“There’s a real need for the employment uses in North Bethesda, it’s in the middle of some suburbs with good retail use and older office product and it’s a great piece of land,” CEO Don Wood said.

Federal Realty Investment Trust (NYSE: FRT) is pivoting with a piece of Pike & Rose.

The North Bethesda developer is going forward with an idea it toyed with earlier this year to swap out a planned 200-foot residential tower at the development. In its place, the company will construct a 10-story life sciences building that takes advantage of that property type’s success in Montgomery County. The 935 Prose building will total 260,000 square feet when it is completed.

The building will be customized to life sciences tenants, Federal Realty said. That includes 15-foot-clear lab floors and 20-foot-clear manufacturing floors, more elevators, loading bays that serve 55-foot trucks, and back-of-house spaces that allow for chemical storage, lab waste handling, air compressors and recycling for biomedical users. It will also have ground-floor retail space, a conference and fitness center and five floors of parking.

Gensler is designing the building, with Scheer Partners Inc. managing leasing.

Federal Realty had first approached Montgomery County with the concept earlier this year, and received quick backing from the planning board. CEO Don Wood at the time called it the “highest and best use” for the land. In a subsequent interview, he reiterated that the development is best served with commercial uses that build off of the urban environment.

“There’s a real need for the employment uses in North Bethesda, it’s in the middle of some suburbs with good retail use and older office product and it’s a great piece of land,” Wood said. “We try to create the place first, the restaurants and things that make people want to come and see it, then build the office users and residences around it.”

This addition comes just a few weeks after the company announced it would forge ahead with plans for a 16-story, 276,000-square-foot office building at 915 Meeting Street within Pike & Rose, thanks in part to a 105,000-square-foot lease for an anchor tenant, Choice Hotels International Inc. (NYSE: CHI), which is moving from Rockville a few miles away.

Wood said companies interested in medical office use abound in this area, thanks to the 18 federal agencies headquartered there including the National Institutes of Health and the Food & Drug Administration. Indeed, in its third quarter market report on suburban Maryland, JLL predicted more real estate companies shifting their focus to this specialized property type noting “an urgent need for lab space.” Meanwhile the Rockville Pike corridor sees office vacancy rates above average for both suburban Maryland and the metro at large, sitting at 22.4%.

Pike & Rose is approved for up to 3.4 million square feet of development, and Federal Realty has invested $710 million in building the development’s 700,000 standing square feet. It’s home to 50 retail and restaurant tenants, as well as 100 condominiums, 765 apartments and a Canopy by Hilton hotel.

By Tristan Navera – Staff Reporter, Washington Business Journal