Friday, January 30, 2009

Auctioning Babes



If any one thing comes to embody the zeitgeist of real estate skepticism, it may be the comeuppance of would-be developments, outlived even by their own ephemeral marketing life. First among that class may be the sad story of Babe's Billiards, purchased and shuttered by Clemens Construction to make way for the Maxim at Tenley, a condominium development at 4600 Wisconsin Avenue, NW that will go to auction as a recent victim of foreclosure.

Popular watering hole Babe's was prematurely closed by the new owner - an easy sacrifice for the nearly 70 condo units intended for the site. Clemens began their pursuit of the elusive project in 2006 and had their intentions reaffirmed when the DC Zoning Commission ruled in their favor the following year.

But the approval was only the beginning of a long and arduous - but eventually mortal - debate with the community. In a coup de grace similar to what may befall neighboring Tenley-Friendship Library/Janney Elementary project – the project was downsized past the point of viability, ultimately ending at approval for a 36,000 s.f. building with a maximum of 42 units and a puny retail component fronting retail starved Wisconsin Avenue.

The combination of the real estate market and reduced scale proved fatal, leaving the blackened building skinned in "coming soon" signs for a prominent epitaph.

Now the entire 12,661 square foot lot, including the store fronts at 4600-4608 and 4614 Wisconsin, has been bundled for the auction, along with its Cunningham & Quill Architects’ designs. In addition to the blueprints, the high bidder will also inherit the development’s previously approved status – meaning that a well financed developer could resurrect the project (or bring back Babes, we hope).

At this time, Clemens still owns the property; the auction is being sponsored by a third party and will take place at the DC offices of attorneys Ober/Kaler (1401 H Street, NW) at 11 AM on February 5th. The winner will be required to provide a deposit in the form of a cashier’s or certified check for $100,000 at the time of sale.

29 comments:

Anonymous said...

Does the "mud" in DCmud mean that you throw a mixture of dirt and water and see if any of it sticks?

There are lots of assertions in this post but no facts cited in support. I live about a half mile from this project. My recollection is that the original developer had a relatively amicable relationship with the neighbors and they reached a mutual agreement on the project's height, density, retail component, affordable housing, etc. I also recall that the developer went to the Zoning Commission with the support of the neighbors. At no time did the developer every assert that the project was not viable. Indeed, the fact that the developer pursued it seems to indicate the opposite.

You label the retail component "puny." The site is small and retail is understandably limited to the ground floor. What do you envision as the ideal size of the retail component for this project?

Anonymous said...

Do you delete comments? I read this a few minutes ago and now it's gone. Here's the text:

Anonymous said...
Does the "mud" in DCmud mean that you throw a mixture of dirt and water and see if any of it sticks?

There are lots of assertions in this post but no facts cited in support. I live about a half mile from this project. My recollection is that the original developer had a relatively amicable relationship with the neighbors and they reached a mutual agreement on the project's height, density, retail component, affordable housing, etc. I also recall that the developer went to the Zoning Commission with the support of the neighbors. At no time did the developer every assert that the project was not viable. Indeed, the fact that the developer pursued it seems to indicate the opposite.

You label the retail component "puny." The site is small and retail is understandably limited to the ground floor. What do you envision as the ideal size of the retail component for this project?

Anonymous said...

Seems like DC Mud always tries to portray the neighbors in a bad light. Is there a real need to do that? Why not just stick with facts? Your credibility goes to zero with the "attack the neighbors" and "defend any development no matter what" policy.

Anonymous said...

sounds like DCmud has angered some Nimbys enough to spur them into posting comments in defense of their actions. But I know someone who worked very close to that project and had the project never been downsized there would most likely be a nice condo building standing there right now. Some nice retail and a lot of nice new neighbors added to tenlytown. making good use of a site close to the metro and increasing DCs relatively puny tax base. The Nimbys have egg on their face after having to live next to a boarded up eyesore for years and years and probably many more to come. all because. what was it? oh yes some of the homes yards near the project would have had shadows casted over portions of them towards the end of the day. so its no surprise they are so defensive. Here is to hoping similar residents dont screw up the much needed development down the road by the giant... I believe the project slated for above the bus site in freindship heights is already facing the wrath of the neighborhood Ludites. god forbid we have a building more than 5 stories tall in this CITY. C.I.T.Y. CITY

Anonymous said...

