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MONDAY, SEPTEMBER 12, 2011

WASHINGTON BUSINESS
Apartment builders focus on Washington
Relatively stable job market helps make area a prime location
BY

THIS WEEK, SEPT. 12

The week will see the release of a number of new data points that should offer a better sense of how the economy held up in August.

J ONATHAN O C ONNELL

Capital Business Staff Writer

Apartment builders are pouring money into the Washington area real estate market, buying land and existing buildings in an effort to take advantage of a relatively stable job market and a region that they say has become more attractive to young professionals. Delta Associates, a research and consulting firm based in Alexandria, called the Washington area the best performing apartment market in the nation at the end of June, due to the available jobs, a vacancy rate of only 3.1 percent and a long pause in building that began with the financial crisis. Those conditions have prompt-

ed buying sprees of sites where new units can be constructed and of aging buildings that can be upgraded. In the District, 1,221 units are expected to be completed in the 12 months ending next June, an increase of 47 percent from last year, according to Delta. In Northern Virginia, the increase is 16 percent. Urban Investment Partners, a private apartment builder and manager based in the District, is in the midst of a string of acquisitions of buildings in the Northwest D.C. neighborhoods of Adams Morgan, Columbia Heights and others, including the $12.4 million purchase of three apartment properties out of foreclosure in June. I think that D.C. has become a much more cosmopolitan city, where people I think come here and stay here, said Steve Schwat, UIP principal. Whereas when I came here in the 1980s people used to come and go, and people referred to D.C. as a very transient place.

It has a desirability above and beyond Oh, I just went there to get a political job, Schwat added. Equity Residential, the Chicago-based apartment builder and operator that is a member of the S&P 500, has also been aggressively acquiring development sites and existing buildings in Washington. Equity is constructing 188 units in Arlington and plans to start building another 360 in Alexandria in November. In the District, the company recently acquired a property made up of a warehouse and two rowhouses at 455 I St. NW, where it plans another 162 units. The prospect of cuts to the federal governments budget has not weakened Equitys appetite. Greg White, a vice president for development at Equity, said the Washington area still has the steady employment that frankly no other region in the country probably has, and despite discussion about the downturn or the

cutbacks in federal spending in the government, it just continues to produce jobs here year in and year out. White said a turn away from home ownership boosted interest. The newest generation of renters are in their 20s and 30s, and they are putting a premium on location. Theyre more interested in where they live, in renting, as opposed to owning and living somewhere in the outlying suburbs. Its really made the whole rental business that much more attractive, he said. The race to build apartments is also spreading into areas that have not seen major residential investment. The Georgelas Group and Greystar plan a 25-story apartment tower in Tysons Corner an area where only 19,000 people live. In the District, developers have announced plans for new apartments on South Capitol Street in Southwest and on Good Hope Road in Southeast.
oconnellj@washpost.com

Neils Must Reads

Would a sudden bout of inflation help cure the indebtedness problems that weigh down the U.S. economy? At Project Syndicate, Raghuram Rajan, economist at the University of Chicagos Booth School of Business, argues that the long-term costs wouldnt be worth it. Find links at washingtonpost.com/ mustreads.

Wednesday
The American consumer was clearly shaken by the debt ceiling debate and stock market volatility in early August; that has shown up in consumer confidence surveys. But was it enough to keep people away from stores? Data on August retail sales should give the answer. Analysts are expecting that for all their fear, consumers did not pull back on spending in a significant way. The consensus is that retail sales rose 0.2 percent in August. In addition, the Labor Department releases its index of wholesale inflation, which is expected to have ebbed in August. Overall, the producer price index is expected to have fallen 0.1 percent. Excluding food and energy, however, it is forecast to have risen 0.2 percent. Also Wednesday, World Bank President Robert B. Zoellick plans a major speech in advance of the International Monetary FundWorld Bank annual meeting that starts Sept. 23. Zoellick will discuss recent turmoil in the world economy during the 11:30 a.m. speech on the campus of George Washington University.

