Huntington Club redevelopment RFP

HUNTINGTON CLUB REDEVELOPMENTALE X AN D R IA , FA I R FA X CO U NT Y, V I RG I N IA

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HUNTINGTON CLUB REDEVELOPMENT HUNTINGTON AVENUE, FAIRFAX COUNTY, VA JULY 07, 2014

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REQUEST FOR PROPOSALS

A 2 . 5 M I LL IO N S F M IXED - US E D E VELO PM ENT O PP O RTU N IT Y AT TH E H U NTI N GTO N M E TRO S TATIO N


H U N T I N G T O N C L U B R E D E V E L O P M E N T JULY 2014

TABLE OF CONTENTS

T A B

1. TRANSMITTAL LETTER

2. MAPS AND PHOTOGRAPHS

3. BID INSTRUCTIONS

4. ASSOCIATIONS MINIMUM REQUIREMENTS AND PREFERENCES

5. PROJECT HISTORY

6. DRAFT MASTER PLAN

7. LIST OF FIRMS ASSISTING THE ASSOCIATION

8. SUMMARY OF REAL ESTATE MARKET FEASIBILITY STUDIES

HUNTINGTON CLUB REDEVELOPMENT RFP 2



TABLE OF CONTENTS

A D D I T I O N A L M A T E R I A L S These materials are available to qualified bidders upon request A . H U N T I N G T O N C L U B C O N D O M I N I U M D O C U M E N T S

Declaration

Bylaws B . F A I R F A X C O U N T Y C O M P R E H E N S I V E P L A N

Fairfax County Comprehensive Plan Amendment

Dept. of Planning & Zoning Final Staff Report

Informational Meeting Presentation

Comprehensive Plan, Mt. Vernon Planning District

Fairfax County Dept. of Transportation Recommendations C . S O U T H C O U N T Y A R E A P L A N S R E V I E W ( A P R )

APR Cover Letter

APR Nomination Form

APR Nomination Statement of Justification

Zoning Map Outline D . R E A L E S T A T E M A R K E T F E A S I B I L I T Y S T U D I E S ( N o v e m b e r 2 0 1 3 )

Rental Apartments

Condominiums

Office

Retail

Hotel E . E N G I N E E R I N G R E P O R T S

Asbestos Report

Subsurface and Geotechnical Engineering Report

Marine Clays Map

Preliminary Site Analysis

Huntington Club Condominium Replacement Reserve Study




TABLE OF CONTENTS

A D D I T I O N A L M A T E R I A L S (continued) F . S I T E S U R V E Y

Survey Description

Survey Plat

Survey Topo Plat G. T R A F F I C S T U D I E S

Traffic Study, 2/24/2011

Traffic Study, 2/24/2011, Appendices A-B

Traffic Study, 2/24/2011, Appendices C-V

Traffic Analysis Addendum, 11/9/2011

Traffic Analysis Addendum, 11/9/2011, Appendices A-C

Traffic Analysis Addendum, 11/9/2011, Appendices D-P

Land Use Mix Trip Generation Comparison, 2/22/2012

Traffic Analysis Addendum, 5/31/2012

Traffic Analysis Addendum, 5/31/2012, Appendix A

Traffic Analysis Addendum, 5/31/2012, Appendices B-M


S E C T I O N 1

T R A N S M I T T A L

L E T T E R

500 M ON T G OM E R Y S T R E E T , S U IT E . 600 | AL E X AN D R IA, VA 2 2314 P : 703 .836 . 5700 | W WW.D E L T AAS S OC IAT E S .C OM

August 1, 2014 Re: Huntington Club Redevelopment An Approved 2.5-Million-Square-Foot Mixed-Use Development Opportunity At the Huntington Metrorail Station Huntington Club, A Condominium Unit Owners Association, Inc. (the Association) has retained Delta Associates (Delta) to solicit bids from interested parties to purchase and develop a mixed-use development on the Associations 19-acre property, the site of the existing condominium, and an adjacent undeveloped 0.5-acre parcel that is owned by a third party (collectively, the Property). This is a significant opportunity in a growing urban setting in the Washington area among the leading economies in the U.S. Among the advantages of this site and development are its:

Location adjacent to Metrorail

Easy access to the Capital Beltway and Fort Belvoir

Convenient transit and road connections to major employment centers in Northern Virginia, in downtown Washington, and throughout the metropolitan area

Proximity to Old Town Alexandria, National Harbor, and the Carlyle area, home of the U.S. Patent & Trademark office and the new National Science Foundation headquarters

Upgraded highway infrastructure and interchanges nearby

Negotiation with one party the Associations Board of Directors

Proven prior approval by the unit owners

Extensive entitlement, site planning, design, traffic, and market feasibility work already completed

Full support of the Association for rezoning

Possibility of phased land purchase

Current unit owners as potential pre-sale buyers for new condominium units P R O P E R T Y O V E R V I E W

The Property is a roughly triangular 19.5-acre tract located on the south side of the 2500 block of Huntington Avenue in the Huntington area of Fairfax County, Virginia consisting of approximately 19.0 acres currently included in a residential condominium and an undeveloped 0.5 acre owned by a third party. The two properties are being co-marketed by the Association as a single parcel and must be purchased together. The site is bounded on the north by Huntington Avenue, on the east by the Huntington Metrorail Station, on the south by North Kings Highway, and on the west by single-family homes on the east side of Kathryn Street. Currently, the site is improved with a residential condominium community known as Huntington Club, which consists of 364 garden and townhouse style units in ten buildings, with additional common area buildings,


Huntington Club Redevelopment Request for Proposals August 1, 2014 Page 2


amenities, and parking. The property was developed in the late 1960s as Telegraph Hill Apartments, which was converted to condominium ownership in 1979. In 2009, the Association and the adjacent landowner submitted nominations to amend the Fairfax County Comprehensive Plan to allow a transit-oriented, mixed-use redevelopment project. In February of 2013, the Fairfax County Board of Supervisors approved a Comprehensive Plan amendment that would make possible the redevelopment of the subject site at up to 3.0 FAR with up to 2.55 million SF of space, consisting of 75% residential use, or 1,911,000 SF, and 25% office use, or 637,000 SF. Approximately 127,000 square feet of office use may be converted to hotel use, leaving 510,000 SF of office space, and an unspecified amount of first floor retail may be included in either residential or office buildings. Recent discussions with Fairfax County indicate that some modifications may be granted that could improve the redevelopment.

