JBG SMITH announced that it has executed three leases and two Purchase and Sale Agreements with affiliates of Amazon.com, Inc. in conjunction with the creation of Amazon’s HQ2 at National Landing in Northern Virginia.
These agreements are the result of Amazon’s announcement in November 2018 that it had selected JBG SMITH as its partner to house and develop its HQ2 locations after a comprehensive, year-long search that included proposals from 238 cities across North America.
Amazon has executed three initial leases totaling 537,000 square feet at three existing JBG SMITH office buildings in National Landing. The leases encompass 88,000 square feet at 241 18th Street South, 191,000 square feet at 1800 South Bell Street, and 258,000 square feet at 1770 Crystal Drive. JBG SMITH expects Amazon to begin moving into 241 18th Street South and 1800 South Bell in 2019, and 1770 Crystal Drive by the end of 2020.
JBG SMITH and Amazon have also executed Purchase and Sale Agreements for two of JBG SMITH’s National Landing development sites, Pen Place and Met 6, 7, and 8, which will serve as the initial phase of new construction associated with Amazon’s HQ2. Subject to customary closing conditions, Amazon will pay $294 million for the sites, or $72 per square foot based on their combined development potential of 4.1 million square feet. JBG SMITH, which has flexibility on the timing of closing to facilitate 1031 exchange opportunities, expects to close on the Mets land sales as early as 2019 and on Pen Place as early as 2020. JBG SMITH will also serve as Amazon’s developer, property manager, and retail leasing agent for these assets.
“We are pleased to report that our partnership with Amazon at National Landing is moving full steam ahead,”
“We are pleased to report that our partnership with Amazon at National Landing is moving full steam ahead,” said JBG SMITH CEO, Matt Kelly. “With the execution of these agreements and recently legislated state and local government commitments to invest approximately $2 billion in the region’s transportation, education and housing infrastructure, we are ready to welcome Amazon’s first National Landing employees in the coming months.”
In January 2019, the Virginia General Assembly overwhelmingly approved incentive legislation associated with HQ2 to fund $195 million toward critical infrastructure improvements, including second entrances to the Crystal City and to-be-constructed Potomac Yard Metro stations, a pedestrian connection linking National Landing to Reagan National Airport, an expanded VRE station and substantial improvements to Route 1. These investments are in addition to $570 million of regional government commitments for transportation infrastructure and transit improvements, and they follow the regional compact from mid-2018 to invest $500 million annually in Metro system improvements.
In March 2019, the Arlington County Board also unanimously approved a $23 million performance agreement with Amazon. Both packages provide post-performance incentives for Amazon to create up to 37,850 jobs with an average annual salary of $150,000 and occupy at least six million square feet of office space in Arlington County.
The General Assembly also recently approved a major education investment package that includes funding of $250 million toward Virginia Tech’s planned $1 billion Innovation Campus to be located in National Landing and $125 million planned for new Master’s degree programs in computer science and related fields at George Mason’s Arlington campus.
In addition, the County of Arlington, the City of Alexandria and the Commonwealth of Virginia have collectively dedicated $225 million to fund a range of low-income and workforce housing initiatives over the next decade.
JBG SMITH and National Landing
National Landing is the newly defined interconnected and walkable neighborhood that encompasses Crystal City, the eastern portion of Pentagon City and the northern portion of Potomac Yard. Situated across the Potomac River from Washington, DC, National Landing is a well-located urban community known for its adjacency to Reagan National Airport and walkable environment featuring offices, apartments and hotels. JBG SMITH currently owns 6.2 million square feet of existing office space, 2,850 units of existing multifamily space, and controls 6.9 million square feet of additional development opportunities in National Landing, excluding Amazon’s land purchase.
In addition to the Amazon project, JBG SMITH has broken ground on Central District Retail, a 109,000 net rentable square foot entertainment and shopping destination that will serve as the retail heart of National Landing. JBG SMITH also expects to start construction on 1900 Crystal Drive next year, currently in design for two residential towers with shops and green spaces at the base. The retail components of these two projects are expected to deliver almost 150,000 square feet of street-level retail featuring an Alamo Drafthouse Cinema, specialty grocer, restaurants, bars, and other experiential offerings. Although the base case for the 1900 Crystal Drive development assumes multifamily construction, the project could switch to office in the event of a substantial or full building pre-lease.
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