Gramercy District a Game Changer

Rendering of the Gramercy project.

Rendering of the Gramercy District project.

by James A. Bacon

Northern Virginia technologist and developer Minh Le is partnering with Microsoft Inc. to build Gramercy District, a $500 million “smart city” development adjacent to the planned Ashburn Metro station on the Silver Line, reports the Washington Business Journal. Not only will Microsoft contribute technology it will participate as an investor. (Details on Microsoft’s exact involvement are sketchy.)

“We believe that technology is going to be a major force and driver in the way people live, the way people learn, the way people socialize,” says Le, a former managing director with Accenture who has delved into predictive data analytics, big data management and software development. “What we’re looking to do is build the next great tech real estate company.”

The WBJ describes the vision:

Key to the project is the marriage of real estate and technology, Le said. Gramercy District will be a “smart city,” baking technology into every aspect of the project, from the building systems to the parking to the retail to the Internet of Things — essentially device-to-device communication. The development will be ideal for tech companies and startups, he said, as the IT systems will be in place before the first building even comes online.

Gramercy District, to be built on 16 acres, ultimately will comprise 2.5 million square feet of development. The property fronts the Dulles Greenway and is adjacent to the Ashburn Metro station, which is scheduled to open in 2018/2019. Le’s company, 22 Capital Partners, is billing the project as the Loudoun County gateway, connecting all major employment centers by Metrorail, international businesses via Dulles Airport, and visitors and tourists to Loudoun’ s wineries,farms, and equestrian events.

The site is zoned for high-density, mixed-use, transit-oriented development. The project is expected to unfold over multiple phases. The first calls for a 268-unit, seven-story luxury apartment building, 26,000 square feet of retail, rooftop amenities and structured parking. A second phase calls for more mid-rise residential as well as retail and a high-tech business center.

Bacon’s bottom line: All I can say is, “About time!” The rest of the world is barreling ahead with smart city initiatives, leaving Virginia in the dust. That’s no surprise for Richmond, Norfolk, Roanoke and other downstate metros but quite a disappointment for tech-savvy Northern Virginia. If smart cities would take root anywhere in the state, one would expect it to be in NoVa. Sadly, while NoVa’s IT industry is tech savvy, its skill sets do not appear to have migrated to the real estate community.

But it always takes someone to be first, and from the brief description I have of him, Le seems to be the logical candidate. He has a strong IT background and he obviously sees an opportunity to embed technology into a real estate development in a way that no one else in Virginia, or even the Mid-Atlantic, has done before. What’s especially interesting about the Gramercy project is that it is driven entirely by the private sector. Most smart city initiatives in Europe are government backed, as is the smart city thrust in Dubai. The only global analogue I can think of is the high-tech Sangdo business district built from scratch on the outskirts of Seoul, Korea. If Le can create a replicable business model, Gramercy is potentially a very big deal. It could be the most transformative event in real estate since the invention of the skyscraper.

What “smart city” technologies would apply? The WBJ article mentions parking — presumably, this would be dynamically priced parking designed to limit and optimize the space dedicated to parking spaces. The article also mentions building systems — that would be primarily things like energy management (HVAC and lighting), water management, security and employee access. Also mentioned is the Internet of Things. That is an exceedingly broad and vague category, but it conceivably could include such things as measuring traffic loads on Gramercy District streets to coordinate with stop lights, parking and mass transit.

It is highly encouraging that Le will be applying the “smart city” technologies in a “smart growth” district of mid-rise, mixed-use buildings with Metro access. I will be especially keen to see if he develops a “mobility as a service” application like the projects being pioneered in California that, as a substitute for car ownership, would provide subscribers access to an array of transportation options from Metro rail, commuter buses, vans, Uber-like ride-hailing services, and automobile rentals. That, I believe, is the future of transportation and a far more likely savior of Northern Virginia from its traffic congestion headaches than anything the state has planned.