The developer will benefit from the sites status as part of a Transit Development Area surrounding the Huntington Metrorail Station on the Yellow Line, which opened in 1983. The area has attracted significant new investment, with several new residential and commercial projects completed and in progress. A S S O C I A T I O N P R O C E S S A N D R E Q U I R E M E N T S

The Association recognized the redevelopment opportunity that the site represents and has invested substantial effort and capital over the last five years in obtaining development approvals, commissioning development-related studies, and securing the agreement of unit owners with regard to the sale and development process. This body of work will save a developer significant due diligence time and cost when considering this opportunity. A sale would require agreement of unit owners who collectively own 80% of the fractional interest in the Association. Bidders should be aware that two prior votes on related matters (including the 2009 Comprehensive Plan amendment petition of support and the 2013 vote to approve expenditures for the RFP process) have indicated more than 80% support of the entire Association. Approval of a bidders offer will require an additional vote by Association members, which cannot be guaranteed. Many current unit owners have expressed interest in living in the new development and thus represent a pool of ready buyers for new condominium units a valuable asset for the developer. I N F O R M A T I O N P A C K A G E

The Association has instructed Delta to approach parties likely to have an interest in this type of property. The enclosed package contains physical, legal, market, economic, and other information on the site to assist interested parties with their feasibility studies and to enable them to bid on the property. Delta Associates has completed market feasibility studies for rental apartments, condominiums, office, retail, and hotel uses at the site. This package contains summaries of these market studies; complete reports will be provided to qualified bidders upon request.




Davis Carter Scott (DCS) has completed significant design work for the Property, taking into consideration the Comprehensive Plan, discussions with Fairfax County planners, the sites topographical and physical conditions, and the results of the Delta market feasibility studies. This design work is a valuable resource for bidders because it shows the sites development potential in practical, and not merely conceptual, terms. A summary of DCSs draft master plan work is included in Tab 6. It is important to note that the draft master plan is not the required development program. However, given the entitlement process thus far and the extensive design feasibility work undertaken, it is the Associations belief that achieving the full development potential of 3.0 FAR would be unlikely with radical changes to the DCS plan. Still, bidders are encouraged to prepare proposals that they consider feasible from the perspectives of market, design, economics, financing, or other considerations. A list of firms assisting the Association is shown in Tab 7, including land planners, architects, engineers, and attorneys. Please feel free to call upon any of these experts if you have questions during this preliminary feasibility period. Questions from individual bidders and the answers provided will be distributed to all qualified bidders as appropriate. Also, any changes in the bid process (for example, as a result of questions) will be offered to all bidders. B I D P R O C E S S

Relevant study period information is contained in this package so that bidders will have sufficient time to analyze this information and submit a Bid Form (Tab 3) by the Bid Due Date. Tab 3 also presents a list of selection criteria. It is the Associations intent to select finalists within three months of the Bid Due Date, followed by a contract negotiation, best and final offer, and ratification by unit owners. Before selection, bidders may be asked to meet the Association and/or its advisors to discuss their bids and present qualifications. The Association is committed to making this bidding process as fair and straightforward as possible. The bid process and the enclosed package are intended to allow you adequate time and information to study the property and submit a bid, as well as to reassure you that you will be purchasing a property that is well along in the entitlement process and that will have the Associations full support during the development process. D I S C L A I M E R

The seller has not engaged a real estate broker in connection with this offering and will not be responsible for compensating a broker.




A N O T E A B O U T D E L T A A S S O C I A T E S R O L E

Delta is assisting the Association strictly on a professional services fee basis, and we will not receive a commission or other consideration dependent on a transaction or on the amount of a transaction. Although Delta works frequently with developers (including some who may bid on this project), Deltas work is strictly for the Associations benefit. We at Delta Associates look forward to working with you on this exciting project and stand ready, along with the other advisors, to assist you in any way possible. Respectfully submitted, DELTA ASSOCIATES Enclosure


S E C T I O N 2

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S E C T I O N 3

B I D I N S T R U C T I O N S

H U N T I N G T O N C L U B R E D E V E L O P M E N T BID INSTRUCTIONS

A . T I M E L I N E

S T E P A P P R O X I M A T E T I M I N G

Proposal due date 2 months

Selection of finalists 3 months

Negotiation, best and final offer 2 months

Ratification by unit owners 4 months

Contingency on the above 1 month

TOTAL 12 months

B . I N T E N T T O B I D Please complete this form and deliver it by 5:00 PM on September 24, 2014 (the Bid Due Date) to: Delta Associates 500 Montgomery Street, Suite 600 Alexandria, VA 22314 Attention: David Weisel [email protected] Telephone: 703-535-3551 Fax: 703-836-5765 C . N O N - B I N D I N G B I D S By completing and submitting this form, the bidder has no legal contractual obligation to purchase the Property and Huntington Club, A Condominium Unit Owners Association, Inc. (the Association) has no legal contractual obligation to accept the bid or any modification of the bid. Nevertheless, the submission of this form signifies that the undersigned entity in good faith is willing, if selected, to enter into a sixty-day period to negotiate a purchase agreement. If selected as a qualified bidder, the contact person for the undersigned entity will be notified by approximately three months after bids are due. If not selected, or if selected as a backup qualified bidder, you will be notified by approximately three months after bids are due. Only upon execution of a purchase agreement shall the parties have legally binding obligations. D . S T R U C T U R E The Association will consider an all-cash transaction, as well as other types of transactions, including phased payments at specified times, joint ventures, or other structures. Proposed transaction structures should meet the Associations requirements, maximize the cash price to the Association, and address the Associations preferences, as described in the RFP package. Proposal other than all-cash transactions must reflect a higher purchase price to compensate for risk.



