Marriott International Inc. will likely need to lease just one site in downtown Bethesda to handle the relocation of its global corporate office, a high-ranking company official said Tuesday.
“We are looking at a 700,000-square-foot building. We think we can get it all done in one site,” said Carolyn Handlon, Marriott’s executive vice president of finance and global treasurer.
The company announced Tuesday morning it will relocate its headquarters from Fernwood Road in Bethesda to a downtown site where it planned to occupy a 700,000-square-foot office building that was built to suit as well as build a 200-room hotel.
Maryland and Montgomery County partnered to provide Marriott with $44 million to keep the $17 billion company’s headquarters in Bethesda—with half of the funds coming from the state’s economic development funds and the other half from the county’s economic fund. The state legislature and Montgomery County Council still must approve the incentive packages.
Marriott’s new building is expected to cost $600 million to build, and the company hopes to have a final decision on a site by the first half of 2017, Handlon said.
County Executive Ike Leggett said in an interview with Bethesda Beat Tuesday that the incentives were provided to the company as part of the negotiation process. He said officials weighed how much the company meant to the local tax base as well as what precedent would be set by providing the company with the money.
“Marriott annually will provide $90 million per year in net state and county income taxes,” Leggett said. He said the headquarters’ construction will also create about 3,000 jobs.
“I had the determination from my personal perspective that we could not afford to lose a company that has been in Montgomery County for 60 years, with an international brand and reputation,” Leggett said. “The incentive package, which I think is reasonable, was somewhat secondary to that.”
Leggett said the downtown headquarters will help the office market in Bethesda as well as provide a “shot in the arm” to retailers and restaurants in the area. He also thanked Gov. Larry Hogan and the governor’s staff for helping to negotiate the deal.
According to local real estate sources, properties under consideration by Marriott could include The Bernstein Companies’ proposed hotel and office building project on the site of the Connor Building in Woodmont Triangle, Carr Properties’ Apex Building project on Wisconsin Avenue at the future site of the Bethesda Purple Line station and a Bainbridge property at the site of the former Exxon gas station on Wisconsin Avenue. Brookfield’s Metro Plaza building proposal may also be a potential pick for Marriott.
The Bernstein property may be attractive to Marriott because the development plan includes a 12-story, 240-room Westin Hotel. Marriott recently acquired the Westin brand in its merger with Starwood Hotels & Resorts. However, the plan only calls for an 11-story, 238,000-square-foot office building that would be much smaller than the 700,000-square-foot space that Marriott is seeking. The site is about a quarter mile from the Bethesda Metro station, which would likely satisfy Marriott’s request for a transit-accessible site.
Bernstein is planning to include a Westin Hotel and an office building in its project to redevleop the Connor Building site. Photo via Bernstein’s website
The Carr Properties’ proposal for the Apex Building site would also meet the transit requirement—the existing building is positioned above the location of a planned station for the light-rail Purple Line and the county is constructing additional elevators nearby to connect directly with the Metro station. The Carr proposal calls for three buildings that range in height from 250 to 290 feet and could include around 900,000 square feet of space. The Carr project is also moving quickly through the Planning Board approval process, with the developer planning to demolish the Apex Building by the spring.
The Carr project at the Apex Building on Wisconsin Avenue calls for three new buildings totaling 900,000 square feet–the project could potentially fit Marriott’s request for 700,000 square feet of office space and a new hotel with access to both the Purple Line and Red Line. Photo via Montgomery County Planning Board.
Bainbridge previously pursued board approval of a 14-story, 225-unit apartment building at the Exxon site. But the company stopped moving forward with that plan and shifted to pursuing more density for the project under the Bethesda Downtown Plan, a land-use guide currently under review by the Montgomery County Council. Sources say Bainbridge may be able to assemble a site that is large enough to accommodate Marriott’s requirements by combining its property with an adjacent property owned by Douglas Development.
Brookfield’s Metro plaza building proposal has not begun moving through the planning board approval process because the developer is still waiting to see whether the property would be rezoned for more density under the downtown plan. The company has said it would like to construct a building up to 290 feet tall on the plaza. The planning board has given tentative approval to Brookfield’s request to change the site’s zoning to allow for the proposed building. Situated directly above the Bethesda Metro station, the proposed building would also satisfy Marriott’s requirement for an urban, transit-oriented site.
Sources who spoke with Bethesda Beat about possible sites for Marriott declined to be identified due to ongoing negotiations with the company. However, others said that whichever site Marriott selects will be good news for downtown Bethesda.
Bill Montrose, a principal at Bethesda-based AMR Commercial, a real estate brokerage, said Marriott’s decision to relocate downtown will help local businesses and apartment buildings.
“Initially I thought it was great news for all the new apartment buildings,” Montrose said. “But it also means about 4,000 more people using goods, restaurants and services in downtown Bethesda. It will help all of the business owners downtown and it will even help other hotels downtown. It’s really going to be great for Bethesda. I see no downside other than, of course, the construction phase, which is something we’ll have to live with in the short term.”
Montrose said the company’s move downtown also will likely help drive an increase in office rents, which he said have remained flat for the past couple of years.
Ginanne Italiano, president of the Greater Bethesda Chamber of Commerce, said she personally thanked County Executive Ike Leggett for his work to retain the company in Bethesda.
“This is going to be a big boon for downtown businesses and throughout the greater Bethesda area,” Italiano said. “It’s going to be wonderful to have more than 3,000 employees moving and having their offices located downtown.”
She said the location of the company’s new headquarters isn’t as important as the fact Marriott has chosen to remain in Bethesda.
“This going to put Bethesda more on the map,” Italiano said. “When you look at the Bethesda skyline and see that Marriott name, you’ll know they’re here and their employees are here.”