I may be reading too much into a single news article, but I feel safe in predicting that Gramercy will be the most significant real estate project in Virginia announced this year, if not this decade… if not so far in the 21st century.

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22 responses to “Gramercy District a Game Changer

  1. The place to do this is at a Metro station. Hopefully, the risk takers are the private parties and not the public. If so, more power to them.

  2. Where are all the critics of the Metro extension today?

    One thing for sure – the DMV (District, Maryland’s DC suburbs, Virginia’s DC suburbs) appears to be booming. It’s hard to count the number of construction cranes presently operating in the District. There is a lot of in-progress construction in NoVa and a lot of planned construction too. Suburban Maryland looks a little quieter. Whatever happened to sequestration and defense cuts etc? The DC metro is either on the verge of an economic eruption or there are going to be a lot of bankrupt real estate developers.

    • I had the same thought about the critics of Metro expansion. Let’s not forget they were blue in the face with their “waste” criticisms just a few years ago…..

  3. This is precisely what Northern Virginia needs. The Exxon site, by comparison and in stark contrast, is a monster dinosaur that should be stuffed and relegated to a museum of perfect examples of what NOT to build in any community that cares about its future.

    • What is key difference between these two projects? It is not size. It is not density. It is how each building interacts within its neighborhood.

      The Exxon Site and others like it in Fairfax work everyday to steal interstate roads built by other people. This deprives those other people of what is rightfully theirs. It takes their roads away from them altogether, or its wastes their time and lives in gridlock, often for hours every day. And it unfairly limits where they can work, or how much time they can spend with their families. Now Fairfax is adding insult to injury.

      After steeling these interstates from its people, sites like Exxon are being used to impose high tolls on the very folks who own the roads, stealing their money as well. This is a double theft.

      Fairfax county can fix this problem. Arlington did. It redeveloped its old downtown starting in 1980s, building a traffic neutral downtown. Fairfax County should not be allowed to instigate major new growth until it enacts an enforceable plan that redevelops Fairfax into an traffic neutral county.

      Gramercy District, like Arlington’s downtown does the reverse. It eats traffic. Freeing up gridlock everywhere.

  4. see… this is why Urban areas are typically “blue” in their politics!

    the GOP would be twisted into ideological knots trying to figure out how to get the free market to do this!

    METRO is a “liberal” idea – right? the GOP would NEVER sign off on METRO, right?

    fess up Mr. Reed.

  5. actually – DON – … isn’t METRO a classic LIBTARD concept?

    • Not really. Because of the need for eminent domain I consider transportation a legitimate function of government. I had a front row seat for the redevelopment of Arlington. Metro was the key. High density requires mass transit. High density concentrates talent, attracts young people and helps to grease the skids of job creation. As such, it is a valuable aspect of economic development.

      • Don – Government FUNDING of Mass Transit – a LIBTARD concept ?

        would Conservatives FUND mass transit?

        all of what you say is true about talent, economic development ..

        BUT would CONSERVATIVES – USE Eminent Domain and taxpayer money to build Mass Transit?

  6. I am not automatically in favor of the Metro expansion to Dulles because Gramercy center is proposed. I’d say the whole reason the Metro expansion was built was a speculative political play for business development along the Metro line, and resulting improved property values. I sure hope the gamble pays off, now that the powers that be have committed us to it. I of course live nowhere near the Metro line, so I see no benefit from it except the taxes and tolls.

    • Other than Gerry Conolly’s gambit with SAIC I haven’t seen any evidence of wrongdoing wrt Metro expansion. The wrongdoing may be there but I don’t see it. My mental picture is informed by living in Arlington from 1981 – 1987, working for 11 years in the Reston Town Center and spending about half my time in Manhattan now. High density mixed use development is the best human settlement pattern I have seen. There’s a way to deal with density and it always involves mass transit. What are the choices for NoVa?

