Washington Business Journal
by Daniel J. Sernovitz
Life has come full circle for Blackboard Inc., the pioneering higher-ed technology firm formed nearly two decades ago in the District.
The company has reached a deal to shift its headquarters later this year to 1111 19th St. NW, the very first office building it moved into after graduating from the basement of a Dupont Circle row home where it was born in 1997. The company has signed a lease for about 71,000 square feet with Clarion Partners, which recently wrapped up a multimillion-dollar renovation of the 12-story building.
“We are the tech poster child for D.C., and after a really serious search effort, and after some very significant courting from Arlington and Virginia, at the end of the day, after 17 years in business, we are a D.C.-centric business,” Blackboard Senior Vice President Michael Stanton said. “We’re still firmly entrenched in D.C.”
Blackboard, now based at 650 Massachusetts Ave. NW near Mount Vernon Square, will be taking the eighth through 10th floors of the building and plans move into its new space this November. There are a number of other tech firms in the building including online college textbook provider Flat World Knowledge Inc. and, coincidentally, SocialRadar. That’s the firm headed by Michael Chasen, who co-founded Blackboard and served as its CEO for 15 years before launching SocialRadar in 2013.
Stanton said the company considered a range of options in Maryland, D.C. and Virginia, including space in Capitol Riverfront and NoMa. Blackboard narrowed its search to three sites based on Metro accessibility, nearby amenities, and the distribution of its workforce throughout the region, among other factors.
The other two sites were 1800 M St. NW in the District and 4520 Fairfax Drive in Clarendon.
The lease is a major victory for the District, which has placed significant emphasis on cultivating its burgeoning technology sector but faced steep competition for Blackboard from economic development officials across the D.C. region. The Bowser administration has come out in support of the industry with a number of initiatives, highlighted by her “InnoMAYtion” push this past May. Stanton said that support was a factor in the company's decision to stay in Washington.
Cushman & Wakefield broker Mark Richardson, who represented Blackboard in the search, said Virginia and Arlington County heavily competed for the company. In the end, he said, the lease with Clarion Partners enabled Blackboard to get a range of benefits, including a generous tenant concession package and the ability to reset its headquarters in a more efficient space layout. DTZ broker Phillip Thomas represented Clarion Partners.
“Literally, throughout the process, I had owners calling me to offer additional incentives and even bidding against themselves,” Richardson said.
Blackboard is planning to shed about 30,000 square feet with its move from 650 Massachusetts Ave., where it has been for about eight years. Its space there consists largely of enclosed offices, conference and meeting space, and it plans to switch to more of an open-space concept that it has been rolling out at its other locations across the world.
It recently completed a similar buildout in Reston, where it went from about 23,000 square feet to 10,000 square feet, eliminating all but about eight private offices. Blackboard has retained SmithGroupJJR to design its new space and Davis Construction to build out its new headquarters.
The new space includes internal staircases linking the three floors, with the main entrance on the ninth floor, and will be built out to include a much larger meeting space for all-staff gatherings. The company has about 450 employees and typically needs to book space at the Walter E. Washington Convention Center for gatherings of that size.
Blackboard stands to benefit from an amendment to the District’s Qualified High Technology Company rebate program that offers a tax rebate to companies that agree to lease at least 50,000 square feet for at least a dozen years.The new rebate program amendment, known as the Creative and Open Space Modernization Amendment Act of 2015, was designed to appeal to tech companies that are not big enough to qualify under the QHTC program otherwise.
The initiative is valued at half a company's tenant improvement costs, a a maximum amount of $5 million over five years.
Another key goal of the program is to help the owners of older legacy Class A buildings retrofit their properties to make them more competitive, said Chris Ahn, who oversees government and corporate affairs for the Washington, D.C. Economic Partnership and works closely with the D.C. Office of the Deputy Mayor for Planning and Economic Development.
Joaquin McPeek, spokesman for the D.C. Office of the Deputy Mayor for Planning and Economic Development, said retaining tech companies like Blackboard is just as important in the face of increased competition from its neighbors in Maryland and Virginia as it is from bigger technology markets such as Boston. The incentive program has the added benefit of helping tenants defray the cost of moving to more efficient space, and that, in turn, can help D.C. landlords willing to further close the gap with free rent and other concessions in the face of competition from other jurisdictions.
“We’re definitely excited that Blackboard is staying in the District, which means those jobs will be staying in the District as well,” McPeek said. “We’re an attractive place for a business to be even without incentives, but we certainly don’t want to take that for granted.”