VALUE ADDED
Thomas Heath

Thursday
The Labor Department releases data on consumer inflation. Analysts expect the index to have risen 0.2 percent overall in August, and by the same amount when the volatile food and energy categories are excluded. This is

the last major piece of data due before a Sept. 20-21 Federal Reserve Board policy meeting. If the consumer price index shows inflation pressures dissipating more than expected, it would make Fed officials more inclined to ease monetary policy; a higher-thanexpected reading might give them pause as they weigh new strategies to try to boost growth. New data on industrial production, meanwhile, is projected to show a small gain after a largerthan-expected boost in July. Julys 0.9 percent gain had been driven in large part by an unusually hot summer that had utilities going full steam to keep air conditioners running around the nation. The August number is expected to show a modest 0.1 percent rise. Also, the Philadelphia Fed releases its index of manufacturing activity, offering a first read on the economy in September.
Neil Irwin

NEW AT THE TOP

WONYA LUCAS TV ONE

Embracing the potential of a start-up

I loved television growing up. It was the first place I saw a great representation of African Americans in environments different from mine. I watched TV, and it made me feel something. How many products can make people think, feel, cry and take action? That was so powerful to me. So when I would hear people say that I should follow my passion, I knew I was passionate about being in a medium that can do all of that. After business school, I decided to go into brand management with Clorox and Coca-Cola to understand marketing and, more importantly, to understand how to influence a consumers behavior to drive business results. TheskillsIlearnedinthefive yearsdoingbrandmanagement weretransferabletotelevision.I wenttoTurnerBroadcasting workingasthevicepresidentof marketingatTNT,doingeverything fromlaunchingoriginalmovies BuffaloSoldiersandPassing Glorytotelevision.Ilovedbeing intheentertainmentspace. I arrived at CNN when competition was really heating up. I spent a lot of time thinking about the competitive space with Fox News and MSNBC. What was our unique position, when you shift from being the only one in the market to being one of three? I was also there during the Sept. 11 attacks. Being a touch point to America in very difficult times was a great learning experience. I eventually went to work for the Weather Channel, for a couple of reasons. Its mission was to help people make decisions that could impact and possibly save their lives. To evacuate? To stay? It was also very technologyoriented, which was an interesting mix between my short engineering experience and my marketing background. One of the things we did that I loved was to broaden the brand beyond the man and the map to tap into the emotional elements of the brand. We tried to more fully dimensionalize weather. We started moving into things such as longform programming. Before that, the mission was to warn people about an event and then turn it over to the news organizations. Then we did a show called Storm Stories. This was the first time we started covering the aftermath of events. I then moved to Discovery, mostly because of the international experience I could get as global chief marketing officer, working on multiple brands in multiple countries. It was about showing people things theyd never seen and trying to stimulate their curiosity. Very different from TNT.

COURTESY OF DISCOVERY COMMUNICATIONS

Wonya Lucas
Position: President and chief executive of TV One, a cable television network and entertainment company targeting African American adults; headquartered in Silver Spring. Career highlights: Executive vice president and chief operating officer, Discovery Channel; executive vice president and general manager, Weather Channel Networks; senior vice president of strategic marketing, CNN Domestic Networks; vice president of business operations and network strategy, General Entertainment Networks, Turner Broadcasting System; vice president of marketing, director of marketing, director of new business development, TNT; brand manager, Coca-Cola Co. Education: BS, Industrial Engineering, Georgia Institute of Technology; MBA, finance and marketing, University of Pennsylvania. Personal: Lives in Bethesda with husband Bruce Kirton. They have two daughters, Alexis Kirton, 18, and Sydney Kirton, 14.

JESSICA SILVERSAGA

Miriam Parkman holds a bag of Parlans caramels. the product of a small Stockholm business started by Swedish entrepreneur Lisa Ericson.

Entrepreneurial spirit is renewed in the Old World

spent the past two weeks on vacation in St. Petersburg, Stockholm and Copenhagen, and I realized that the United States does not have a corner on entrepreneurism. Our Russian tour operator, Tatiana Alexandrova, efficiently provided the most expensive day of my life. Private guide. Wellconnected driver with a sleek sedan. A 12-hour tour. Private boats. Tatiana gets capitalism. Smallbusiness entrepreneurism is alive in post-Soviet Russia. In Stockholm, entrepreneur Lars Rosen, 63, ditched his job as a firefighter a few decades ago and dived into publishing. One day when we played soccer and I saw the older [firemen] standing on the sideline instead of playing. I decided to [end] my job as a fireman. I did not want to be the guy standing on the sideline. Rosens father worked for the Swedish royal family, so Lars had a network of contacts. One was the editor at the biggest car magazine in Scandinavia, and Rosen approached him about starting a couple of magazines that judged cars for consumers. The magazines became successful, and Rosen sold them about three years ago. Now he owns a big chunk of a high-end, monthly car magazine called Gran Turismo, which is more a lifestyle publication than a consumer guide. The company has nine fulltime employees and more than $1 million in revenue. He hopes to double that by next year. I sometimes think about the hours and money we have invested in our small publishing house and if I instead had started something with more potential profit. But if I then look