      1. Restrict development and watch housing prices skyrocket and economic development flatline?

      2. Continue with the willy-nilly unplanned expansion of the past and watch transportation chaos increase and economic progress decline?

      3. Use mass transit (Metro) as a stimulant to high density, mixed use development and try to evolve into a better organized place to live?

    • There are (at least three) problems with the Silver Line.

      First, it is not economically efficient as a spur line traveling through relatively sparsely populated areas. Many of its passengers are transferees from the Orange Line, rather than new transit riders. (On a positive note, that does give the Orange Line more capacity.) Ridership counts for the Silver Line are generally expected to lag behind other lines, including the Red Line, which also serves some less than dense areas. Keep in mind that the federal government refused to fund the Silver Line because it did not pass cost benefit standards.

      Second, the Silver Line has forced service cutbacks on the Blue Line and on the Silver Line west of East Falls Church. A number of people, communities and businesses have been hurt by the arrival of the Silver Line.

      Third and most important, the funding plan for the Silver Line is flawed and unfair. Putting the bulk of the costs on users of the Dulles Toll Road is not consistent with sound economics. They are receiving no benefits from the Silver Line. And the landowners within a quarter mile of the rail stations are receiving a huge financial windfalls from toll-payers and taxpayers. The Silver Line is crony capitalism at its worst.

      Having said this, the capital costs are either sunk or committed. We, therefore, need to make the best use of the Silver Line as we can. This project in Loudoun County does that.

      • TMT

        I agree with every word of your above comments. And here I will underline two of your themes, and add my slant on those comments .

        “The Silver Line was crony capitalism at its worst.”

        Yes, it surely was. Just like the irresponsible building of Dulles Airport, doubling its capacity at the cost of $billions between 2000 and today, the Silver Line, and how it was financed off the backs of toll paying commuters, was driven by the backroom influence of land developers and other powerful business interests around Dulles Airport and Dulles Toll Road from Tysons Corner west across Fairfax into Eastern Loudon.

        And, like you suggested, the Silver Line like the Dulles Airport expansion was built on a pack of grossly irresponsible decisions driven by private selfish interests overriding the public good. And it was fueled by a campaign of disinformation, hidden agenda, and likely outright lies.

        One need only go back to the newspapers articles written at the time, how this reckless spending of other people’s money and the wastage of their lives were sold, for example, on the idea that tolls that historically had been 25 cents for 25 years, but just raised to 50 cents,would thereafter be only modesty increased in the future once the Dulles Airport Authority (WMAA) got control of the Dulles Toll Road. Now, my friends, we have entered the realm of Chinatown Northern Va. style.

        These gross misstatements, if not outright lies, were told again and again to public meetings of citizens up and down the toll road. And they were pushed by financial interests that wanted to build ever more heavy traffic centric suburban grid style Exxon like buildings, air-cargo warehouse complexes, and other truck served distribution centers, as well as ever more sprawling retail and suburban grid subdivision housing throughout eastern Loudon and western Fairfax. All of this replication of Eastern Fairfax County would be served by an ever greater tangle of interstate type Toll roads funneling traffic into Northern Virginia from up and down the Eastern Seaboard, giving preferential treatment to commercial truck traffic and the Fat Cats building all this stuff and for whom paying $60 a day to get to work was nothing more than tax write off chump change, given their profits off land speculation and building development.

        All this corruption was made far worse by the gross cost and time completion overruns the afflicted the Silver Line (like Dulles Airport expansion) that were added onto the backs of taxpayers, commuters and the flying public using Dulles Airport and now National airport too.

        And like you said, TMT, the Silver Line is now built so lets use it the best possible way we can with projects like Gramercy District.

        Here I will add something you may not agree with. The Silver Line very likely is a good thing. The problem is how that Good Thing was so corruptibly planned, financed and built on the backs of local, regional, and interstate commuters for the private benefit of the wealthy few.

