShea, president of McShea & Co. of Gaithersburg, which is representing Sodexo in its search for space. "They are exploring all options."
That includes sites in Montgomery County and Northern Virginia, but a renegotiated lease also remains an option, he said.
Gaithersburg officials are operating on the assumption that the company might not move at all.
“I believe they’re exploring their options and 9801 certainly continues to be considered,” said Tom Lonergan, the city’s economic development director. “We hope they will stay, with the city, the state and the county offering a generous incentive package.”
He declined to confirm or deny speculation that the city and county both have put tax credits or other offers totaling $500,000 on the table.
“Our interest, of course, is for Sodexo to stay in the city, but we have every expectation that the county offer would be available for any location they might consider, including Gaithersburg,” Lonergan said.
Sodexo USA’s relocation explorations might be in earnest, or the company might simply be trying to squeeze its new landlord for a better lease. Marriott, Sodexo USA’s former corporate parent, was notably successful in that regard in 1999, when it won state and county promises of $31.7 million to $44.2 million — depending on staying in Bethesda or moving to Rockville — in grants and tax breaks to stop it from moving its 3,500-employee corporate headquarters to Virginia.
Whatever Sodexo’s plan, its rumored relocation options may not be taking into account the burden of commuting on company employees.
Although its current headquarters received platinum certification from the U.S. Green Building Council’s Leadership in Energy and Environmental Design program in 2010, it’s more than 3 miles from the nearest Metrorail stop, at the Shady Grove station in Rockvillle. But easy Metro access isn’t a selling point at any of the other locations — the Rock Spring complex in North Bethesda, Tower Oaks in Rockville, or Reston, Va. — that real estate industry sources say the company is considering.
“It doesn’t make economic sense for Sodexo to move, when you factor in rent and relocation costs and loss of productivity,” said Kenneth Smondrowski, director of leasing at Mack-Cali Realty of Edison, N.J., a major office space owner in the region. “I can’t see Sodexo moving to Northern Virginia. Most of its employees live in northern Montgomery County, Gaithersburg, Germantown or even Frederick.”
He also said Sodexo isn’t looking in Prince George’s County, either because a new building would cost too much to construct or due to a lack of readily available space. Mack-Cali owns 964,258 square feet of office space in Greenbelt and Lanham but has nothing open big enough to handle Sodexo, which occupies 181,000 square feet in Gaithersburg.
NIH leasing lab space in Rockville for $51.9M
The National Institutes of Health is expanding its lab space in Rockville, taking 75,056 square feet in the Shady Grove Life Sciences Center, according to the General Services Administration.
The agency signed a $51.9 million lease for 15 years in the 9800 Medical Center Drive complex, a four-building project owned by Alexandria Real Estate Equities of Pasadena, Calif. The NIH Chemical Genomics Center already leases 59,662 square feet there.
The lease, originally put out for expressions of interest in 2009, called for secure and highly specialized lab space in close proximity to the genomics center, which was created in 2004 as the first part of a national network intended to produce new chemical tools for use in biological research and drug development.
With the new lease, the 281,475-square-foot Shady Grove complex is 97 percent leased. But Alexandria Real Estate plans to add 236,000 square feet of new commercial space, which could house 500 to 700 bioscience jobs at the 18-acre site, under a project that already has won county approval.
The company bought the four buildings for $77.8 million in 2004, when Human Genome Sciences began consolidating space.
The complex was more than half empty little more than a year ago, until the opening in June of the new 72,000-square-foot headquarters of Advanced Bioscience Laboratories, which relocated from White Flint in North Bethesda.
Planned 182-acre business park for sale near Frederick
CBRE, in partnership with Fitzgerald Realty Group, announced that is marketing the Century Center at Retreat Farms, a 182-acre planned business park in Frederick County.
The project, owned in a joint venture by Potomac Capital Advisors and Fitzgerald Realty Group, was annexed by the town of Walkersville to allow multiple building construction on single lots. The property is across the Monocacy River north of Frederick.
Possible uses include research, office, warehousing and light assembly, manufacturing, data centers, flex space and hotel conference centers.
The Century Center will sell industrial lots ranging in size from just larger than 2 acres to 80 acres. The park also has been designed to cluster lots into 10- to 15-acre land bays.
A bonus feature includes a mile and a half of river frontage where 26,000 trees have been planted. The wooded acreage can be purchased to meet forestation requirements in other developments.
CBRE’s John Wilhide and John Boote represent the owner, Washington Century Fund, along with Seamus Fitzgerald of Fitzgerald Realty.
Hampden Square in Bethesda has new management
American Realty Advisors has changed management of its Hampden Square office building in downtown Bethesda, according to Transwestern, which announced it was hired for the job.
The 144,000-square-foot class A office building at 4800 Montgomery Lane is a block from the Bethesda Metro station. The owner bought the circa 1988 property in 1998 for $34.1 million.
The 12-story property has 41,318 square feet available, according to a leasing brochure.
Transwestern also was hired to manage three buildings in Washington, D.C., in the same portfolio.
Carr lines up $57M to start Bethesda office building
Broker Cassidy Turley announced that it secured $57 million in financing for Carr Properties of Washington, D.C., to start construction of a long-delayed office building in downtown Bethesda.
The loan was provided by Wells Fargo.
The 220,000-square-foot speculative property will replace a McDonald’s and a home converted into office space at 4500 East West Highway. The building will have ground floor retail space and underground parking one block east of the Bethesda Metro station under plans that were approved in 2008.
Carr bought the development rights from the Clarett Group of New York, which paid $71.6 million for the 1.3-acre site in 2008. For decades, developers have eyed the property, which is across East West Highway from Bethesda-Chevy Chase High School.
Carr, which owns and operates a portfolio of about $1 billion of commercial office properties in the Washington region, is a subsidiary of JP Morgan Asset Management.
Mack-Cali announces Prince George’s leases
Mack-Cali Realty announced that it leased 48,984 square feet in Prince George’s County during the first quarter.
Three deals alone in the company’s Capital Office Park in Greenbelt accounted for more than half the space. They included the following:
The University of Maryland’s 8,030-square-foot lease renewal at 6305 Ivy Lane. The 112,022-square-foot office building is now 94.3 percent leased.
Web designer Blue Water Media signed a 6,501-square-foot renewal and for 3,550 square feet at 6404 Ivy Lane. The 165,234-square-foot building is now 69.5 percent leased.
MHI Hotels, trading as Chesapeake Hospitality, signed a 5,917-square-foot renewal and a 916-square-foot expansion at 6411 Ivy Lane. The building is 69.1 percent leased.
All the deals were brokered in-house by Smondrowski.
Commercial real estate news items may be mailed to Robert Rand, The Business Gazette, 9030 Comprint Court, Gaithersburg, MD 20877; emailed to email@example.com; or faxed to 301-670-7183.
An item in the column should have said that Hampden Square in Bethesda has new management, not that it was up for sale.