May 5, 2000
Best Overall Real Estate Deals of the Year
Source: Washington Business Journal
Putting a new twist on an old lyric, XM Satellite Radio is out to prove that they can make it anywhere - even on New York Avenue NE.
The new radio company signed a deal last October to lease 125,000 square feet at 1500 Eckington Place NE, half a block from the intersection of New York and Florida avenues. In doing so, XM became a pioneer of sorts. Denver-based Qwest Communications had in 1998 set the wheels in motion by announcing plans to put a data center in the same building, but that operation only employs about 40 people, not quite the critical mass needed to revive the run-down corridor.
XM, in turn, promises to create nearly 300 jobs at its corporate headquarters. The site will also house a production studio. XM is one of two companies licensed to offer radio broadcasts via satellite. It has financial backing from companies including General Motors.
Those facts played a part in the Districts decision to give the radio station $10 million in tax breaks. The city council did so by creating a loophole in a law that gives tax breaks to telecommunication firms. Since it is not a telecommunications firm, XM did not qualify for the tax break.
Had District officials not acted, XM was ready to put its headquarters in Silver Spring.
The XM move was immediately hailed as the saving grace of the city's Northeast gateway. "We are trying to provide as many incentives to businesses as we can," Mayor Anthony Williams said at the time of the deal.
"This is excellent for all of New York Avenue" Marc Weiss, a former economic development advisor to the city, said last October. "It shows that technology firms will go to the area. It will bring hundreds of jobs and lift the employment base and opportunities for residents here. And it shows that Qwest was not a fluke."
Since the XM announcement, two Fortune 500 companies - MCI World-Coin and Enron - signed deals to bring data centers to the area.
But the question remains: Can North of Massachusetts Avenue, or NoMa as the area is commonly called, become a vibrant part of the city's landscape? With its close proximity to the CSX rail lines and thus fiber optics, city officials are promoting New York Avenue as its technology corridor. Telecommunication companies are clearly drawn to the area. But thus far, XM is the only corporate headquarters along the corridor. NoMa advocates are quick to point out that the Bureau of Alcohol, Tobacco and Firearms is building its new headquarters at the intersection of New York and Florida and Metro is putting a stop there as well.
Joe Galli, vice president of the Bernstein Companies., which owns Eckington Place, suggested last October that New York Avenue would become the "hip" alternative to the Dulles Corridor. That may be so, but D.C. Councilman Vincent Orange, D-Ward 5, who represents the area, would like to see more done to the boost the area's stature.
"It's coming along slowly," he said recently. "I do believe we are getting the publicity needed to entice others to come to the area."
What Orange really wants is for the District to invest in making NoMa the city's true technology center. He is pushing a plan to turn McKinley High School, which closed its doors a few years ago into a technology training school.
Orange and others acknowledged, however, that part of the push to revive New York Avenue comes from having companies such as XM locate there.
Brendan Owen, a CB Richard Ellis broker who represented Bernstein Companies, touted the lease as a good omen for the NoMa business community: "The XM deal legitimizes the corridor."
XM Satellite's 150,000-square-foot tease at 1500 Eckington Place NE is one of the first that will bring employees to the North of Massachusetts Avenue area. The company expects to employ 300 people there.