3865 Wilson Boulevard - 2010 TOBY Winner

Commercial Component
of Mixed-use Development

• Property was originally sole commercial component of larger residential development
• Litigation among neighboring developers held up construction and impeded potential for shared parking arrangement for the combined project
• Office parcel was left with environmental issue that restricted the parking garage from being constructed with adequate parking for a Class A office building
• Original developers were unable to resolve outstanding issues
• Penzance outlined a solution accepted by Arlington County and proceeded to close on the transaction
• Assembled funds to finance the project by joint venturing with a development partner, an equity partner and through construction debt
• Construction of Class A, eight-story building completed in Spring 2003

• Emerging submarket
  • Identified need for Class A office building in this close-in Northern Virginia sub-market prior to heightened demand for this asset class 
  • Capitalized on anticipated rent growth
  • Positioned asset to reap benefits of area’s steady economic growth and high concentration of government contractors supporting the Defense Advanced Research Projects Agency (DARPA)
• Development
  • Site development had structural and zoning intricacies that were misunderstood by market
  • Successfully negotiated with Arlington County for variance addressing parking garage issues
  • Obtained easement with adjoining land owner that enabled structural changes to garage design, circumventing potential problems, reducing costs by $2.5 million and making development feasible
  • Leveraged in-house project management capabilities to streamline costs and extract hidden value 

• Shortly after building completion in December 2003, development equity partners requested their interest be sold in less than one month
• Penzance identified and recapitalized original investor’s position with a new partner within the prescribed timeframe

• Within 18 months of completion, Penzance leased and managed the new building to 97.3% occupancy
• Property was awarded The Office Building of the Year (TOBY) award by AOBA in 2010