Anthony Lanier's Georgetown Part I: Landlords, Renters and Rent
Anthony Lanier of EastBanc describes a real estate scene in Georgetown that pits conscientious landlords against greedy, lazy landlords and their high rents.
It would not take long for someone new to the Georgetown real estate scene to hear about Anthony Lanier. Lanier, the founder and presidentof EastBanc, Inc. real estate development and investment company, moved to Georgetown in the early 1990s, began picking up properties and has in the 25 years since become one of the biggest players in the Georgetown and greater D.C. commercial real estate market.
In a recent conversation with Lanier, the developer shared his views on controversial issues like high rents and empty space in Georgetown and spoke about his affinity and vision for Georgetown and the transformation of the D.C. real estate market during his time as a resident.
Lanier separated himself, claiming to be a conscientious and professional landlord, and his well-kept properties from other greedy and lazy property owners in Georgetown and their "bombshell" properties.
"Once you have a lot of buildings your main concern is to maintain occupancy. And when you want to maintain occupancy, you're very sensitive to how you maintain occupancy, with which tenants" explained Lanier.
"The difficulty in creating an urban environment is there is no consensus. Particularly if you have five people living in Miami, Alabama and Dakota who own a little building in Georgetown, the more they are, the greedier their demand is for rent, and the less their ability to reinvest in the building," explained Lanier.
EastBanc's buildings are "state of the art" said the developer, but some of the neighboring properties are "bombshells." Lanier said the owners of these other properties demand the sort of rents he does without the investment and repairs EastBanc puts into its buildings.
These bombshell properties are difficult and slow to rent and are leased based on how prime the location is, explained Lanier. "The perfect example is the former Nathan's building [at Wisconsin Ave. and M St.]. How is it possible that the number one corner in Washington, D.C. is being fixed by the blind and the one-eyed to make a hokey ice cream store and a bar on the second floor? How is that possible?" asked Lanier. The Nathan's building is being converted to Serendipity 3, a trendy NY-based dessert chain.
That speaks to the other priority for landlords: finding the right tenants. Lanier said he picks and chooses his tenants carefully and has been known to fight proposed tenants at neighboring properties. Lanier asked how he was supposed to rent to Coach when Chipotle was coming in next door.
Coach located to M St. and so did Chipotle, despite the developer's protestations. "Chipotle is there because there was a land owner who said 'they'd pay me more rent'," which is the core of the problem in Lanier's mind.
"Rents are decided by greed, predominantly from those who are not professional landlords," explained Lanier. The people who have a "bigger picture in mind" are the professional landlords, who "in Georgetown remain...a minority," said Lanier.
In 2009, Georgetown had a net loss of 15 stores, according to Jim Bracco, executive director of the Georgetown Business Improvement District (BID). The loss is evidenced in the many brown paper covered windows, though Braco expects to end 2010 with a net gain of 14. Business owners are quick to point to the high rent rates, which increase despite the decrease in demand for commercial space.
When asked if the BID was working with property owners and businesses to ameliorate the problem, Bracco said frankly, "Understand that we're not the landlords here...We wish we did control the real estate, but we don't…it would make things a lot easier." The choice was really up to the market, up to the property owners, Bracco explained.
Does Lanier thinks he could be part of the problem, if his own rents are perhaps too high? Lanier said, "It's not true. It's for sure not true."
For Lanier, the value and quality of his buildings justify the rates he charges. He prides himself on well-located and well-maintained properties. EastBanc offers buildings that are "effectively brand new" and require lessees to do very little with the space, explained Lanier, which allows "a big tenant to move into space and open 60 days after signing lease."
Beyond the buildings, Lanier considers his rates competitive with other retail corridors in the District. "There's not a day I can't compete favorably with downtown or 14th St."
"I think rents range in Georgetown in our portfolio from $20 per square foot to $150," estimated Lanier, but this depends on what is being rented. "Is it on the ground floor only? Is it for the basement, groundfloor, second floor? Is it average rent over three floors,? Is it 1,500 square feet or 800 square feet or 23,000 square feet? All these things play a big role into how to calculate rent..." explained Lanier.
To put an end to the rent debate, "I would say anybody who says that we have extremely high rents doesn't know what he's talking about," stated Lanier.