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UDC negotiating with 4250 Connecticut owner for office and retail lease

September 19, 2018 by FHC 2 Comments

UDC is in negotiations with Bernstein Management Corporation that could give the university control of the office and retail space at 4250 Connecticut Avenue.

Troy Lemaile-Stovall, UDC’s chief operating officer, explained at the September 17th meeting of ANC 3F that UDC’s buildings are overdue for modernization, and the university needs swing space. Building 41 is currently being emptied, some of it into the former Walgreens at 4225 Connecticut Avenue. UDC controls the master lease for the Walgreens and has long-term plans to renovate and activate the retail, but in the short term it is using whatever space it can for offices and classrooms.

The next building set for modernization is Building 44. That is why UDC wants 4250 Connecticut, the office building being vacated by Fannie Mae in November.

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UDC’s plans could include the retail space, as well. Lemaile-Stovall said he could not respond to questions about negotiations for the ground-floor retail due to a non-disclosure agreement with Bernstein. But he said everything was on the table, and he stressed that retail is an important component of a vibrant campus that is attractive to students. UDC partnered with Van Ness Main Street and Bernstein in a 2017 study of Van Ness retail possibilities, and Lemaile-Stovall reiterated UDC’s commitment to a continuing partnership with Van Ness Main Street in the development of an active retail area for students and the community.

UDC currently controls the ground-floor retail at 4340 Connecticut Avenue (the UDC law school), retail space at the UDC Student Center at 4200 Connecticut, and the former Walgreens at 4225 Connecticut. Adding 4250 Connecticut would put the university in control of nearly all the unleased retail space at Van Ness.

The only retail space UDC has activated is at 4340 Connecticut. Acacia Food and Wine is on the north side of the building. DC Public Libraries has control of another storefront at 4340. It’s currently the temporary home to the Washingtoniana Collection. Previously, the Cleveland Park Interim Library used the space. Next door, Van Ness Main Street has an office and a pop-up shop which can move when the street frontage is leased to a retailer.

Retail spaces in the UDC Student Center have been empty. However, UDC recently gave permission to Van Ness Main Street for another pop-up shop in the Connecticut Avenue storefront.

What impact will these negotiations have on leasing the retail space at 4250? And will plans for the facelift of the building move forward? 4250’s owner, Bernstein Management, was invited to the ANC 3F meeting but declined to send a representative. Bernstein President and CEO Josh Bernstein told Forest Hills Connection he couldn’t comment because of the non-disclosure agreement.

Gary Malasky, chair of Van Ness Main Street’s Economic Development Committee, thinks there is a way forward that satisfies the needs of all stakeholders. He writes:

Previously Bernstein has communicated significant progress in finding appealing retail tenants for 4250. This progress and Bernstein’s promised building improvements could be lost if UDC takes over the building.

A win-win for all parties, including the community, would be the following:

  • UDC leases the office/classroom space it needs on the upper floors of 4250
  • Bernstein maintains control the 4250 retail space
  • Bernstein obtains control of UDC retail space in its other buildings

In this way, Bernstein can continue and accelerate the progress it has made in finding quality tenants to occupy 4250 and other vacant or under-utilized space presently controlled by UDC. In addition, Bernstein would have the capital to provide tenant improvement allowances which are typical in retail leasing.

Lemaile-Stovall hopes there will be a deal in time for a closed-door session of the UDC Board of Trustees meeting on September 26th. UDC wants to have this wrapped up by the beginning of October, at which time they would make it public. Then it would need approval from the DC Council’s Committee of the Whole, chaired by Phil Mendelson.

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Filed Under: Featured, News, Real Estate, UDC

Comments

  1. David Donaldson says

    September 19, 2018 at 11:25 am

    A point that Lemaile-Stovall, made regarding the Wellness Center in the Student Union Bldg after I met and inquired with the Director of the Wellness Center and inquired again with him at the ANC meeting, that they have plans to enlarge the Wellness Center activities in the future for the DC residents, but there are other projects taking priorities as you noted in your article today.

    Reply
  2. Green Eyeshades says

    September 19, 2018 at 11:48 am

    Readers should compare these three sentences in this post side by side:

    “Lemaile-Stovall [chief operating officer of UDC] said he could not respond to questions about negotiations for the ground-floor retail due to a non-disclosure agreement with Bernstein.”

    “4250’s owner, Bernstein Management, was invited to the ANC 3F meeting but declined to send a representative. Bernstein President and CEO Josh Bernstein told Forest Hills Connection he couldn’t comment because of the non-disclosure agreement.”

    I doubt that the first and third of those sentences are both true. Generally, the parties to a transaction affecting an asset submit to a non-disclosure agreement (known as an “NDA”) for the benefit of the owner. Here the owner is Bernstein which wants to make a potential bid to UDC (a government agency) to enable UDC to lease office space from Bernstein.

    After all, how do we even know about these “negotiations for the ground-floor retail” if everything about those negotiations is secret under the NDA?

    It cannot be true that BOTH Bernstein and UDC are prohibited from discussing the potential bid by Bernstein. It is most likely the case that Bernstein required UDC to submit to the NDA — for Bernstein’s benefit not for UDC’s benefit. The most likely arrangement is that Bernstein wants to control its proprietary information and/or trade secrets (e.g., the price per square foot it will offer to UDC to lease office space to UDC). Since Bernstein is the beneficiary of the NDA, it can waive (disregard) the NDA whenever it wants on any subject it wants. Which is why the Connection was allowed to find out that “negotiations for the ground-floor retail” are underway.,

    We should assume until proven otherwise that Bernstein is just UNWILLING to make disclosures about important details affecting “the ground-floor retail,” not that Bernstein is UNABLE to make any disclosures. It seems obvious to me that Bernstein is hiding behind the so-called NDA in order to prevent public knowledge about the key “ground-floor retail” in the middle of our neighborhood.

    UDC is a publicgovernment agency. Its budget is controlled by DC Council. That is why the post confirms that this lease between UDC and Bernstein must be approved by DC Council (like other contracts). Why should the public be unable to know what agreement UDC is considering entering into with Bernstein regarding 4250 Connecticut Avenue? A government agency should not be able to negotiate contracts in secret. Even if Bernstein is a “sole source” since it alone controls the real estate, a sole source is often required to make its bid public BEFORE the government agency enters into a binding agreement.

    District residents are being duped about many crucial economic decisions through the use of NDAs (e.g., whether Amazon’s second headquarters will come to DC). It is unfair that residents of our neighborhood, and even our elected ANC commissioners, are unable to learn anything substantive about what will happen to the retail store fronts next to the western entrance to Metro.

    Did Van Ness Main Street submit to Bernstein’s NDA? If not, why should we believe that Van Ness Main Street is in a better position than our elected ANC commissioners to suggest what would be a “win-win for all parties”? If Van Ness Main Street DID submit to the NDA, why is Van Ness Main Street allowed to discuss “negotiations for the ground-floor retail” while Bernstein and UDC refuse to discuss it?

    Reply

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