ULI Washington News

Full Member Executive Conversation with Oliver Carr, III

On April 14, Oliver Carr, III, led an informational and interesting conversation with the group of Full Member attendees. He discussed his early career leading up to his current company, Carr Properties, a vertically integrated real estate company. In 2005 he led the creation of a small office REIT investing in this region. Eighteen months later, the firm was bought by JPMorgan Chase and created a sizable return. In 2013, an Israeli firm, Alony Hertz Properties, invested in the company to provide capital for growth going forward. The company now has $2 billion in assets and $2 billion equity. It owns 17 buildings and is building several more throughout the region. They expect to double the size of their assets to $4 billion in assets in the next 2-4 years. At present, over 90% of assets are within a couple blocks of Metro and they own only one building outside the Beltway.

The company is considering going public again in the future. Oliver said that being a public company is not easy but there are generally good earnings and investment discretion. Everyone in the company has equity interests, a 90% of its income has to be distributed each year. At present, there are many positive deals taking place for the company. He spoke about how every deal leads many lives. Among his best deals is building a new home for Fannie Mae on 15th Street NW. This 700,000 square foot project is among the biggest in the district, and the client was clear that they wanted to stay in the District proper. The Fannie Mae CEO wanted to change the vibe from an antiquated, stodgy building to a headquarters with light and air. The new building will meet all their requirements, with a new food and beverage concept in the alley that will enliven the area.

Carr was able to obtain the deal on price, which was important to a quasi-government entity, plus he had a ground lease on 1100 15th Street, NW which gave him control of the property. Fannie Mae and Carr negotiated the lease in one week, with a plan to bring vitality back to this middle part of downtown. Carr is continuing to buy up properties nearby to continue to enhance the neighborhood.

Carr discussed his thoughts on the future of development. He acknowledged that office tenants want new buildings with amenities and proximity to public transportation. Since system demand is increasing so dramatically from all of the new development, Metro needs to seriously improve its service and safety records. Mr. Carr said that a superregional power with independent authority that can act and make decisions is needed to bring Metro back to its operational peak. He is supportive of alternate modes of transportation but says that when construction temporarily impacts convenience, the public has to accept the change in the area.

In the company’s future is a “stick to basics” way of doing business. The company’s employees all go through the Ritz Carlton customer service training that teaches them to be incredibly customer service oriented. At present, trying to lead in the creation of office space requires that great lobbies, public space renovations, coffer bars and food purveyors in the building, free wifi everywhere, are all required elements being demanded by new tenants. A company is only successful if its buildings are full – and retaining customers through service is an important way to keep the tenants. The company requires quarterly appraisals of all its assets to understand the real value of the building and to measure value creation.

When questioned about development east of the river, Carr said that developers there are not pioneers anymore, but a one step behind on the risk curve. For Bethesda, he views it as a great edge city with everything going for it, including the Purple Line. His project at the APEX building site will include 300,000 square feet of office and two residential towers. As for tech companies generally relocating to this area, Carr said that the industry needs to create more spaces for companies where employees can live and work proximate to each other, and more incubators would a plus for the region. Carr mentioned that his Bethesda site would likely be able to accommodate the Marriott relocation deal, something that he would not be adverse to hosting.

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