It's not a done deal yet, but Marriott's HQ announcement reflects team's confidence
Hotel giant Marriott International Inc.'s decision to announce its pick for a new downtown Bethesda headquarters on Friday might have seemed ill-timed to seasoned real estate experts — and not just because it coincided with the presidential inauguration.
As President-elect Donald Trump was preparing to take the oath of office, Marriott disclosed it had signed a letter of intent with The Bernstein Cos. and Boston Properties Inc. for a new corporate home and flagship hotel at a roughly 2-acre site by Wisconsin and Norfolk avenues.
LOIs often convert into fully signed and executed leases, but it's not a sure thing. That is one of the reasons few developers, brokers or tenants involved with a deal want to talk about it when it's still in that stage of the process. Also consider: Two of the parties at the table, Marriott (NASDAQ: MAR) and Boston Properties (NYSE: BXP), are publicly traded and not given to tipping their hands prematurely.
But in this case, Bernstein President and CEO Adam Bernstein said there are LOIs — and then there is Marriott's LOI. It was not hastily entered into, he said, and he is confident all three parties will see the project through to a ribbon cutting in 2022.
"They ran a first-class, very thorough, very detailed process, and all of the details are well vetted," Bernstein said. "I'm excited for Bethesda and the opportunity that this brings for this side of Wisconsin Avenue and the other side of Woodmont Avenue. What Marriott's going to do for the community, they're going to be a great neighbor and be a big catalyst for the neighborhood."
Bernstein had previously proposed a Westin Hotel and smaller office building on the site at 7750 Wisconsin Ave. and had gone so far as to promise in April that the hotel's groundbreaking would happen in 12 to 16 months. That was before Marriott completed its $13 billion acquisition of Starwood Hotels and Resorts Worldwide Inc., which includes the Westin brand.
When the Marriott headquarters prospect emerged, Bernstein brought on Boston Properties to help improve its chances of landing the hotelier. He and Boston Properties Senior Executive Vice President Ray Ritchey go back a long time, he said. They have talked about collaborating on other projects before and have a strong track record with such competitions. With the help of architecture firm Gensler, the two were able to take Bernstein's previously approved plan and modify it to meet Marriott's larger needs.
"We figured teaming up with the No. 1 developer in the region, especially when it comes to corporate headquarters, really made sense," Bernstein said.
Marriott, meanwhile, was working with another team from Gensler to flesh out its vision for a cutting-edge workspace, and the two visions came together to result in Friday's announcement. The proposal, for a 22-story office building and a 230-plus-room hotel, will now have to go through Montgomery County's approval process — and it's too early to say how the public will respond given its past pushback to the proposed downtown Bethesda sector plan. A large group of residents criticized the sector plan on a number of levels, including the height of buildings, and that could be an issue for Marriott's proposed headquarters building, set to be among the tallest buildings in that territory.
But in this case, the timing of Marriott's announcement lines up well, said Mike Smith, Montgomery County's development ombudsman. The county council is scheduled to hold a work session Jan. 23 on the downtown Bethesda plan, and this means the body can consider Marriott's proposal as part of its deliberations and ensure the public has the chance to weigh in.
Montgomery County Council President Roger Berliner said Marriott's proposal fits into the mission of the master plan for Bethesda — to encourage world-class architecture. He stopped short of calling the project's approval a slam dunk, which he said would be disrespectful of the process, but said Marriott's request also wasn't entirely surprising given the space needs the hotelier outlined in October. The important thing, he said, is Marriott's commitment to the county and its ability to stimulate more development in a part of downtown Bethesda that has not seen as much activity in the past.
"The reinvestment into Bethesda is very important to our county going forward," he said. "It's a catalyst. All of the places around where Marriott has now landed will see incredible business opportunities. So if you have a restaurant on Norfolk Avenue or Woodmont Avenue, imagine with 3,000 people trooping in and out of work every day. This is going to be a nice spur to development."
Pete Otteni, senior vice president of development at Boston Properties, said Marriott is committed to coming up with a plan that will contribute to downtown Bethesda, not detract from it.
"We think keeping Marriott and their employees and their corporate citizenship in Montgomery County will be well-received by virtually everyone," Otteni said. "It's important, and Marriott has said through their press releases and everything that they want to be a good corporate citizen. They have been that way, they will be that way."