E . S E L E C T I O N C R I T E R I A Qualified bidders will be selected based on the following criteria:

1) Conformance with Association requirements and ability to meet Association preferences (Tab 4)

2) Price (total consideration and cash equivalent price) 3) Financial capability 4) Successful completion of similar developments 5) Special conditions required, if any F . B I D I N F O R M A T I O N 1) Name of bidding entity 2) If a venture, names of participating entities 3) Names and biographies/experience of principals 4) Description of financial capability (e.g., available equity and proven access to capital) 5) Description of development capability (e.g., examples of projects) 6) Other information on bidding entity (e.g., principals and their experience) 7) If other than an all-cash offer, a risk assessment and mitigation plan for Association

members 8) Price and payment schedule 9) Deposit and at-risk funds, if any 10) Detailed description of terms, conditions, and contingencies, if any Please attach additional information or materials as desired. G . F O R M A T Electronic submissions are encouraged, but printed materials will be accepted. H . D I S C L A I M E R The information in this Request for Proposal Package has been obtained from sources believed to be reliable. However, notwithstanding anything to the contrary, the Association and Delta (and their officers, employees, agents and representatives) make no, and hereby expressly disclaim any, representations, warranties, or other assurances as to the accuracy or completeness of the information provided. Each prospective Bidder should undertake such due diligence investigations concerning the property and the information contained herein as it considers necessary or desirable independently to verify, among other things, such information and to determine whether to submit a bid. In addition, no person, including Delta, is authorized to make any representations or warranties, to agree to sell the property, or to agree to any terms and conditions with respect to a sale, ground lease, joint venture, or any other transaction, and the Association will not be bound by any such terms and conditions.



U N D E R S T O O D A N D A G R E E D :

Name of entity:

Name/title of authorized representative:

Signature:

Date:

Address:

Email:

Telephone:

Fax:


S E C T I O N 4

A S S O C I A T I O N S M I N I M U M

R E Q U I R E M E N T S

A N D P R E F E R E N C E S

H U N T I N G T O N C L U B R E D E V E L O P M E N T ASSOCIATIONS MINIMUM REQUIREMENTS AND PREFERENCES

M I N I M U M R E Q U I R E M E N T S :

The developer purchases the entire Property for redevelopment at once or in phases

The developer funds and manages the rezoning process with the support of the Association

At least one of the buildings built in construction Phase 1 is a new residential condominium suitable for acquisition in whole or in part by current unit owners

Each unit owner has the option to reinvest his/her net sale proceeds into a new condominium unit on the property

If rezoning increases unit owners' real estate taxes prior to sale, then a subsidy from the developer will be necessary

M I N I M U M R E Q U I R E M E N T S I F T H E L A N D I S T R A N S F E R R E D I N P H A S E S :

Land transfers and associated payments occur on fixed dates

New condominium buildings include (at a minimum) enough new units for unit owners who want to remain onsite before the last old buildings are vacated

Unit owners who buy new units on the property, except those displaced in the first phase of construction, can live in their existing units with adequate parking until their new units are ready for occupancy

Residential and construction areas of the property are segregated and separately managed to the extent possible

The developer assists unit owners to find alternative housing and financing as needed

The interests of the Association and unit owners are protected to the fullest extent possible if the developer does not complete the purchase of the entire property

The developer funds modifications to infrastructure as needed to enable redevelopment

The Association's engineer, attorneys, and other advisors retain access to the site and to design documents to assure compliance with the terms of the agreement (if appropriate to the transaction structure)


H U N T I N G T O N C L U B R E D E V E L O P M E N T ASSOCIATIONS MINIMUM REQUIREMENTS AND PREFERENCES

P R E F E R R E D F E A T U R E S O F A N E W C O N D O M I N I U M T O B E P U R C H A S E D / O C C U P I E D I N W H O L E O R I N P A R T B Y C U R R E N T H U N T I N G T O N C L U B U N I T O W N E R S In general, the Association wants any new residential condominium buildings developed as part of the project to have construction quality, in-unit features and finishes, energy efficiency, and common area amenities consistent with the best standards in the marketplace. Proposals should include, at a minimum, examples of similar projects that represent the bidders vision for the subject site. Bidders should keep in mind that current unit owners represent a pool of ready buyers for condominium units in the new development. The existing owners would like to structure their purchase on a tax-free basis and at a discounted pre-construction price. Here are examples of characteristics in which current unit owners have expressed interest:

Unit floor area and bedroom/den count equivalent to current units

Equivalent or better parking ratio than current condition (1.5) in a condominium building

Sound-proofing / noise abatement features

Common area amenities:

Individual storage areas

Community room / multipurpose room

Management office

Gym/fitness facility

Weather-protected access to Metro

Exterior common areas: rooftop deck, barbecue/picnic area, garden area

Swimming pool

Bicycle racks

Motorcycle parking

Car wash area


S E C T I O N 5

P R O J E C T H I S T O R Y

H U N T I N G T O N C L U B R E D E V E L O P M E N T PROJECT HISTORY

By 2005, successful transit-oriented redevelopment projects were common in Alexandria and throughout the Washington DC area. The Huntington Club Board of Directors recognized the potential of its 19-acre condominium property, which is located adjacent to the Huntington Metro Station, and it chartered a Redevelopment Committee to explore the Associations alternatives. The committee organized in 2006, did some preliminary research, and surveyed unit owners to gauge interest in redevelopment. A very positive response by early 2007 motivated the committee to continue, with 64% of unit owners in favor, 13% undecided, and 7% against (16% did not respond). Fairfax County Supervisor Gerry Hylands staff noted that a Comprehensive Plan amendment was needed to redevelop the Property, and the next opportunity was the 2009 South County Area Plans Review (APR). In April of 2009, Huntington Club unit owners approved a budget for the APR process with 70% in favor and 3% against (27% did not cast ballots). Huntington Club selected Walsh Colucci, Wells & Associates, Davis Carter Scott, and VIKA to support the process. The Comprehensive Plan amendment was submitted in September of 2009 with a petition of support signed by 84% of unit owners. A preliminary staff report and APR Task Force review in April of 2010 led to a lengthy traffic study, which ultimately included two addenda. Meanwhile, VIKA provided a preliminary engineering site assessment and property survey with detailed topography. Huntington Club undertook extensive community outreach during this period and is grateful for the support of nearby citizens associations. Final approvals of the Comprehensive Plan amendment by the Department of Planning & Zoning, Mount Vernon Council, Planning Commission, and Board of Supervisors concluded in February of 2013. Unit owners voted in May of 2013 to fund this request for proposals (RFP) with 82% in favor and 4% against (14% did not cast ballots). Reed Smith and Delta Associates added their specialized expertise to Huntington Clubs team later that year. Delta completed a detailed market analysis of the proposed land uses, and Davis Carter Scott provided a more detailed design concept that fully utilizes the approved 3.0 FAR within the limitations imposed by the Comprehensive Plan. Davis Carter Scott, Walsh Colucci, Wells & Associates, and VIKA are available to support the subsequent rezoning, which will be funded and managed by the selected developer, leveraging the substantial investments that Huntington Club has made since 2009. Huntington Club is an unusual example of a highly organized homeowners association that has completed substantial entitlement, economic, design, traffic, and engineering work for a large project independently of a developer. This commitment over a number of years and the features of the subject site establish Huntington Club as one of the most remarkable development opportunities on the DC area market at this time.