The initial developer, IBG, purchased this site in 2004 for $4.3 million after the Zoning Commission declined to schedule the larger (43 large unit) proposal for a hearing. Fifteen months later, after the significantly smaller 42-unit project was approved, IBG sold the property to Clemens for $7.35 million. Apparently, Clemens, paying $7.35 million, considered this to be a viable project as approved. One year ago, the Zoning Commission approved Clemens’ request for an extension of the PUD approval based on the Clemens’ inability to obtain sufficient project financing for the PUD because of changes in economic and market conditions beyond its control.

Anonymous said...

Blah Blah Blah.

The "residents" of Tenleytown reap what they sow and deserve all of the mattress stores and vacant lots they desire.

Ken on Jan 31, 2009, 8:52:00 AM said...

Anon - For the record, no, we don't delete comments, and we're one of the few real estate blogs not to do so. Note that your comment now appears twice - I'm guessing it was yours since you had the text.

You are correct that the developer did not publicly declare the project non-viable. What developer seeking financing and approval says it won't work? And it obviously DIDN'T work, which is the whole point. Once the developer owns the property, they're committed, they have no choice.

"Puny" retail, yes. Less than 2000 s.f. was intended. That's the size of a small Starbucks. Not exactly inspiring.

The point of the article was the state of the market. We neither attacked the neighbors, nor "defended the project at any cost"; we think the eviction of Babes was a bad decision, and did not even take a position on the development. If you choose to take this article as a personal attack on the neighbors I suggest you are reading what was not written or implied.

Sue Hemberger said...

The poster who mentioned IBG is right about the sales history. I'll add a bit more detail that (beyond simple market frenzy) helps explain why Clemens failed to build at that site.

IBG, after being denied setdown on the first PUD (which happened at a time when they had not yet purchased, but still had an option on, the site), rethought the project. Knowing that they couldn't count on substantial upzoning, could they build something profitable there anyway or should they just abandon the deal?

When they came back with a new proposal, it was for units with a price point of around $300K which, they said, was an empty but high demand niche during the luxury condo boom and which would be well-suited for an established area like Tenleytown. The PUD for this project was approved, as the previous poster said, with neighborhood support (and no community opposition)

At the time, IBG was an experienced developer with an interesting niche. They concentrated in a few markets they knew well, extricating troubled buildings in high value areas from legal/financial difficulties, often flipping them for a quick profit once they were unencumbered. But always with a PLAN B that would enable them to turn a profit (albeit more slowly) if they couldn't flip and had to build. So that was the scenario here.

IBG gets the PUD, then sells it to Clemens, a builder, I believe, who had little or no prior development experience, but wanted to cash in on the boom. Clemens grossly overpaid for the site (which came with the PUD, so if the PUD made the project unviable at a $7.3 million purchase price, then that's developer error), thinking that they would build Manhattan-style/-priced condos in Ttown. Quel surprise -- they didn't sell.

Meanwhile, Clemens had too much for the land, based on their even-higher-end model (vs. IBG's starter condo model). And they didn't have a development track record. And investors (which made up a healthy chunk of the purchasers at Cityline) were already fleeing the condo market. So they didn't get financing.

To me, that's a more interesting story than another blame-the-NIMBY-neighbors piece. And it has the virtue of being true.

Sue Hemberger said...

Actually, I was the second anon and not the original poster. I went to respond to the article and saw that the first comment had disappeared. Luckily I still had it in my browser window so I cut and pasted it back in and asked the question. Because, yeah, many RE blogs do censor.

In this case, the original comment did disappear and then reappear. The first version had an earlier date stamp than the current "first" version. I'm guessing that this new "first" was re-posted by the original author. Still don't know how/why the original comment came down. Can a poster delete his/her own previous entry?

Re Babe's and retail, there was a hardware retailer (and this was long before Tenley Harward moved into Cityline) who wanted the whole building, but the money was in housing at that point. So IBG blew him off pretty mercilessly both pre- and post-setdown denial.

One tenant they did talk to for the small space was Icee Icy (now Dolcezza) which, ultimately, opened its second branch in that new Bethesda Row project with the pedestrian street (it was called Arlington East at the time and still working through zoning issues of its own, so I think that the retail lease there was a much later development).