        I also believe that it’s quite likely, although not yet definitively shown, that many of the same tactics used on the Silver Line, Dulles Airport, and much else built in Fairfax County, are now being deployed today this latest gambit in Fairfax County having to do the County’s newest Road toll regime and this latest highly speculative Personalized medicine play. And I believe only because I think I have seen it many times before, and because the silence and lack on clear information on these latest projects are overpowering my senses, hanging like the stench of a skunk.

        • Reed – I agree that the Silver Line will provide benefits to the public. I think those benefits will be outnumbered by the benefits going to private interests.

          And while it makes no difference now since the Silver Line is operating and scheduled to be completed, had the beneficiaries of the density that has and will come from the Silver Line (and only because of the existence of the Silver Line) been forced to pay an equitable share of the Silver Line’s costs (instead of dumping them on the backs of Dulles Toll Road users), I honestly believe the Silver Line would never have been built – or it were constructed, it would stay totally on the Dulles Access Road RoW until it got to Dulles Airport. The economics don’t make sense absent thousands and thousands of patsies funding a big wealth transfer to landowners.

      • Correction in my second comment, “on the Silver Line west of East Falls Church” should read “on the Orange Line west of East Falls Church.” Sorry for the error.

      • TMT and Don –

        Thanks for follow on comment. Thank you Don for yours below as well.

        It is interesting how thoughtful people with different experiences with the same subject can often reach similar or complementary interactive conclusions from different directions and/or using different methodologies. That is always a highly enlightening exercise particularly up front on figuring out how to do a Job. In my experience it is akin to, thought not always as dramatic as, a lawyer abruptly switching seats to become what his clients had been before, going from attorney to real developer and/or investor.

        TMT – above you said:

        “And while it makes no difference now since the Silver Line is operating and scheduled to be completed, had the beneficiaries of the density that has and will come from the Silver Line (and only because of the existence of the Silver Line) been forced to pay an equitable share of the Silver Line’s costs (instead of dumping them on the backs of Dulles Toll Road users), I honestly believe the Silver Line would never have been built – or it were constructed, it would stay totally on the Dulles Access Road RoW until it got to Dulles Airport. The economics don’t make sense absent thousands and thousands of patsies funding a big wealth transfer to landowners.”

        I understand how you come to that conclusion. I too am aware of the long and sorry history of the Silver Line. Still I believe that the Silver Line could have been successfully built to everyone’s great advantage as happened in Arlington but for a string of unfortunate factors, most driven by human failures after history and culture took their initial toll.

        If time permits I will touch on those “unfortunate factors” here tomorrow.

        Meanwhile, I am reminded of our related earlier discussions involving you and Don and others on same or related topics. See for example:

        http://www.baconsrebellion.com/2015/09/the-slow-inevitable-demise-of-traditional-mass-transit.html

        That deals with how the competence of the “Doing of the Thing” often depends on the quality of the Vision of the Thing (including its ways and means and objectives) and how success properly defined must be based not only on smarts, talents, and skills, but also on the honorable intentions that good governance and performance always demands. Unfortunately today we (all of us) far too often forget this.

        Tomorrow too I will try to reference some old articles found on this website about how doing real development the right way, as opposed to the short term, narrow view and greedy way, creates and compounds wealth exponentially for all of society, allowing us to build things that we otherwise could never afford, or imagine affording. Things like mass transit.

        • Reed – interesting and thoughtful comments. I would add, however, that, despite being built as a PPP, there is not one dime of private investment in either Phase of the Silver Line. Say what you will about the Beltway Express Lanes, Transurban has invested capital.

          While I support success for the Silver Line since it is now here, it is a prime example of American crony capitalism and the type of event that explains why so many people are flocking to Bernie Sanders and Donald Trump. Both candidates are clowns and, absent deep corruption that controls American politics, wouldn’t have lasted into 2016.

