Why Marriott Stayed | Page 3 of 7

Why Marriott Stayed

An inside account of the hotel giant’s decision to relocate its headquarters to downtown Bethesda, rather than move away

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Marriott employee Courtney Stokke (right) lives in downtown Bethesda and is looking forward to being able to walk to her company’s new offices. Stokke is pictured with her co-worker Kelly Smith. Photo by Michael Ventura.

 

The parties reached agreement in July 2016 that Marriott would stay in Montgomery County. But the decision on where to relocate the headquarters remained.

Marriott had hired Wells + Associates, a transportation consultant, to help determine the best location in Montgomery County for the headquarters building. Wells’ traffic and commuting analysis, done in June 2016, focused on five sites—Pike & Rose and White Flint on Rockville Pike, and three sites in downtown Bethesda, two a block or two south of the Metro station (at the intersection of Wisconsin Avenue and Old Georgetown Road) and one 800 feet north of it.

Carr Properties was proactive, offering its 2.69-acre tract at Wisconsin Avenue and Elm Street, known as the Apex site. But there were potential problems with traffic circulation. Another site along Montgomery Avenue, west of Wisconsin, was also rejected.

That left a 2-acre tract that The Bernstein Companies, a regional developer, had been assembling in Woodmont Triangle, between Woodmont and Wisconsin avenues. The site was two blocks north of Metro. And not having to deal with the intersection of Wisconsin and Old Georgetown Road could save drivers three or four minutes during rush hour, the consultants determined.

The site consisted of five parcels that Bernstein, an 80-year-old Georgetown-based real estate company, had begun acquiring in the mid-1980s, when it purchased the Bethesdan Motor Hotel for $3 million from The Church of Jesus Christ of Latter-day Saints, which had operated it for Mormons traveling to the nation’s capital area.

“We thought we would develop it in five or 10 years,” says Greg Rooney, Bernstein’s vice president of development. “Instead, it has taken 30.”

Bernstein was interested in talking to Marriott, but there had been a hitch. The developer had a franchise agreement with Westin Hotels to build a hotel on the property—and Westin was part of the Starwood Hotels & Resorts chain, a Marriott competitor. That dynamic changed when Marriott announced in November 2015 that it intended to purchase Starwood.

“Had that never happened,” Bernstein would have been out of the running, says company President Adam Bernstein. Rooney says they learned about the planned acquisition “through the news. …Sure, there was a sense of relief. There was a constellation of stars that needed to align. This was one of them.”

Bernstein made its first pitch to Marriott on April 21, 2016. On June 6, Bernstein told Marriott that it was partnering with Boston Properties—one of the country’s largest developers, owners and managers of Class A office buildings. That gave Bernstein, a largely regional developer, the credibility it needed to boost its case.

But there was one other issue. To complete the assemblage, Bernstein had to acquire the old Blackwell office building at the corner of Norfolk and Wisconsin avenues, and its owner wasn’t selling. Adam Bernstein says he told a consultant representing Blackwell, “This is it. I’m going to be as transparent as I can. Next Wednesday we have to submit. If we don’t have Blackwell under option, we’re going to get booted out of the competition. He will never get as much money for this.” Blackwell finally accepted Bernstein’s offer of $6.5 million. By now, it was September, and Bernstein’s final pitch went on as planned.

The plan Bernstein presented called for the demolition of the Blackwell Building, the Connor Building, the building that housed Tako Grill, and the Bethesda Court Hotel (formerly the Bethesdan). A surface parking lot that Woodmont Grill leased for its customers would also be incorporated into the development.

The project would be built without two parcels, however. The iconic Tastee Diner and Woodmont Grill (formerly Houston’s), a favorite weekend dining spot for Bill Marriott and his wife, Donna, would remain. “We’d love to have that real estate to make this a square site,” Young says. But Bernstein’s meeting with Tastee owner Gene Wilkes went for naught. Nor were the owners of Woodmont Grill, the Hillstone Restaurant Group, receptive to what W. Glenn Viers, its vice president and general counsel, called a “lowball offer.”

“They’re very fine people,” Viers says. “We just couldn’t figure out a way to make the economics work for both of us.”

Finally, in January 2017, Marriott announced its site selection and the developer. Bernstein, with Boston Properties, would build and own a $600 million complex consisting of a 21-story, 785,000-square-foot tower and a 200,000-square-foot, 244-room hotel next door. Between the buildings would be a landscaped walkway. Underground, there would be five levels of parking for employees and hotel guests.

At the end of the negotiations between Marriott, the county and the state, some 30 people came together at the Bethesda  Marriott on Pooks Hill Road for a celebratory luncheon. Sorenson and Leggett were there, of course, as was Firestine; he had designed a baseball cap emblazoned with three M’s—for Maryland, Montgomery and Marriott—that was given as a souvenir. There were a lot of toasts, but no champagne or wine, just coffee.

“As the old saying goes, success has 1,000 fathers and failure is an orphan,” says Buchanan, the county’s economic development corporation chairman. “Well, there were a lot of happy people at this event.”

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