GSA Proposed Budget Seeks $1.5B for Real Estate Investments

The U.S. General Services Administration (GSA) released its 2017 Annual Budget Request, which includes $1.5 billion in investments to federal infrastructure and modernizing the federal government's most at-risk legacy IT systems. The GSA announced last month that the budget request would include $1.4 billion in Department of Justice and GSA funding for the FBI headquarters, but the newly released budget reveals more specific real estate investment plans. GSA's request includes:

— $759 million to support consolidation of FBI Headquarters function into a single, secure campus supporting the FBI's national security and law enforcement mission
— $267 million to deliver a new headquarters for the Federal Emergency Management Agency (FEMA)
— $248 million to support the second and final phase of the Calexico West Land Port of Entry modernization and improvement project
— $81 million for the renovation of the 985 Michigan Avenue Federal Office Building (aka Patrick V. McNamara Federal Building) in Detroit, MI

"The President's budget includes investments necessary to further strengthen our nation's real estate portfolio while promoting development in communities across the country," said GSA Administrator Roth. "GSA will also be able to more effectively bring federal IT systems into the 21st century. Once enacted, GSA will be positioned to better provide the services and solutions that allow the government to more effectively tackle our shared challenges."

To read the full Congressional Justification for the 2017 Annual Budget Request, click here. For more news and information visit Blumberg Partners.

Subaru Breaks Ground on Camden HQ

Subaru of America, Inc. broke ground this week on an all-new $118 million corporate headquarters in Camden, NJ, adjacent to Campbell Soup Company's world headquarters. The Subaru of America campus will be the first new corporate headquarters in Knights Crossing, a master plan urban town center community, being developed by Brandywine Realty Trust. The new facility, at 250,000 square feet, plus an additional building at 83,000 square feet will be more than double the size of its current headquarters building and will bring employees from four sites onto one campus; Subaru expects the development to be complete in 2017.

"We are delighted to contribute to the revitalization of Camden and look forward to Knights Crossing becoming a significant catalyst to the renaissance taking place in Camden," said Gerard Sweeney, president and chief executive officer of Brandywine Realty Trust. "We're especially honored to be developing this state-of-the-art campus for such a well-renowned and admired company as Subaru of America. Subaru's decision, coupled with the long-standing commitment by Campbell, provides an excellent platform for further economic development and job creation in the city of Camden."

Thomas Doll, president and chief operating officer of Subaru of America, added: "We are very excited to be moving this project forward as we seek to bring our family of employees together on one site. This signing cements the long-term future of Subaru in the Delaware Valley and we are pleased that, after almost 50 years here, we can plan to continue to be a part of the local community we have supported for so long."

"Today not only signifies a long-term commitment by Subaru to the region, but now to our city and, yes, to our residents," Camden Mayor Dana Redd said at the groundbreaking ceremony. "To say this is an incredible investment to our city and region is an understatement." Subaru announced the move a year ago, after the state Economic Development Authority awarded the company $118 million in tax incentives under the Economic Opportunity Act to move from its Cherry Hill location, about four miles away. The credits, spread over 10 years, are conditional on Subaru creating or saving at least 250 jobs in the city and remaining in Camden for at least 15 years. Video of the groundbreaking ceremony can be seen here. For more news and information visit Blumberg Partners.

GSA Releases Renderings for DC Homeland Security HQ

The U.S. General Services Administration (GSA) announced this week that it had begun its search for contractors to build a new Department of Homeland Security headquarters and released renderings of the new project for review. The GSA posted a request for qualifications Monday to FedBizOpps.gov outlining plans to renovate the Center Building on the St. Elizabeths campus on Martin Luther King Jr. Avenue in Southeast D.C., a design-build project estimated to cost between $100 million and $140 million, according to a Washington Business Journal article. GSA expects to award the contract in August, with a completion date set for July 1, 2017. The cost of the renovation of the building that dates back to the late 1800s has been pegged at between $100 million to $140 million, reports GlobeSt.com.

St. Elizabeths was established by Congress in 1855 as a government hospital, divided into two campuses. The West Campus is presently owned by the federal government and is under the custody and control of GSA. The development of St. Elizabeths is the consolidation site for the Department of Homeland Security, with Congress having already approved $155 million for the GSA to bring more than 14,000 employees to the campus. DHS's current facilities are spread among more than 40 buildings in the Washington, DC area; DHS's new headquarters will allow for more efficient incident management response and command-and-control operations. The first phase of the consolidation – the new Coast Guard headquarters – was completed and occupied by the Coast Guard last year, according to a Federal Times report.

For more news and information visit Blumberg Capital Partners.