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Architecture Interior Architecture Land Planning 1676 International Drive Suite 500 McLean, Virginia 22102 P 703.556.9275 F 703.821.6976

www.dcsdesign.com

Design Criteria 070314 (last page of Sec 7 Draft Master Plan) final 07-31-14.doc

DESIGN CRITERIA FOR HUNTINGTON CLUB REDEVELOPMENT

1. In approving the land use, Fairfax County imposed the following: a. 55 height limited above Kings Highway from the south R.O.W.

grades. b. 55 height limit from the west property line grades. c. 200 height limit within the arc of the central road (see attached site

plan diagram).

2. One entrance / exit on Huntington Avenue aligned with the new development entrance on the north side of the avenue. One entrance / exit on Kings Highway as shown.

3. Preliminary review and consent from the fire marshals office for the 8% internal road grades, with the pull off provisions as shown on the site plan for fire truck access. Preliminary review and consent from fire marshals office that fire access is acceptable as shown. (See VIKA report).

4. The design, as shown, achieves a 3.0 FAR density and includes the acre parcel to the east (WSD Huntington, LLC property) for both density calculations and design.

5. For market affordability, Buildings A & B are wood frame (at developers option).


S E C T I O N 7

L I S T O F F I R M S A S S I S T I N G

T H E A S S O C I A T I O N

H U N T I N G T O N C L U B R E D E V E L O P M E N T LIST OF FIRMS ASSISTING THE ASSOCIATION

D E L T A A S S O C I A T E S

David Weisel 500 Montgomery Street, Suite 600 Alexandria, VA 22314 703.535.3551 Office 703.836.5765 Fax 301.332.4107 Cell [email protected] R E E D S M I T H L L P

Robert M. Diamond 3110 Fairview Park Dr., Suite 1400 Falls Church, VA 22042-4536 703.641.4273 Office 703.641.4340 Fax 703.585.0411 Cell [email protected] D A V I S C A R T E R S C O T T L T D

Doug Carter, AIA, NCARB 1676 International Dr., Suite 500 McLean, VA 22102 703.556.9275 Office [email protected]

V I K A V I R G I N I A L L C

Bob Cochran 8180 Greensboro Dr., Suite 200 McLean, VA 22102 703.442.7800 Office 703.761.2787 Fax [email protected] W A L S H C O L U C C I

G. Evan Pritchard 2200 Clarendon Boulevard, Suite 1300 Arlington, VA 22201 703.528.4700, Ext. 5417 Phone 703.525.3197 Fax [email protected] W E L L S & A S S O C I A T E S , L L C

Michael J. Workosky 1420 Spring Hill Rd, Suite 600 McLean, VA 22102 703.917.6620 Phone [email protected]


S E C T I O N 8

S U M M A R Y O F

R E A L E S T A T E M A R K E T

F E A S I B I L I T Y S T U D I E S

500 MONTGOMERY STREET, SUITE 600 | ALEXANDRIA, VA 22314

P: 703.836.5700 | WWW.DELTAASSOCIATES.COM

VOLUME I

SUMMARY OF MARKET STUDIES AND DEVELOPMENT PROGRAM RECOMMENDATIONS

HUNTINGTON CLUB CONDOMINIUM REDEVELOPMENT A PLANNED MIXED-USE PROJECT

ALEXANDRIA, FAIRFAX COUNTY, VIRGINIA

December 6, 2013

P R E P A R E D B Y D E L T A A S S O C I A T E S F O R :

HUNTINGTON CLUB, A Condominium Unit Owners Association, Inc. Attention: Dr. Rossman P. I rwin, I I I , Pres ident

2601 Indian Drive Alexandria, VA 22303

#13294


5 0 0 M ON T G O M E R Y S T R E E T , S U I T E 6 0 0 | ALEXA N DR IA , VA 2 2314 P : 703 . 836 . 5700 | W WW.D E LT AAS S OCIAT E S .COM

T A B L E O F C O N T E N T S P A G E

Letter of Findings .................................................................................................................................. 1



December 6, 2013

Huntington Club, A Condominium Unit Owners Association, Inc. Attention: Dr. Rossman P. Irwin, III, President 2601 Indian Drive Alexandria, VA 22303 RE: Summary of Market Studies and Development Program Recommendations

Proposed Mixed-Use Redevelopment of Huntington Club Condominium Alexandria, Fairfax County, Virginia Deltas Project #13294

Dear Dr. Irwin: This letter presents the results of a market study undertaken in connection with the project referenced above. Pursuant to our contract dated September 24, 2013, the primary purpose of this study is to assist you with internal planning with regard to the residential, retail, office and hotel components of a proposed mixed-use development at the subject site. Our reports are organized as follows: x Volume I: Summary x Volume II: Apartments x Volume III: Condominiums x Volume IV: Office x Volume V: Retail x Volume VI: Hotel

The primary tasks involved in assessing the proposed project were as follows:

x Prepare an analysis of the regional economy. x Prepare an overview of market conditions for each use: apartment, condominium, office, retail, and hotel. x Evaluate the subject site as a place from which to compete for each use. x Survey competitive/comparable properties. x Assess supply and demand conditions in the market area. x Recommend a development program for each use. x Estimate achievable rents/prices and absorption pace for each use.