Personally, I'd rather have had Babe's than condos (much less a blackhole!) these last years. But creating the blackhole seems to be a strategy used to increase the odds of project approval. But not a sufficiently effective strategy to leave us without blackholes -- see the Outer Circle Cinema/proposed drive-thru bank site for another local example.

remaketenley said...

What do you expect from the NIMBYist neighborhood in DC, and perhaps the world. (Yes, even Takoma Park is less NIMBY nowadays)

It's always the loudest minority that screws things up for the rest of us. Having grown up in the area in question, it's a real shame that we have to watch as every other part of the city develops and improves and Tenleytown looks like a second-rate suburb like you see on Rockville Pike... I'm slightly embarrassed to show friends from out of town this stretch of Wisconsin, opting for the Conn. Ave drive instead and then cutting over. The parking lots and vacant buildings are an eyesore and blight on what should be a main drag that is as nice as the neighborhoods that surround them. All because people who are willing to invest their own money in the neighborhood are treated like criminals. I'm sure NIMYBs are celebrating this as a victory for NIMBYs, but you can only obstruct progress for so long.

I do agree that the proposed drive thru bank must be stopped. We need density and good-looking buildings along this corridors, not ugly drivethru banks that belong in a strip mall. It's a very poor business decision by the bank, too, to use such valuable land for such a pedestrian purpose. Same with the Walgreens proposal on Conn. Ave.

Sue Hemberger said...

I'm always amazed at the double standard with respect to commercial vs. residential property ownership. Somehow residents, who invest millions of dollars of their own money in the community through homeownership (not to mention taxpaying) and who are expected to abide by zoning restrictions that govern their property are routinely cast as meddlesome NIMBYs when they argue that the zoning regs should also control the development of commercial property.

No one blames a vacant or rundown home on the neighbors -- but vacant and rundown commercial property is somehow never the fault of the property owner (or even market forces). What gives? Should businesses and developers have more rights (or less responsibility) than citizens and homeowners?

There has been investment in Tenleytown -- Cityline and Tenley Hill are obvious examples, as is the recent renovation and expansion of Whole Foods. DCPL is eager to invest in rebuilding our library -- it's the Mayor -- not the residents -- who has blocked that project. New businesses (like Marvelous Market and Sears Appliance and Nest and, going back a little further, Robeks, Tenleytown Hardware, Neisha Thai.) have moved in -- older ones, like Middle C, have expanded. Generally, the retail that has left (Sears, Hechingers, Hollywood Video, Outer Circle Theater, CD Exchange, particular restaurants) seems to have left for reasons that aren't Tenley-specific but more reflective of issues in the company or market niche.

And when I think of the projects that residents have ultimately blocked -- the porn shop, the tower -- I don't see how we would have been better off if they'd gone through. The currently unbuilt projects aren't being held up by community opposition. Babe's, as has been pointed out, got a PUD. In other words, the developer got approval to build in ways that exceed the current zoning. The Eyebar guys got approval for an as-yet unbuilt lounge up on the hill near Fort Reno. There's no political obstacle to these project, but still they aren't built. Time to look elsewhere for an explanation.

Ultimately, Tenleytown looks the way it does for a variety of reasons -- it's on a hill (and a hill covered with ugly telecom towers), it's a place where there are lots of high school and college students and the local businesses reflect that, and it competes with Friendship Heights for retailers. The neighborhood groups have pushed for years for a BID and streetscape funds and for an intelligent retail strategy, but all the Office of Planning wants to do is upzone, the effect of which will be to drive out retail rather than improve it. Babe's is gone precisely because someone (mistakenly) thought they could make a killing on condos at that site.

Anonymous said...

Because Tenleytown would look very different today (for the better) if residents had worked with developers rather than taking immediate antagonistic stances with them.

The result is a commercial district which is not living up to its potential in terms of neighborhood amenities or revenue to the city.

This too will change in time.

Anonymous said...

I'm glad to see this proeject go by the way side. The general idea is great but the proposed building was the usual modernist shmaltz with no care for detailing. Get a real architect who actually cares about civic beauty.

Anonymous said...

