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Since the development of the East End of Washington, D.C., began in earnest in the mid-1980s, commercial real estate and legal industry professionals have been keeping a close eye on the migration of law firms to this area from the more traditional business districts west of 15th Street. In recent years, the movement of firms to the East End � the area bounded on the west by 15th Street, N.W., on the east by 7th Street, N.W., on the north by M Street, and on the south by Pennsylvania Avenue � has gathered steam. Today, more than half of Washington’s top 100 law firms are located east of 15th Street. What was once a market whose major asset was the ability to provide larger buildings for the city’s biggest firms is now an area that offers even more for the firms. As far back as 1985, as large parcels of land west of 15th Street became scarce, commercial developers sought opportunities in the East End around Metro Center. Metro Center then became the first major submarket to thrive in D.C.’s eastern expansion. As D.C.’s largest law firms experienced explosive growth toward the end of the 1980s, they sought buildings with larger floor space (at least 30,000 square feet), in larger buildings that could accommodate their long-term growth. In addition, these new buildings offered floors with fewer columns, which made their design easier and more efficient, and modern heating and cooling systems. The office market west of 15th Street had been substantially developed with mostly smaller, less efficient buildings. In many cases, their building systems had become functionally obsolete to larger law firms which require extended hours of operation. With the development of major projects around Metro Center like Columbia Square (at 13th and F streets, N.W.), 1100 New York Ave., and the Homer Building (13th and G streets, N.W.) in the late 1980s and early 1990s, the East End was becoming a credible office market. And with the relocation to this area of such high-profile firms as Hogan & Hartson and Williams & Connolly, Metro Center became the first legitimate law firm center in the East End. The success of the redevelopment of this area became a catalyst for the redevelopment of another East End submarket just north of Metro Center, surrounding Franklin Square. Several prominent law firms, led by the relocation of Finnegan, Henderson, Farabow, Garrett & Dunner from 18th and K streets, N.W., to 13th and I streets, N.W., took up residence in the new first-class buildings developed around Franklin Square’s five-acre park. As a result, several additional sites were developed at both Metro Center and Franklin Square, leading to an influx of other top-tier law firms to the East End. Perhaps the most significant event, after the initial rush, was the 1995 relocation to 555 12th St., N.W., by Arnold & Porter, a firm that had been virtually an institution in Washington’s traditional business district. The numbers show the trend: The 1994 Washington Business Journal list of the top 50 law firms in the metropolitan area (49 firms in D.C. and one now defunct) lists 19 firms (40 percent) in the East End and 29 firms (60 percent) west of 15th Street. By 2004, a Washington Business Journal list of the top 100 law firms in the metropolitan area (86 of them in D.C.) shows 44 firms (51 percent) in the East End and 42 firms (49 percent) west of 15th Street. Of the top 50 law firms in the same 2004 survey (all 50 are in D.C.), half are in the East End, and half west of 15th Street. The growth of the law firm community in the East End is mirrored by the increase in the office space inventory � the total amount of existing office space � in these two markets. In 1994, the East End had an office space inventory of 30.2 million square feet, while the central business district had an office space inventory of 36.6 million square feet. Today, the total inventories of each market are much closer: The East End has 37.7 million square feet, and the CBD has 39.3 million square feet. BUT WILL THEY STAY? Despite finally gaining the edge in law firms, the East End’s long-term viability will ultimately be determined by its ability to retain the firms. With the lease expirations over the past few years of many of the initial East End law firms, we can now get an indication of the future. It appears the East End has passed this initial test: Only three of the law firms listed on the Washington Business Journal 2004 top 100 returned to offices west of 15th Street. O’Melveny & Myers relocated from 555 13th St., N.W., to 1625 I St., N.W., in 2004, and Chadbourne & Park relocated from 1101 Vermont Ave., N.W., to 1200 New Hampshire Ave., N.W., near 21st Street. Pillsbury Madison & Sutro gave up their offices at 1100 New York Ave., N.W., to move in with Winthrop, Stimpson, Putnam & Roberts at 1133 Connecticut Ave., N.W., after the two firms merged. Perhaps even more telling is that 12 of the top 100 have relocated since their initial move east into other buildings in the East End. These firms include Finnegan, Henderson (1300 I St., N.W., to 901 New York Ave., N.W.), Latham & Watkins (1001 Pennsylvania Ave., N.W., to 555 11th St., N.W.) and Venable (1201 New York Ave., N.W., to 575 7th St., N.W.). Although Metro Center and Franklin Square are now established office submarkets, when the first law firms took root