Research for this study was conducted in October and November 2013 and the analysis and findings reflect market conditions as of that period. This volume presents a summary of findings from the reports for the individual property types. Please see the individual volumes for details.


Huntington Club Condominium Attention: Dr. Rossman P. Irwin, III, President December 6, 2013 Page 2


T H E S U B J E C T S I T E The subject site is a roughly triangular 19-acre tract located on the south side of the 2500 block of Huntington Avenue in the Huntington area of Fairfax County, Virginia. The site is bounded on the north by Huntington Avenue, on the east by the Huntington Metro Station, on the south by Kings Highway, and on the west by single-family homes on the east side of Kathryn Street. It has access/curb cuts on both Huntington Avenue and Kings Highway. The site is improved with a residential condominium community known as Huntington Club, which consists of 364 garden and townhouse style units in ten buildings. The property was developed in the late 1960s as Telegraph Hill Apartments, which was converted to condominium ownership in 1979. In 2009, the Huntington Club Condominium Unit Owners Association submitted a nomination to amend the Fairfax County Comprehensive Plan to allow a transit-oriented, mixed-use redevelopment project. In February 2013, the Fairfax County Board of Supervisors approved a Comprehensive Plan Amendment which would make possible the redevelopment of the subject site with up to 2.5 million square feet (SF) of space, consisting of 75% residential use, or 1,875,000 SF, and 25% office use, or 625,000 SF. Approximately 125,000 square feet of office use may be converted to hotel use, leaving 500,000 SF of office space, and an unspecified amount of first floor space of any type may be converted to retail use. The maps that follow this letter show the subject sites location in detail. We have assumed that the retail space at the subject will be delivered in 5,000 to 10,000 SF blocks as the office and residential buildings are completed over time. The analysis in this report is based on a total of 50,000 SF to 55,000 SF of retail at full build out. We have analyzed the subject as if the proposed mixed-use redevelopment project is complete, with a rich and varied complement of office, residential, retail, and hotel uses with convenient parking and access. Our conclusions about the subjects performance assume that these conditions are in place. S I T E E V A L U A T I O N The subject site lies within Fairfax County, but this part of the county has an Alexandria postal address. The area, often considered to be a part of Alexandria, includes several established residential neighborhoods including Huntington, Burgundy Village, Jefferson Manor, Fair Haven, and Belle Haven. Richmond Highway (U.S. Route 1), Telegraph Road, and Kings Highway are the main north-south roads in the area, which has a mix of single-family and townhome residences and garden and high-rise apartment and condo buildings, with highway retail and commercial uses concentrated along Richmond Highway. The largest commercial developments in the immediate Huntington area include Huntwood Plaza, a 103,000 SF office building on Richmond Highway that was built in 1986, and a 213-room Hampton Inn hotel, which is located next to Huntwood Plaza.




The subject enjoys a good location near the Capital Beltway and two established office submarkets the I-395/I-95 Corridor and Old Town Alexandria.

x The I-395/I-95 Corridor office submarket spans the Northern Virginia interstate highways, from the Eisenhower Corridor on the north to Woodbridge on the south. The submarket is convenient to Downtown Washington and the Pentagon. Proximity to the Pentagon has been a major factor in the development of this 19.8 million-square-foot office market as numerous government agencies including the Department of Defense and government contractors are located there. Access to I-395/95, the Capital Beltway, and local roads is excellent, which supports the 28.6 million square feet of flex/industrial space located there.

x Old Town Alexandria is tucked into a corner next to the Potomac River and the Capital Beltway. This 8.4 million-square-foot submarket traditionally has been known for its historic buildings, quiet neighborhoods, boutique shops, and quaint restaurants. The Metro station openings at King Street and Braddock Road in 1983 encouraged commercial development near the two stations, while re-development along the waterfront, north of the historic district, proceeded simultaneously. Most of Old Towns office space was built between 1982 and 1993. These modern office buildings complement the townhouse-type commercial buildings that are the core of Old Towns personality. In addition to quick and easy access to I-95, the Capital Beltway, the George Washington Parkway, and two Metro stations, Old Town is less than two miles south of National Airport and four miles from downtown Washington. Old Towns convenience, appeal, and quality of life have attracted a variety of companies, particularly associations and non-profits. In fact, Alexandria is the nations fourth-largest center for trade and professional associations, surpassed only by the District of Columbia, New York, and Chicago.

The subject enjoys excellent local and regional access. The subject is located just east of the intersection of Huntington Avenue and Telegraph Road and southeast of the major highway intersection of Telegraph Road and Interstate 495. Direct vehicular access to the subject is by both Huntington Avenue and Kings Highway, which provide access to the Capital Beltway/I-495, I-395, I-95, and I-66, thus connecting the subject to the rest of Northern Virginia and the Washington metropolitan area. These road connections place the subject within a 20-minute drive or less of downtown Washington, Tysons Corner, the Pentagon, Crystal City, Washington Reagan National Airport, and Alexandrias Old Town historic district. In addition, the Huntington Metro station on the Yellow Line is immediately adjacent to the subject. The Huntington Metro Station is also served by 11 bus routes, including both Metro buses and Fairfax Connector buses. The subjects transit connections provide convenient access to the District of Columbia and Metro-served suburbs in Virginia and Maryland as well as Northern Virginias outer suburbs, such as Prince William, Stafford, and Spotsylvania Counties. The subject is close to a variety of support services and retail destinations. The subject is about two miles north of Beacon Center, which is on Richmond Highway at Southgate Drive, and 1.5 miles south of Alexandria Commons Shopping Center, which is at the corner of Duke Street and Yale Drive.

x Beacon Center is a 328,000 SF community shopping center anchored by Lowe's, Giant Food, Marshalls, Office Depot, and HomeGoods. This property, owned by Saul Centers, was built in 1973 and underwent a major renovation in 1993. It is currently 100% leased.

x Alexandria Commons Shopping Center is a 203,000 SF neighborhood shopping center that was built in 1990 and is anchored by Giant Food and Staples. This center is currently 92% leased.