Amazon Paying $1.16B for Global HQ

Last month Vulcan Real Estate announced that it would be putting Amazon.com's 11-building Seattle headquarters on the market; this week, Amazon announced that it would purchase the campus. In what will be the United States' biggest commercial real estate deal so far this year for a single property, Amazon is expected to close on the 1.8 million square foot complex by the end of the year.

"When we originally commenced the disposition process, we did not think Amazon would necessarily be the buyer," said Ada Healey, vice president for real estate at Seattle-based Vulcan. The 11 buildings were built in six phases. "We were fully prepared to have the six phases go to six different buyers."

In addition to the sale, Vulcan also said last month that it would construct two new buildings for Amazon, a $160 million project two blocks west of the existing headquarters that will add 380,000 square feet for Amazon. According to a Seattle Times article, construction of the five- and six-story buildings should start in January, and Amazon should move in by early 2015.

For more news and information visit Blumberg Capital Partners.

Frank Gehry's New Facebook HQ Design

In a new Facebook post on Friday, Everett Katigbak, Facebook's Environmental Design Manager, revealed the plans for Facebook's new campus expansion, designed by the world-renowned architect, Frank Gehry. The Los Angeles Times reports that plans for the Silicon Valley site, which will be submitted Monday, will include a 420,000-square-foot, single-story warehouse topped with a garden that will span the entire roof. An excerpt from the post:

At every step of planning the new building, Frank has taken into account our engineering culture. It will be a large, one room building that somewhat resembles a warehouse. Just like we do now, everyone will sit out in the open with desks that can be quickly shuffled around as teams form and break apart around projects. There will be cafes and lots of micro-kitchens with snacks so that you never have to go hungry. And we'll fill the building with break-away spaces with couches and whiteboards to make getting away from your desk easy.

We've paid just as much attention to the outside as well. The exterior takes into account the local architecture so that it fits in well with its surroundings. We're planting a ton of trees on the grounds and more on the rooftop garden that spans the entire building. The raw, unfinished look of our buildings means we can construct them quickly and with a big emphasis on being eco-friendly. Of course, we'll maintain our current campus and use an underground tunnel to connect the two.

We plan to break ground on the new building in early 2013 and hope for a quick construction. When it's completed, we hope it will provide a paradise workspace for the 2,800 engineers who will one day fill it.

In May, Facebook was granted permission by city officials to hire up to 6,600 workers on the California campus according to PC Magazine. Facebook will pay the city of Menlo Park an average of $850,000 a year for 10 years, to cover the impact of additional workers on city infrastructure.

For more news and information visit Blumberg Capital Partners.

Amazon's Global HQ for Sale

Microsoft co-founder Paul Allen's Vulcan Real Estate announced last Thursday that it would be putting Amazon.com Inc.'s 11-building Seattle headquarters on the market with plans to use the proceeds for other real estate projects in the area. "We have been deeply involved in the redevelopment and revitalization of South Lake Union for over a decade, and the sale of the Amazon campus will allow us to continue to invest in the neighborhood and the community," Ada M. Healey, vice president of Vulcan's real estate unit, said in the statement.

"Vulcan's portfolio is heavily weighted in office and we need to rebalance that distribution," Lori Mason Curran, Investment Strategy Director of Real Estate at Vulcan said in a statement. "With the current low interest rate environment and high values for core assets this feels like a good time to capitalize on market conditions."

Built in the former warehouse district north of downtown, the 1.8 million square foot campus is being listed for sale through CBRE Group Inc. While no asking price was listed, industry experts expect the property to sell for more than $1 billion. According to a Reuters report, Amazon, which only recently moved into its new headquarters, declined comment on whether it would be a bidder to buy the 11 buildings on 1.8 million square feet of land which make up its headquarters. Amazon already has plans to build new offices nearby to house its growing staff.

"If they're going to take the cash and use it to do more development in South Lake Union, I see it only as a good thing," commented Jerry Dinndorf, president of the South Lake Union Community Council.

"The Amazon corporate headquarters buildings represent exactly what core capital wants today: new product featuring durable, credit income streams in great CBD locations. Markets like South Lake Union in Seattle, South of Market in San Francisco and Silicon Beach in Santa Monica, command premium rents because of huge tenant demand," said Kevin Shannon of CBRE in a CoStar Group report. "Technology and corporate tenants love state of the art campuses in amenity rich, transit oriented environments like Amazon's because these locations allow them to attract and retain the best talent in the workforce."

For more news and information visit Blumberg Capital Partners.

