Washington Business Journal
June 17, 2011
WBJ: Penzance Gets $110M Clarendon Project Back on Track
By Sarah Krouse
|Penzance has resurrected plans to develop one of the last available sites in Clarendon by replacing a cemetery monument business, automobile repair shop, bank and fitness club with an office tower.
The D.C. developer has the entire 1.13-acre block at 3001 Washington Blvd. under contract and formally submitted site plans to Arlington County on June 13. Penzance wants to build 274,421 square feet of office space and 27,755 square feet of retail space in two attached buildings.
Company founder Victor Tolkan said he hopes to secure county approval by the end of the year and break ground soon after — with or without a tenant. The project, designed by Noritake Associates, is expected to cost $110 million to $120 million.
This the second time that Tolkan has had under contract most of the parcels in the block — bounded by Washington Boulevard, Garfield, 11th and Highland streets. His plans stalled during the downturn, and Penzance had to walk away from some of its agreements to buy parcels.
That block “really is the missing piece” in Clarendon, Tolkan said.
He said the two buildings, one with eight stories and the other with 10, will add needed office to the submarket. The area is filled with high-rise apartment and condominium buildings.
“We’re adding the economic driver of office, and that’s a great addition,” said Tolkan, whose company has made $1 billion in acquisitions since its inception in 1997.
Penzance’s construction will preserve the historic facade that currently encompasses Eleventh restaurant and Potomac CrossFit at 11th and Highland.
Office space in the two buildings can be connected, depending on a tenant’s needs, but Penzance could also treat the shorter building as an office condominium project and sell individual floors.
The Clarendon, Court House and Virginia Square submarket had an 8.5 percent direct vacancy rate at the end of the first quarter, according to Jones Lang LaSalle Inc., which is marketing the project for Penzance. Those vacancies total about 433,067 square feet.
Dave Millard, a principal of Avison Young who specializes in Northern Virginia leasing and represents another Clarendon landlord, estimates there is about 2 million square feet of demand from tenants hoping to expand in or move to the submarket in the next year or two.
“The Rosslyn-Ballston corridor is the best submarket for office development in the area, if not the country,” Millard said.
Terry Holzheimer, director of Arlington Economic Development, said some tenants in the market are already thinking about calling the future development site home, but he declined to elaborate on who those tenants are.
Holzheimer said the county’s goal when it formed the Clarendon sector plan in 2006 was to have a strong office base in addition to residential stock, so bringing commercial space to Penzance’s site was a priority.
“We were very concerned for that location,” he said. “It’s really the other major site,” beyond the nearby Wachovia Bank site at Washington Boulevard and N. Hudson Street.
Download full article here.