Other nearby retail locations include Kings Crossing, a 149,000 SF neighborhood shopping center located at 6303 Richmond Highway for which Walmart is the primary tenant, and the many upscale boutiques, shops, and restaurants in Old Town Alexandrias shopping and entertainment district are about two miles to the northeast. Significant multifamily projects that were recently delivered in or near the Huntington area include:

x The Courts at Huntington Station, a 416-unit mid-rise rental apartment project, is located adjacent to the entrance to the Huntington Metro Station on Kings Highway just south of the subject. Home Properties built this project in two phases, which were completed in 2010 and 2011. Currently 94% occupied, this project has an average effective rent of $2,053 per month, or $2.07 per SF.

x The Beacon of Groveton is a 290-unit mid-rise rental apartment located at 6870 Richmond Highway, which was developed by Redbrick Development in conjunction with Wood Partners and CBRE Investors. This project was completed in 2012, and it is currently 68% leased. Effective rents average $1,765 per month, or $2.10 per SF.

x Midtown Alexandria Station is a 368-unit high-rise condo project located at 2451 Midtown Avenue, which is on the north side of Huntington Avenue just to the northeast of the subject. Developed by KSI, this project began sales in 2005 and construction was finished in 2007.

The subject is convenient to major employment concentrations. The subject is centrally located in the near suburbs and is convenient to Old Town Alexandria, Crystal City, the Rosslyn/Ballston Corridor, Fort Belvoir, and other Northern Virginia employment centers as well as downtown Washington. Hoffman Town Center and Carlyle are the largest employment centers in the subjects immediate vicinity.

x Hoffman Town Center is a mixed-use urban center adjacent to the Eisenhower Avenue Metro Station, which is on the Yellow Line one stop north of the Huntington Metro Station. Hoffman Town Center is planned for more than seven million SF of space, including 3.5 million SF of office space in 10 buildings, 1.5 million SF of residential in four buildings, two full-service hotels, 200,000 SF of retail, and a 22-screen movie theater. Today, there are four office buildings with about 1.3 million SF of space, in addition to the movie theater, a hotel, and 95,000 SF of retail. The primary office tenant is the U.S. Department of Defense, which occupies a 607,000 SF building. With one building vacated and under renovation and another having sat vacant for several years, the occupancy rate is currently low, but the National Science Foundation recently announced plans to move into a new 661,000 SF building in Hoffman Town Center in 2017, which should attract contractors and other tenants that do business with the NSF.

x Carlyle is a 77-acre mixed-use development just east of Hoffman Town Center and south of the King Street Metro Station in the southwest section of Old Town Alexandria. It lies partly in the Old Town Alexandria submarket and partly in the Eisenhower Avenue submarket. Carlyle has some 5.1 million SF of office space in 25 buildings, plus high-rise residential buildings, hotels, and retail space. Carlyles largest office users include the U.S. Patent & Trademark Office, which occupies 2.5 million SF of space, and the Albert V. Bryan U.S. Courthouse.

Overall the subject site has good potential to compete. The subject enjoys a good location in an established submarket just outside the Capital Beltway. Local and regional access to the site is excellent, particularly with a Metrorail station adjacent, and it is easily accessible to major employment concentrations. The variety of onsite and offsite retail, dining and entertainment, employment, and other support services will make it an attractive place to live, work, and shop.




S U M M A R Y O F K E Y F I N D I N G S A N D R E C O M M E N D A T I O N S We evaluated market potential for the proposed mixed-use project at the subject site. For the residential component, we evaluated market potential based on prototypical low-rise1 and high-rise2 rental apartment buildings and prototypical mid-rise3 and high-rise4 condominium buildings. (Note that this study addresses market-rate units only; affordable units are not part of the scope of work.) For the office use, we evaluated the market potential for the amount of space permitted by the Fairfax County Comprehensive Plan Amendment, after converting part of the maximum allowed office space to hotel and retail uses.5 For the retail component, we evaluated market potential and recommended a tenant mix plan for the estimated amount of space that could be accommodated on the ground floor of office and residential buildings that will face Huntington Avenue and Kings Highway. For the hotel, we recommended the optimum configuration for the market in which the subject will compete. Figure 1 presents a summary of the recommended development program. Our findings and recommendations for each product type are presented in the sections that follow.

F I G U R E 1 R E C O M M E N D E D D E V E L O P M E N T P R O G R A M S U M M A R Y

REPORT VOLUME PRODUCT TYPE

PROTOTYPE SCALE (UNITS/SF/ROOMS)

AVERAGE UNIT

SIZE (SF) II Low-rise Apartments 250 units * 862 II High-rise Apartments 300 units * 885 III Mid-rise Condominiums 75 units * 1,081 III High-rise 150 units * 942 IV Office 269,000 SF ** -- V Retail Space 50,000 SF -- VI Select Service Hotel 120 rooms --

* The number of units represents the prototypical building size for each residential product type, and it includes market-rate units only. This is not necessarily the maximum development allowed or feasible. ** The prototype office building has 269,000 SF of office space and 10,000 SF of ground floor retail space, for a total of 279,000 SF.

1 Defined as wood-frame construction with four to five floors of residential and structured parking. 2 Defined as concrete construction with nine or more floors of residential and structured parking. 3 Defined as wood-frame construction with five floors of residential and structured parking. 4 Defined as a concrete building with ten stories of residential and structured parking. 5 The Comprehensive Plan Amendment allows up to 625,000 SF of office use, and up to 125,000 SF of the office space can be converted to hotel use. Based on the recommended 120-room, 67,000 SF hotel, there will be 558,000 SF remaining for office use, which we assume will be built in two 279,000 SF buildings, each of which will have 10,000 SF of ground floor retail space, leaving a total of 538,000 SF of office space at the subject.




Apartments Our recommended unit mix and unit sizes for apartments at the subject, as well as our estimated effective rents in todays dollars, are shown in Figures 2 and 3 below.