    • Here is why I believe that:

      1/ Northern Virginia’s traffic gridlock will not be solved by dynamic tolls and road improvements, but will grow far worse under such a regime,

      2/ that Northern Virginia’s traffic gridlock is insoluble absent Fairfax County rearranging its current land use patterns into mixed uses that substantially reduce existing traffic while rendering new county development traffic neutral outside the area of its immediate locale, and,

      3/ why only 2 above will give the public roads in Fairfax County back to their rightful owners, the citizens of the county, region, state, and interstate travelers who have lost their right to free reasonable use of those roads.

      In 1982 I realized that Northern Virginia’s traffic problem was otherwise insoluble by reason of its geography, history, culture, and the very poor and counter productive land use planning and development already in place.

      This realization occurred on the first day that I-66 opened between DC and the I-495 (the Capital Beltway). At 3 pm the west bound traffic from DC began to back up east of Falls Church. Soon the line of cars reached back to just west of the Glebe Road interchange at Ballston, Va. Standing on that overpass that first day, I realized two obvious facts:

      1/ this interstate road I-66 was a traffic magnet on a huge scale.

      2. that I-66 was grossly under built. Its two lanes in each direction had been designed and built to fail from day one.

      The next day, I discovered more obvious facts. The design and function of this interstate road I-6 created a series of altogether new traffic problems that rippled out across Arlington and Fairfax east of the Beltway.

      I-66 severed a series of north south and east west tributary roads. This cut off travelers from roads they had historically used to snake around and though neighborhoods. Drivers going back and forth between Alexandria Virginia to DC across Chain Bridge, for only one of endless examples.

      Indeed I-66 not only robbed these drivers of their use of these of arteries, it forced them into narrow often gridlocked intersections that ended up channeling them into limit access roads that in turn quickly became overloaded themselves. This forced those drivers into longer trips than had been necessary before I-66 robbed them of options. And of course this dislocation of drivers was cumulative, driver piling up against driver.

      Indeed, one can argue that Arlington and Fairfax in many ways did not have a traffic problem until I-66 opened in 1982. Indeed, I-66 was the final straw that broke the camel’s back. These problems had been around for hundreds of years, but their most modern iteration had been building from at least the 1930s, grown intractable in the 1960s and 70s then exploded in the 1980s.

      But after that 2nd day, seeing how I-66 broke the camels back all the way west past Falls Church and going past it deep into to Fairfax County, I went looking for ground to build an office building on in Arlington.

      Next, we’d get into that early and more recent history as to why I-66 was only the final straw the broke open a long festering problem that has only gotten much worst since, reeking harm across the DC region daily.

  7. re: ” Metro expansion was built was a speculative political play for business development along the Metro line, and resulting improved property values.”

    I suspect TMT is in somewhat agreement with your view but would await his words…

    All things EQUAL (and never are) – if the METRO expansion could have been voted on by the Va General Assembly how would the votes have lined up in terms of Conservative vs Liberal – ?

    Isn’t Mass transit – like METRO – in general – considered by Conservatives to be not a good cost-effective use of tax dollars?

    I’m trying to get a feel for how Conservatives would run an urban area like NoVa, if they could call all the shots and be guided solely by their Conservative and free market leanings?

    how about it?

    Don – how about you?

    • I don’t speak for conservatives. I am bitterly opposed to the death penalty for example.

      Like most software developers and systems engineers I think in terms of models. What is the model that maximizes citizen well being as Ed Risse might have asked? Then, how do you pay for that model to be implemented in real life. Finally, the model may (and will) differ from place to place and over time.

      So, how to think about NoVa?

      1. There is no NoVa. There are the Virginia suburbs of the Washington metropolitan area. There is also DC and the Maryland suburbs. DMV is the entity to consider.

      2. DMV is either the most educated city or one of the most educated cities in America. That’s its great strength.

      3. DMV has a chaotic clash of different government entities including at least two states and a federal district along with many, many localities. That chaos causes challenges in governance which must be overcome.