Porsche Building New $100M HQ in Aerotropolis

Porsche Cars North America Inc. has plans to build a new $100 million headquarters at Aerotropolis, a 130-acre mixed-use development in Atlanta, according to CoStar report. Groundbreaking on the new project is expected for this fall with the first phase of move-in scheduled for 2013. The "Aerotropolis Atlanta" development site is near the new International Terminal at Hartsfield-Jackson Atlanta International Airport. The new Porsche center will include office space for 400 employees and a Customer Experience Center that will feature a handling road course to demonstrate the capabilities of Porsche's vehicles.

"The unparalleled nature of the Porsche ownership experience absolutely deserves an equally unique home. That is what we'll create with our new headquarters – a concept completely new to the U.S. automotive industry, and one that delivers our brand and product experience to our employees, dealers and customers alike," said Detlev von Platen, President and CEO of Porsche Cars North America.

"We welcome the entire Porsche team to Atlanta's newest corporate center, the innovative Aerotropolis complex," said Kasim Reed, the mayor of Atlanta. "Porsche's decision to reinforce its roots and grow its next-generation U.S. headquarters here is a testament to the vitality and vibrancy of our city and an exciting addition to the many iconic brands that also call Atlanta home. The Porsche crest will be a perfect welcome sign to greet the hundreds of thousands of visitors and guests that land each day at the world's busiest airport in Atlanta."

For more news and information visit Blumberg Capital Partners.

MTA Seeks to Sell Madison Avenue Headquarters for $150M

The Metropolitan Transportation Authority (MTA) announced this week that it is seeking to sell three of its headquarter buildings in midtown Manhattan in an effort to consolidate office space. MTA said that it expects to yield at least $150 million from the sale and would use those funds to support MTA capital projects. MTA plans to relocate employees from the 341, 345 and 347 Madison Avenue buildings would be relocated near Grand Central and Metro-North’s other facilities, including an office facility in North White Plains.

"We are reviewing our real estate portfolio from top to bottom, looking for opportunities to reduce costs and increase revenue," said Jeffrey B. Rosen, MTA Director of Real Estate. "In our real estate, as in all of our operations, the MTA is making every dollar count."

Peter S. Kalikow, who was chairman of the authority from 2001 to 2007, said he had decided not to sell the buildings when he was in charge because they housed the Metro-North administration, which he believed should remain close to Grand Central according to a New York Times article. "Moving New York City Transit to 2 Broadway is best thing we ever did," he said in an interview this week. "But there are no Metro-North trains down there."

For more news and information visit Blumberg Capital Partners.

Agar Secures $18M Loan

AGAR Supply Co., a New England-based foodservice distributor, has secured an $18 million loan from People's United Bank. The long-term, fixed-rate loan on its headquarters building in in Taunton, MA was arranged by Holliday Fenoglio Fowler LP and replaces a maturing loan on the property according to a Boston Business Journal article.

About 15% of the Class-A industrial building leased by Agar is dedicated to office use and underwent a 54,000 square foot expansion last year. "Through this expansion, we are able to serve our customers better and build efficiencies for the future. This will go a long way in improving how we help our customers grow their business," said Karen Bressler, president and CEO of Agar.

For more news and information visit Blumberg Capital Partners.

Google Buys Tallest Building in Dublin

Google purchased the Montevetro Building this week, the tallest building in the city of Dublin, for €99.9 million (roughly $136 million U.S. dollars) from Real Estate Opportunities (REO) and The National Asset Management Agency (Nama) according to a Wall Street Journal article. Google bought the 15 story, 210,000 square foot Montevetro development on Barrow Street to house about 2,000 staff members and accommodate new business activities that are currently in development. Real Estate Opportunities redeveloped the building, and its chairman, Ray Horney, said the sale is one of the largest commercial real estate deals Ireland has ever seen reported the San Francisco Chronicle. Nama, which acquired the Montevetro building as security for a loan that transferred from a participating institution in April 2010, advance the necessary working capital to complete the development.

"We are at capacity in our EMEA headquarters in Barrow Street and the additional space will allow us to relocate some teams to Montevetro and to create an even more spacious working environment for Googlers in our existing building," said John Herlihy, head of Google in Ireland.

Nama chairman Frank Daly comment that "the successful completion of the Montevetro development and its sale again reflects the positive potential of Nama to support the commercial property market in Ireland without compromising its objective of recovering monies owed to the taxpayer."

For more news and information visit Blumberg Capital Partners.

Facebook Moving HQ to Menlo Park

In the biggest lease deal in Silicon Valley since 1991 when Apple signed an 865,000-square-foot lease agreement, Facebook held a news conference at Menlo Park City Hall on Tuesday explaining that the crowding in their current location pushed the move to a larger space in Menlo Park where the social networking company will assume multiple office buildings to serve as its headquarter campus according to a CNN article. The company will begin moving its employees this summer and said that it would be renovating the campus to make it a fun place to work.