F I G U R E 2 L O W - R I S E P R O T O T Y P E A P A R T M E N T B U I L D I N G

R E C O M M E N D E D U N I T M I X , U N I T S I Z E S , A N D R E N T S A S O F D E C E M B E R 2 0 1 3

UNIT MIX UNIT EFFECTIVE RENT

UNIT TYPE # % SIZE (SF) PER UNIT PER SF Efficiency 25 10.0% 575 $1,575 $2.74 1BR/1B 96 38.4% 775 $1,695 $2.19 1BR/1B/Den 24 9.6% 875 $1,895 $2.17 2BR/2B 100 40.0% 1,000 $2,125 $2.13 2BR/2B/Den 5 2.0% 1,125 $2,275 $2.02

Total/Average: 250 100.0% 862 $1,886 $2.19 Overall Average Including Premiums and Parking: $2,017 $2.34

* Market-rate units only.

F I G U R E 3 H I G H - R I S E P R O T O T Y P E A P A R T M E N T B U I L D I N G

D E L T A S R E C O M M E N D E D U N I T M I X , U N I T S I Z E S , A N D R E N T S A S O F D E C E M B E R 2 0 1 3

UNIT MIX UNIT EFFECTIVE RENT

UNIT TYPE # % SIZE (SF) PER UNIT PER SF Efficiency 45 15.0% 550 $1,815 $3.30 1BR/1B 105 35.0% 750 $2,025 $2.70 1BR/1B/Den 55 18.3% 900 $2,125 $2.36 2BR/2B 87 29.0% 1,175 $2,650 $2.26 2BR/2B/Den 8 2.7% 1,275 $2,800 $2.20

Total/Average: 300 100.0% 885 $2,214 $2.50 Overall Average Including Premiums and Parking: $2,426 $2.74

* Market-rate units only

We expect rents to be 2% to 4% lower in late 2016 than today as a large volume of new buildings leads to an oversupplied market. We expect the market to return to equilibrium conditions within five years. We estimate that prototype buildings at the subject can lease up at an average pace of 15 to 20 units per month.




Key findings and recommendations are shown in Volume II, Appendix A, Tables A-1, A-2, and A-3 for the low-rise apartments and Tables A-4, A-5, and A-6 for the high-rise apartments. Condominiums Our recommended unit mix and unit sizes for condominiums at the subject, as well as our estimated effective prices in todays dollars, are shown in Figures 4 and 5 below.

F I G U R E 4 H I G H - R I S E P R O T O T Y P E C O N D O M I N I U M B U I L D I N G

R E C O M M E N D E D U N I T M I X , U N I T S I Z E S , A N D P R I C E S A S O F D E C E M B E R 2 0 1 3

UNIT TYPE UNIT MIX UNIT EFFECTIVE PRICES

# % SIZE (SF) PER UNIT PER SF Studio 8 5.3% 625 $285,000 $456 1BR/1B+ 55 36.7% 750 $325,000 $433 1BR/1B+/Den 35 23.3% 950 $410,000 $432 2BR/2B+ 40 26.7% 1,125 $475,000 $422 2BR/2B+/Den 12 8.0% 1,400 $575,000 $411

Total/Average: 150 100.0% 942 $402,700 $427 Overall Average Including Premiums and Parking: $431,450 $458

F I G U R E 5 M I D - R I S E P R O T O T Y P E C O N D O M I N I U M B U I L D I N G

R E C O M M E N D E D U N I T M I X , U N I T S I Z E S , A N D P R I C E S A S O F D E C E M B E R 2 0 1 3

UNIT TYPE UNIT MIX UNIT EFFECTIVE PRICE

# % SIZE (SF) PER UNIT PER SF 1BR/1B+ 18 24.0% 775 $320,000 $413 1BR/1B+/Den 8 10.7% 975 $395,000 $405 2BR/2B+ 42 56.0% 1,175 $455,000 $387 2BR/2B+/Den 7 9.3% 1,425 $550,000 $386

Total/Average: 75 100.0% 1,081 $425,067 $393 Overall Average Including Premiums and Parking: $452,400 $419




We estimate that condo units in a high-rise/concrete building at the subject can sell at an average pace of three to four units per month and that units in a mid-rise/wood-frame building at the subject can sell at an average pace of three units per month. Price growth for condos in the subjects submarket is expected to outpace the metro area over the next three years, with increases of up to 6% per annum. Office We estimate that Class A office space at the subject site can achieve an average face rent of $38 to $40 per SF, full service, in todays dollars. We expect that rents will stay soft until after 2014 and that it will not be until 2016 when Northern Virginia experiences material gains in rent. Market-oriented tenant improvement allowances will be $40 to $60 per SF (in todays dollars), depending on the size of the tenant, length of the lease, and other concessions offered. In addition, we estimate a concession of three to four months free rent for most tenants and up to eight months free rent for large tenants. We estimate that a prototypical building with 269,000 SF of office space at the subject can reach stabilization within 31 to 41 months after completion, assuming that about 50% (134,500 SF) will be preleased before construction starts. The remaining office space will likely be leased at an average pace of 3,000 to 4,000 SF per month after the building is delivered. Key findings for the office space are shown in Volume IV on pages 2 and 3 of the letter as well as in Appendix A. Retail The scale of the 50,000 SF of retail that we recommend for the subject is supportable now and through 2018 for most types of convenience retail tenants, but not for a grocery store. We estimate that demand for restaurants and health and personal care store space exceeds current and projected supply in the subjects retail trade area. We recommend a retail tenant mix that includes a pharmacy as an anchor and a mix of convenience goods, personal/professional services, and eating places to fill most of the remaining space. For the typical spaces, we recommend primarily local-serving tenants including a specialty food store, a quick service restaurant, and convenience walk-away food such as pizza, a coffee shop/bakery, and an ice cream shop. Perhaps 50% to 60% of the space can be devoted to health and personal care goods and services such as a day spa, nail salon, vitamin/nutrition store, optician, and medical/dental offices. See Figure 6 on the following page for a complete list of recommended tenants.