I see that the "sophisticated" level of discourse continues regarding development issues in the Upper Northwest between those being labeld "Nimbys" and the "Stupid Growth" folks. Time for some more mature discourse, don't you think, and that will only happen when pejoratives are no longer a part of the posts.

Anonymous said...

I personally like Tenley retail!

Just for kicks, Clemens' has his house up for sale.

http://www.marcfleisher.idxre.com/idx/detail.cfm?cid=11821&pid=DC6455461&bid=30

Anonymous said...

Neighbors worked with IBG and it was awarded a PUD for the Babe's site with the support of the community. Nothing has been built.

The ANC quickly reached a voluntary agreement with the Eyebar owners re their lounge. It hasn't been built.

Akridge got exactly the PUD it wanted at the Buick site despite neighborhood opposition. That project hasn't been built either.

The political hurdle is only the first that a developer faces and most clear it. In fact, a developer doesn't need to face this hurdle unless he's asking to build more than (or something different from) what the zoning allows. The neighbors have no say unless the developer asks for some legal restriction to be waived.

With the possible (but not clear) exception of Commerce Bank, it's not the politics but the economics of development that is causing vacancies and black holes right now in Tenleytown (and, if you look around, in Cleveland Park, in Glover Park, and other upscale neighborhoods with retail strips.)

But people who have paid upwards of $800,000 for a house in Tenley feel entitled to better-looking retail (even though they have significant and well-regarded retail like Whole Foods, Best Buy, Container Store, Middle C, Starbucks, Guapo's, 4912, Matisse, Krupin's, etc.)

The reality is that they are surrounded by other even more expensive neighborhoods that, in different ways, are more attractive to retailers. Cleveland Park's neighborhood commercial overlay and historic district make it particularlly appealing to restauranteurs. Friendship Heights has had large tracts to offer for retail development. Wisconsin and Macomb and Connecticut Avenue just south of Chevy Chase Circle have parking lots hidden behind pedestrian friendly environments. Tenleytown has none of the above.

There's just not infinite demand for retail which means that no one neighborhood has the best of everything. Given how close these neighborhoods are to each other, there's no major inconvenience or deprivation involved. If you want Tenleytown's retail strip to look better, stop blaming your neighbors or expecting some new residential building to transform your environment and start working on streetscape issues and match-making.

Paolo said...

Well bummer. Count me as one of those that has been following this project since day 1 and had contacted the front office a number of times to get information and find out where I was on the list of investors. I should have known that there was a problem when in 2005 I offered a deposit on a Maxim unit to reserve a particular model. That is what I was used to in San Diego and to be honest I was nervous about having potentially "missed" the opportunity to get into the project. Anyway, after a month of phone calls asking to pay a deposit on a unit and filling out the investor paperwork, I was finally contacted and told to simply wait and that my name had been recorded and I would be contacted once the sales office was established.

Anyway, my research of Maxim is what turned me onto this digest.

20/20 hindsight, I should have known that a building that did not even have a sales staff certainly would never come to fruition. I have no idea where the blame lies with for this and Janey and the Library, but it is sad as I thought for a moment that Tenley town was going to be my home. Tenley has the perfect mixture of RAW ingredients, but either a DC Government intent on sabotaging one of their own wards or neighbors who do not want to share their diamond in the rough have made Tenley a sad case study.

Anonymous said...

Anon 4:15. Elevating the discourse are we? "stupid growth"?? very clever too. clear to see which side you are on. Just wondering what is "Stupid" about the concept of "smart growth". since you are so in to having a real debate and all. Is it really stupid to maximize growth around metro stations? Is it really stupid to expect residents of a CITY to have the brains to expect the city to grow? Why you Nimbys are even allowed to have a say I dont know. The City should just increase the hight limit to 15 stories around all metro stations and tell the Ludites to go fly a kite. cash in your places and go to frederick if you dont like it.

Anonymous said...

I too am new to this discussion, but I have to agree with the prior post who suggests that the residents in the neighborhood have a hand in shaping the lack of opportunity in Tenleytown.

Anonymous said...

Its people like Sue Hemberger and her NIMBY gang that have destroyed our city by making it prime for only the best funded big box chains and vanilla developers to take any risk.

Thank you Sue for the Container Store and Best Buy!! I love having those traffic inducing uses in my neighborhood!