"There are very few opportunities for a city to have an 'it' company," Mayor Richard Cline said of Facebook after the press conference. "And we also have facilities that are vacant. This solves a big problem." Facebook will rent the one million square feet, nine building campus from Deutsche Bank AG’s RREEF in a 15-year sale-leaseback deal; RREEF purchased the 57-acre property from Sun Microsystems owner Oracle Corp. for an undisclosed amount. The property was built between 1993 and 1995 and was the corporate headquarters for Sun Microsystems until it was acquired by Oracle.

Chief Financial Officer David Ebersman noted that Facebook has the option to buy the property in five years. The company also bought an adjacent 22-acre property, connected to the new site by a tunnel, for future development.

For more news and information visit Blumberg Capital Partners.

CoStar Sells DC HQ, Makes $60M Profit

1331 L Street in the heart of Washington's Business District traded hands this week as CoStar agreed to sell the 169,430-square-foot building to GLL L-Street 1331, a subsidiary of GLL Real Estate Partners. The sale of the headquarter building of CoStar is scheduled for close later this month for $101 million - a $60 million profit for the company according to the Washington Post. CoStar bought the Class A building last year from the Mortgage Bankers Association for $41.3 million with the help of a $6.1 million, 10-year tax abatement from the city that was contingent on the publicly traded company hiring 100 District residents.

"We nailed the bottom and are getting out while we go into the recovery," said CoStar's chief executive, Andrew Florance. The seller was represented by executive managing directors, Paul Collins and William Collins, senior managing director, John Flood and senior vice presidents, James Cassidy and Judson Ryan of Cassidy Turley Commercial Real Estate Services.

For more news and information visit Blumberg Capital Partners.

West Pharmaceutical Building New HQ in PA

West Pharmaceutical has entered into a build-to-suit lease agreement for its new global headquarters in Exton, Pennsylvania according to a CoStar report. Located in Eagleview Corporate Center, just two miles from its current headquarters in Lionville, the new headquarters will feature 130,000 rentable square feet of office space and 41,000 square feet of laboratory and research space.

530 Regency Drive Associates LP, the landlords of the property, will construct, furnish and equip the new building. The lease will begin around January 2013 and will expire 15 years later with the option to extend for two additional terms totaling 10 years. It was reported that the annual base rent for the new headquarters is expected to be about $4 million per year.

For more news and information visit Blumberg Capital Partners.

JP Morgan Purchases Lehman HQ in London for £495M

J.P. Morgan announced today that it had acquired 25 Bank Street in Canary Wharf for £495M according to a Guardian article. The building, home of Lehman's European arm until 2008, will become the new European headquarters of J.P. Morgan's Investment Bank in 2012. In addition to this property, Morgan has also agreen to purchase 60 Victoria Embankment in London, a building that the firm has leased since 1991 and houses its Treasury and Security Services Division. The City minister, Mark Hoban, described JP Morgan's decision as "excellent news". Morgan purchased the Bank Street building from Canary Wharf Group and has said it will continue to work with the group to develop the Riverside South site at Canary Wharf for future use.

"These buildings ensure that our employees will have the necessary technology, infrastructure and amenities to take our businesses forward. Even during the recession, we have continued to invest and grow our businesses internationally," said Jamie Dimon, Chairman and CEO of J.P. Morgan. "These properties are long-term investments and represent our continued commitment to London as one of the world's most important financial centres."

For more news and information visit Blumberg Capital Partners.

World Bank Purchases DC Headquarters for $216M

The World Bank has bought the 8-story building at 1225 Connecticut Avenue in Washington, DC for $216 million according to a Bloomberg report. World Bank has leased the property since 2008 and used 100% of the rentable 240,000 square feet as its headquarters. World Bank acquired the office building from Brookfield Properties, which will be retained as the managing agent for the property. The sale represents a price of $900 per square foot, the highest price per square foot ever paid for an office building in D.C. according to the Washington Business Journal.

Brookfield said it sold the building after spending $32 million on updating it after buying it in 2006 as part of Trizec Properties Inc.'s portfolio according to Reuters. The building was among the first redeveloped buildings in the United States to achieve LEED CS (Core & Shell) Platinum certification. "In keeping with our capital recycling strategy, we will be proactive in seeking similar opportunities to create value within the D.C. market," Dennis Friedrich, chief executive officer of Brookfield's U.S. commercial operations, said in the statement.

For more news and information visit Blumberg Capital Partners.