there, these areas lacked the amenities and infrastructure prevalent west of 15th Street. Hotels, restaurants, residences, and entertainment venues were scarce. Although they were vibrant during the business week, the neighborhoods were dormant after the office workers went home. As a commercial real estate consultant specializing in representing law firms in the District, I discuss the pros and cons of the East End and competing markets on a regular basis. In speaking with attorneys over many years, I have noticed that there was clearly a reluctance to leave the confines of the K Street corridor where they had been for decades. However, over the past five years those attitudes have changed dramatically. Following the 1990-92 real estate downturn that brought a halt to new office development, Abe Pollin � then the majority owner of both the Washington Wizards and the Washington Capitals � announced that he would construct an arena at 7th and F streets, N.W., to host Washington’s professional basketball and hockey teams. Although it was widely thought that the presence of a major sports arena (now named the MCI Center) would reinvigorate a blighted area of the city, few predicted it would propel the stature of the East End to such a degree. FASHIONABLE AREA Even before the opening tip had occurred at the Wizards’ first home game, both office and residential developers began clamoring for sites, transforming the area into arguably the hottest office and residential center in the city. After the predictable influx of retailers to the area immediately surrounding the arena, the opening of the MCI Center also presented the opportunity for developers to expand the East End by building offices and condos in the previously undesirable sites between 11th and 7th streets, N.W. As a result, 7th Street has become one of the most fashionable areas to live and dine in the city, and office rents for new buildings routinely approach $60 per square foot. In fact, most of the office buildings are substantially leased before they open. Law firms that have recently relocated, or have signed leases to relocate, to this area (now commonly called Penn Quarter) include Venable, DLA Piper Rudnick Gray Cary, Dewey Ballantine, Alston & Bird, and Nixon Peabody. Any one of these firms could have picked buildings west of 15th Street, but the opportunity to relocate to a true 24-hour neighborhood where there is as much bustle after hours as from 9 to 5 was surely a factor in their decisions. Another factor in a law firm’s decision to move east may come from the leadership change that typically happens in a firm over 10 or 15 years. Many of today’s law firm leaders are part of the generation of attorneys already familiar with the entertainment, dining, and living options of the East End. In contrast, the law firm decision-makers of the 1980s worked in a city where these opportunities almost exclusively existed west of 15th Street. During the initial growth of the MCI Center area in particular, I would show clients around and almost always get the same “wow” reaction to the amount of construction and overall change occurring there. However, most everyone did not have any firsthand experiences there, and a move seemed speculative. Now when I take clients through the same neighborhood, they almost always comment on their experiences with restaurants, hotels, or theaters, or talk about a particular event they attended at the MCI Center. ONE FIRM VOTES The change in attitude came through at one top 100 law firm we represented from 1999 to 2000. The firm had to decide between a new building at 19th and M Streets or a new one in Penn Quarter. The vote was almost evenly divided between those who preferred the prospects of pioneering to an up-and-coming area versus those who preferred the more established confines of the central business district. The prevailing side (those who voted for the Penn Quarter building) had more partners who were likely to be at the firm throughout the duration of the lease, and were responsible for the long-term growth of the firm. It is important to realize that the Penn Quarter location was not the less expensive alternative, but the majority of the partners weighed cost against overall office environment and firm culture in making the decision. The success of East End submarkets such as Penn Quarter is already fueling further expansion north and east. Over the next three years, three first-class office buildings (1101 New York Ave., N.W., 1099 New York Ave., N.W., and 1101 K St., N.W.) are scheduled to join 901 New York Ave., N.W., in a new area developing between the new and old convention centers. Several major law firms, including Finnegan, Henderson, have already relocated or committed to this area. Of course, the area west of 15th Street is still a vibrant and desirable office market for law firms. Some of the most prestigious new developments, such as 1700 K St., N.W., still occur there. In fact, our clients believe that the city has evolved into one single downtown business district. As a result, the resistance to moving to the East End that existed 10 or 15 years ago has clearly abated. Richard Lane is a principal with West, Lane & Schlager Realty Advisors-ONCOR International and specializes in representing D.C. law firms. He can be reached at [email protected].

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