Citing confidentiality agreements, W. Matthew Kelly, CEO of the Washington, D.C.-focused landlord and developer, declined to comment in detail about the company's "interactions" of late with the two tech giants, but did offer a few broad remarks about the ongoing process.
"All we know is, we expect that there will be a selection, of some kind, in the next — who knows? It could be tomorrow. It could be two months from now. And we think we're well-positioned to be on that short list," he said. "But again, we don't know."
North Carolina's Research Triangle is also rumored to be near the top of both Amazon's and Apple's lists of potential locations.
"Our buildings do have the potential to satisfy the entirety of either requirement," Kelly said. "It might be a challenge to do both, if we could be so lucky."
Whether or not it secures a deal, JBG SMITH will come out a "winner" from the headquarters search process, Kelly said, insofar as the company's long-term growth plans for Northern Virginia's Crystal City submarket have advanced significantly. The city's political leadership has prioritized its metro system and other public infrastructure as the companies have considered expanding there. Other prospective tenants have expressed interest in the same assets Amazon is said to have explored.
"It will take time to translate that into actual leases, and actual income and rent, but that's been hugely positive," Kelly said. "We think that will only grow, if and when we make it to the shortlist. And it wouldn't surprise us that, even if our city is the loser in all of this, that there will be other tenants that follow in behind in Amazon's wake and take advantage of the process they ran."
In a pre-conference interview, Nathan Edwards, regional director for Mid-Atlantic and Southeast research at Cushman & Wakefield, said Washington, D.C., has a history of attracting and winning similar market-defining transactions, and he put JBG SMITH among its "best-in-class" office owner-operators. He described Washington, D.C., as a tenant's market overall today, but said space options for prospective tenants with large requirements are very limited.
Edwards noted that Amazon's cloud service, Amazon Web Services Inc., has a large data-center presence in Washington, D.C., and last year signed a long-term lease for an entire 400,000-square-foot "solid class A" office building in the Herndon submarket in Northern Virginia. Originally Amazon had only wanted half that square footage, but went ahead and leased the entire building to accommodate future expansion, he said.
"It's a great story for the market, it's what we love to see," Edwards said. "These tech companies that are in high-growth mode continue to lead the way, in terms of demand and growth moving forward in the market [where] a lot of the tenants have been moving the other way — shrinking — as they've transacted leases."
Edwards compared Crystal City favorably to North Carolina's Research Triangle, with the former's proximity to the nation's capital, vast prospective work force and urban quality-of-life offerings.
"It's just the potential to really create something of their own, in what is a quasi-urban environment already," he said. "They have enough development potential ready — already approved and ready to go there — to accommodate their immediate need ... as well as their potential final build-out."