Thanks for beating down the Babes to the point of infeasibility. That black-wrapped building is gorgeous and can't wait to see who buys it! Maybe we'll get lucky and it will be a strip club!

Thanks for the "no more than four" townhouses one block from the Metro. Suburban style townhouses sure are a great use of that space!!

Thanks for scaring all the developers away so that the best use we could get for one vacant lot was another drive-thru bank!

Sue, you are the best!

Sue Hemberger said...

Wow, it's amazing to me to learn I have such power -- even over projects that predate my involvement in local development politics! Apparently, I own a wayback machine as well as a magic wand.

Since whatever I say goes, I now decree that the Tenley-Friendship library will be rebuilt ASAP and Janney Elementary School will retain the use of its entire campus and its addition and renovation will be restored to their rightful place in DCPS's modernization queue.

Ah, that felt good!

Anonymous said...

Sue, you are a master at the hit and run. First you direct caustic blame, then deflect it when it comes your way. Face it, the little gang you hang out with has really screwed up our neighborhood. Unfortunately, you do have power because you and Marilyn and David and the rest of the NIMBYs intimidate neighbors and harrass city officials until they have no choice but to bow to your demands. I really wish I had the free time you did, but you see, I have this thing called a job.

Anonymous said...

man. I feel for you Tenley folk. I do not know this Sue character but mark my words and mark them good. There is a worse NIMBY in Mount Pleasant. She goes by the name of Laurie Collins and if her and Sue havent met they should make it a point to do so because that would be a match made in heaven. Laurie doesnt even live in Mount Pleasant but scares away all development with her group of mpna old timers who dont want anything to change in the neighborhood. So next time you are bemoaning Sue. ask yourself how much more pissed you would be if she lived in friendship heights while disrupting tenleys growth! and thats the situation in Mount Pleasant.

Anonymous said...

Oh, don't worry, Sue and her gang have meddled plenty in Friendship Heights too. They are committed to making Wisconsin Avenue look like it runs through West Virginia instead of upper NW DC.

Anonymous said...

Any update? How much did it sell for (and to whom)?

Anonymous said...

Sue hasd made an enormous contribution to the Tenleytown-FH community through her intellligent and fair presentation of facts. Her detractors, I notice, are strong on diatribe and venom but woefully short on facts or anything that purports to be information rather than accusation. It's fact that Clemens, by paying almost twice what IBG paid scarcely a year later, grossly overpaid for the Babes site. It's fact that the real estate market has tanked, taking with it Babes and other projects all over the city. Why is this an excuse for such venom?

Neighbors of positive and cheery demeanor should get together, as another poster suggested, and work with the property owners to help match new tenants with the vacant properties and try to get some of the storefronts refurbished. A lot of the problem is that the places look scruffy because they're not well kept up and there's no coordination of design elements like awnings. It doesn't take demolishing the buildings to make the area look more appealing. For those who subscribe to the "build 15 stories and watch the neighborhood improve" theory, please go to Ballston before you get too enthusiastic. It's sterile, dreary, the suburbanization of what might have been a great place. Is this really what you want for Tenleytown?

I believe there is a better alternative. A Metro stop doesn't necessarily mean 15-story buildings. Look at Paris with its 65-foot height limitation and Metro stations all over.

Neighbors who want improvement rather than argument can work together. And people like Sue and David and Marilyn have made significant contributions to the discussion with their willingness to do research and work from facts rather than theories and platitudes.

How about if try working together from our areas of agreement?

Anonymous said...

The problem is, PP, that David and Sue do not speak for the community.

It is clear that the community supports more density around metro stations.

It is clear that sustainable living in the future requires more housing and retail around Metro stations.

Is anyone calling for 15 stories? Please stop with the exaggerations.

Tenleytown is scruffy, and while there is little good retail, there could be so much more.

Now is the time to get it done.

Anonymous said...

Well, but the end of the story here is that the failure of the residential project will bring retail.

The consumer base in the area isn't the problem. It's the economics of competing land uses. Higher density residential development tends to drive out or marginalize retail uses. Requiring mixed-use residential/retail buildings isn't the solution -- it creates substandard retail storefronts compared to other new entries in the market -- e.g. in Friendship Heights, MD

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