at all the fun and good times we have had during this trip, I dont regret one day. Rosen is still bringing in investors to help build the business. His current project is a car show/auction planned for this fall that could boost the visibility of his magazine. He also has a new car magazine in the works, featuring more-basic cars that might appeal to a broader audience. He hopes to double his revenue next year. I like this kind of business because it never stands still, and you meet a lot of nice people, and I get to drive all the cars that most people just dream about, Rosen said. Rosen does well. He and Milena Bergquist live in a waterfront apartment on the island of Kungsholmen in central Stockholm. They also own a country home in southwestern Sweden. Bergquist, 53, has written childrens books, has a cookbook coming out any day and is finishing up a novel. When we met for dinner at a restaurant in Stockholm two weeks ago, she said she was in negotiations with a Swedish television network to develop a show around her childrens books. The TV show could become an financial home run if it boosts the sale of her childrens books. I started writing quite late, at 38, said Bergquist, who quit her job as a features editor at Svenska Dagbladet, one of the big Swedish newspapers, to strike out on her own. For me, its always been a freedom thing, she said. Being able to decide for yourself how to spend your day. I have a hard time with the 9-to-5 thing. I met another entrepreneur

accidentally. Our Stockholm hotel left a complimentary bag of delicious caramels in our room, and my wife, Polly, and I decided to hunt down the manufacturer, Parlans, so we could buy some for friends. After a long march around the city, we found Lisa Ericson, 33, and her employees cooking up the candy in the kitchen of an airy, upscale cheese shop that reminded us of a mini-Balduccis. Ericson, who was born in the college town of Uppsala, north of Stockholm, comes from a food family. Her father works for the Swedish Dairy Association and made sure that the family diet included generous portions of fresh cream and butter. Ericson studied food science at the Swedish Agricultural University before working as a product developer in the food industry. She started thinking about starting her own business while traveling on business to London, New York and Tokyo, where she learned the business of branding and marketing. She built a network, and she raised money by selling her apartment and moving in with her boyfriend. Suddenly, it was the right moment, she said. She registered the company in March 2010, but it took six months to find a kitchen where she could make the caramels and to hire employees. Parlans opened in November, just in time for the Christmas season. Ericson designed simple, attractive brown boxes and small bags for packaging. Her first customers were businesses that wanted to give caramels as holiday gifts. Three weeks after opening our shop, we were working in shifts to be able to produce

enough caramels to meet the demand. I had to call my friends, trying to find people that could help me. It was very fun, but I was totally exhausted at Christmas. Come January, she started taking samples to Stockholms fine food stores, asking them to put the candy on their shelves. The Hotel Skeppsholmen, where I stayed, called her after reading about Parlans in a magazine. The candy isnt cheap. Each caramel costs about $1 retail. Parlans has sold about 200,000 pieces, about 40 percent of them through direct sales at its store and 35 percent through resellers. The rest were bought by companies that give caramels as gifts. Parlans, which employs five people, may have its first profitable month in September. Ericson is looking for bigger quarters so she can expand sales, which will help reduce the perunit cost. We have had problems with a very inefficient and costly production, but we have done a lot of improvements during the last two months, she said. She wants to expand, but carefully, mainly through upscale hotels and fine food stores throughout Sweden. Ericson said the hardest part of owning a business is sleeping at night. I am responsible for the livelihood of five people. They depend on me. She also borrowed money from her family. And she wants to make sure she pays it back. We did our part to help her sleep. We bought several boxes.
heatht@washpost.com Follow me on Twitter at addedvalueth.

Ive pretty much worked on every type of target audience there is in television. Ive worked on networks that were more geared toward women or men or more slightly intellectual or older or younger or very established brands. TV One is intriguing because its targeted to the African American community. When I look at the options there for African Americans, theyre relatively limited. For many years, BET did an amazing job of being there for us, but there was a huge opportunity that TV One was already capturing to really diversify who we are as a people and show that on the screen. Its very exciting working with that audience, which also happens to be the audience of which I am a part. Ive watched a lot of start-ups in this business fail, but TV One has done an amazing job of gaining distribution in a very short period of time and becoming financially secure and profitable. Theres so much more we can do and so much growth ahead of us.
Interview with Vanessa Small

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