      4. DMV is heavily influenced / supported economically by government. That government seems destined to spend more on entitlements (which create few DMV jobs) and less on things like Defense and Homeland Security which create a lot of DMV jobs.

      5. Well educated people are the most mobile demographic. If the jobs dry up or the quality of life declines a lot the educated people (DMV’s biggest asset) will leave.

      Against that backdrop I see virtually no alternative to building an effective mass transit system. In practical terms I see no alternative to government overseeing the construction of the system. There are three big questions:

      1. Are the government entities sufficiently competent for the job?
      2. Are the government entities honest?
      3. How to handle ongoing costs / depreciation?

      The answers to the first two are probably and probably not.

      The third gets interesting. A more conservative theory would hold that the mass transit should pay for itself – including recovery of the cost of construction (i.e. depreciation and amortization). A more progressive view would counter that people don’t pay the full costs of roads so why should they pay the full costs of mass transit, especially as we want to encourage mass transit use?

      I personally like the idea of forcing all methods of transportation to pay for the specific costs of the transportation. That would mean per mile driving charges tied to the actual costs of the road in question (including the need for future expansion) as well as full charging for mass transit. I would also support free and discounted mass transit for people actively seeking employment or those employed at relatively low pay.

      The problem, of course, is that our government entities are horrifically dishonest. The monies collected for road maintenance and expansion as well as mass transit operation and expansion would be sluiced and slushed to whoever was lining the pockets of the politicians – as usual. Downstate pols would want to keep taxing NoVa for transportation but not want to spend any of that tax money in NoVa because “they have tolls”. NoVa pols would try to buy votes by giving away free and reduced mass transit to their voting constituencies.

      Always remember Larry – Vision without execution is hallucination.

      The vision is there. The execution depends on an honest and transparent government. That is not there.

      As an aside, have you been tracking the Imperial Clown Show in Richmond’s attempted systematic dismantling of Virginia’s FOIA laws this session? While a number of the bills died in committee you and I know those bills will keep coming back until public scrutiny fades and then they will be passed. I guess it isn’t all that important. The clowns don’t obey their own laws anyway …

      http://www.fredericksburg.com/news/virginia/many-state-officials-ignore-foia/article_f1c09fcd-b4d6-5864-a726-db8f8a428bfd.html

  8. good discussion – that totally evades the idea of how Conservatives would go about developing/expanding/growing urbanizing areas like NoVA.

    Risse and folks like him, no insult intended, would easily be characterized as a top-down, govt-loving “socialist” by most folks who consider themselves Conservatives.

    so how about it guys? if Conservatives in their heart of hearts was going to do the development of NoVa – what would they do different than what has been done? Would they have supported the expansion of Metro ?

    come on now – don’t be shy… do more than blather about “now that we’ve done this ….”

    and if someone gets REAL ambitious – how about citing a couple of urbanizing areas done “better” by conservative folks…

    re: “Always remember Larry – Vision without execution is hallucination.

    The vision is there. The execution depends on an honest and transparent government. That is not there.”

    okay – so does that mean what is going on is a failure?

    “As an aside, have you been tracking the Imperial Clown Show in Richmond’s attempted systematic dismantling of Virginia’s FOIA laws this session? While a number of the bills died in committee you and I know those bills will keep coming back until public scrutiny fades and then they will be passed. I guess it isn’t all that important. The clowns don’t obey their own laws anyway …”

    oh I have – but isn’t the Fairfax Police one of the biggest offenders on being transparent and accountable these days and perhaps one of the supporters of the way the Clown show has been emboldened to crap on their own citizens?

    I have no respect what so ever for the clown show. It’s like a miracle that we ever get to a real budget given all the idiocy that occurs along the way.

    and dare I say it’s a prime example of the “Conservative” way of governance these days since the GA is dominated by them and the only person really looking at economic development and education in a reasonable 21st century way is that Clinton Liberal McAuliffe?

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