F I G U R E 6 I L L U S T R A T I V E R E C O M M E N D E D R E T A I L T E N A N T P L A N

F O R T H E S U B J E C T S I T E

# OF STORES TYPE

ESTIMATED STORE SIZE (SF)

TOTAL ESTIMATED SQUARE FEET

1 Mini-Anchor (Pharmacy) 10,000 - 12,000 10,000 - 12,000 1 Specialty Food Store 1,500 - 3,000 1,500 - 3,000 1 Liquor / Beer / Wine 3,000 - 3,500 3,000 - 3,500 1 Coffee / Bakery 1,250 - 1,500 1,250 - 1,500 1 Ice Cream Shop 1,250 - 1,750 1,250 - 1,750 1 Pizza 1,250 - 1,750 1,250 - 1,750 1 Quick Service Restaurant 1,750 - 2,250 1,750 - 2,250 1 Bank (drive-in) 3,000 - 3,500 3,000 - 3,500 1 Day Spa 3,000 - 4,000 3,000 - 4,000 2 Hair / Nail Salon 1,500 - 2,000 3,000 - 4,000 1 Mailing / Photocopy Service 1,750 - 2,000 1,750 - 2,000 1 Dentist's Office 1,250 - 1,750 1,250 - 1,750 1 Doctor's Office 2,500 - 3,000 2,500 - 3,000 1 Chiropractor's Office 1,500 - 2,000 1,500 - 2,000 1 Insurance 1,250 - 1,500 1,250 - 1,500

1 Realtor 1,500 - 1,750 1,500 - 1,750 1 Dry Cleaners 1,250 - 1,500 1,250 - 1,500 1 Optician 1,250 - 1,750 1,250 - 1,750 1 Telephone Store/Telecom Store 1,500 - 2,000 1,500 - 2,000 1 Vitamins / Health Food / Nutrition 1,500 - 2,000 1,500 - 2,000 1 Pet Store 2,500 - 3,000 2,500 - 3,000

23 Total: 46,750 - 59,500

We estimate that the subject can achieve average face rents of $28 to $30 per SF triple net for typical retail tenants, in todays dollars, with a tenant improvements package of $35 to $40 per SF and three to four months of free rent. Retail rents are expected to gather further momentum over the next year, with asking rent growth predicted to be 2% to 3% in 2014 and perhaps 3% annually in the longer term. We estimate that retail space on the ground floors of the office and residential buildings planned for the subject site can be leased soon after completion of each building, particularly once several buildings are occupied. Key findings and recommendations for the retail space are shown in Volume V on pages 2 and 3 of the letter and in Appendix A.




Hotel We recommend a hotel development program with a 120-room select service hotel. Examples of select service hotel brands include Courtyard by Marriott, Cambria Suites, Hilton Garden Inn, Hyatt Place, and others. We recommend the following room configuration:

F I G U R E 4 S E L E C T S E R V I C E H O T E L A T T H E S U B J E C T S I T E R E C O M M E N D E D C O N F I G U R A T I O N O F R O O M S

ROOM TYPE ROOM MIX # %

King 65 54% Double Queen 49 41% Double Queen Suite 2 2% King Suite 4 3% Total 120 100%

Occupancy for a select service hotel at the subject site is expected to stabilize at 71% by 2023 if delivered in early 2020. We project an average daily rate, at revenue stabilization in 2023, of $120 (in 2013 dollars). Please note that this represents the estimated average daily rate, not the rack rate, which will be substantially higher. This rate reflects a base rack rate of approximately $152 in 2013 dollars. Key findings and recommendations for the hotel are shown in Volume VI, Appendix A, Table A-1.

* * * * *




It has been a pleasure undertaking this assignment for you. Respectfully submitted, DELTA ASSOCIATES

David Weisel, CRE President, Consulting

David W. Parham Senior Vice President and Project Director

Grant Montgomery Senior Vice President

William Rich Senior Vice President

Justin Donaldson Associate

Cassidy McCormick Senior Associate

Rachelle Sarmiento Associate

Michelle La Motte Senior Consultant



N O T I C E Delta Associates (DA) considers that it is essential to the reader's examination of this document, and projections contained herein, to understand the use of data, the methodology involved, the role of judgments as distinct from calculations in the methodology, factors which affect current projections, and the impact, if any, of change over time. The purpose of market, economic and financial projections, together with the basis for the projections, is to make available a considered opinion on potential economic returns from the project so that those who utilize these results can evaluate them in terms of methodology employed, data applied as well as judgments made and identified. All prospective data are subject to uncertainties. As actual market and economic factors affecting the project materialize, they may differ somewhat from the basis projected herein. Unforeseen changes in laws may also affect real estate market performance and value. Accordingly, although the projections in this report are those one would reasonably expect to occur given the conditions existing at the time of this writing, actual market and financial results may differ from the projections. Similarly, projections herein have been prepared utilizing the information, assumptions and calculations outlined in this report. Select information utilized in the projection process is on occasion from sources other than DA; where such information is from published sources, DA has identified the source and assumed such information to be accurate as presented. Where such information is from unpublished sources, DA has reviewed the information for reasonableness and consistency before including same herein. No representations are made by DA as regards property ownership, size, zoning conformance, occupancy and lease terms, availability of utilities, soil conditions, flood hazard, environmental problems, or any other matters. All such property specific data has been supplied to DA by the property owner and/or its agents and DA has assumed this data to be accurate as provided. DA's principal business activity is the evaluation of real estate development economics, including the analysis of market potentials, evaluation of projected operating and financial results, and valuations. In the course of each year the firm typically performs more than a hundred assignments for building and development organizations, financial institutions, property owners and the like. The firm considers that it is "expert" in this field, and it is DA's belief that the methodology and other procedures employed by it constitute valid and accepted methods of evaluating and valuing real estate. However, it is pointed out that procedures used herein rely on judgments dependent on the accuracy of data and influenced by external circumstances which can change quickly with time and substantially affect the project and hence its value. DA recommends that its clients recognize these limitations inherent in using the projections of this report when making business decisions. Finally, the reader is hereby advised that Delta Associates is the trade name of Transwestern Delta Associates L.L.C., a Delaware limited liability company. As such, DA is part of the Transwestern (TW) family of real estate service companies that broker, finance, manage, advise, and develop real estate throughout the United States. This disclosure is made so as to (1) avoid the appearance of a conflict and (2) to assure the client of confidentiality and impartiality. Delta Associates is independently operated by its principals and separately officed in Old Town Alexandria. In no way does Delta Associates TW affiliation affect the judgments expressed herein.


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Documents

Huntington Club redevelopment RFP