Friday, July 31, 2009
Labels: Georgia Avenue, LEED, Silver Spring, Willco Companies
Replacing what is currently a parking lot, the building will top out at the maximum allowed height, 143 feet, and will provide 275 parking spaces in its five-story parking garage - one level below, four above ground. Proximity to the metro was a factor in the plan which offers 40% fewer parking spaces than allowed at max; an effort to promote mass transit and reduce local traffic. The remaining 8 stories above the garage will be the office space.
In addition to trying to secure an anchor tenant to fill the majority of the office space, Willco is trying to bring in a restaurant and another service-oriented retailer for the planned 6,000 square feet of retail on the ground floor (featuring two-story ceilings). Richard Donnally, the lead architect on the project and Senior Principal at Donnally Vujcic Associates, indicated that the developers are in talks with a "few firms," but nothing is secured and in writing. Ditto on the restaurant.
The team has submitted its site plan to the Montgomery County Department of Parks and Planning. Wes Capps, an Engineering and Construction Supervisor at Willco, said they anticipate a 2011 completion date assuming the approval process moves along without any issues.
Thursday, July 30, 2009
Labels: auction, Capitol Riverfront, Davis Carter Scott, Lehman Brothers, Monument Realty, Navy Yard
The Gold status, the second highest rating in the system, was awarded by the U.S. Green Building Council (USGBC) and came as a surprise to the developer, which had expected only the Silver certification. "[t]o be awarded Gold is a true testament to the hard work that all the team members put into this project,” said Michael Darby, Principal of Monument Realty.
55 M Street, a Class A commercial office building in the heart of the Capitol Riverfront neighborhood - and the official pedestrian entrance to the ballpark - features 275,000 s.f. of office space and 13,000 s.f. of ground floor retail directly above the newly expanded Navy Yard Metro station. Architect Davis, Carter, Scott included environmentally conscious design features such as a green roof and an LID (Low Impact Development) streetscape concept that captures rainwater to irrigate street trees and plantings and reduces storm water run-off. Monument has yet to begin work on the residential portion of the block, for which Lehman was a partner, and has no immediate plans to add to the residential stock of the neighborhood.
Gerard DiRuggiero of Urban Land Company was concise in his answer to our inquiry. "The developer is having problems with the lender. We still have tremendous interest in the building. It appears to be one of the more popular buildings in the city as so many real estate agents keep bringing people who want to buy. And that's the update." Click.
In June, DiRuggiero said they planned to give buyers weekly updates. Hopefully potential buyers and current residents are getting more details in their updates on the Floridian's status than DCMud.
Wednesday, July 29, 2009
ANC-7D Chairperson Willette Seaward said that despite the city's award of the project and subsequent land disposition review, there was no "official" ANC support. Seaward said she believed Donatelli had met with residents only once after being awarded the RFP last October and failed to "engage the community."
The primary issues are traffic congestion and pedestrian safety at the intersection of Minnesota Ave. and Benning Road. Resident groups like the Coalition for Smarter Growth want public easement and right-of-way for a possible future street connection that would extend Minnesota Ave. along the Metro tracks and add an intersection to reduce congestion. Neighboring ANC7C04 Commissioner, Sylvia Brown was frustrated that prescribed changes in the Minnesota Avenue Great Streets plan, such as the Minn-Benn Phase 2 Benning bridge access road, were not implemented in Donatelli's plan.
Commissioner Seaward said residents are also concerned about not having enough market-rate housing necessary to attract high-end retail. Additionally, the community wants a binding benefit agreement to include public green space, internships and job training for residents or funds for local community centers. Commissioner Brown said the community wants to shed its reputation for being opposed to everything by working with the developer to find a solution.
According to Chris Donatelli, President and CEO of Donatelli Development, the project is not going through the PUD process, but they are working closely with the city on the plan since it is part of a public-private partnership. Donatelli cited the community spaces (think NGO offices) already included in the plan and modifications that added a for-sale component as examples of their collaboration. According to Donatelli, the July disposition hearing was the first time the developers were made aware of community concerns over right-of-way. At that time, DC Council Members asked the developer to consider including the right-of-way. Donatelli said they are meeting with DDOT and in the end are pretty flexible, "you always want to have community support."
We'll see what happens when Donatelli's team presents their project to the community this Friday the 31st at 6:30 in the 6D Police Station Community Room at 100-42nd St NE. It guarantees not to be a dull evening.
Suzane Reatig Architecture has designed a 32,125 s.f. multiple-family building comprised of 16 units, eight of which will be affordable to households earning 60%–80% of the AMI, with a mix of two and three-bedroom units, ranging from 1,150 sf. to 2,200 sf.
Additionally, there will be 11 surface level parking spaces, open green space at ground level, a green roof, small rooftop deck, and developers will shoot for LEED certification. According to Megan Mitchell, a Project Designer at Suzane Reatig, the firm has worked with United House of Prayer for All People before and was a natural partner in this new project.
The PUD application was first submitted to the Zoning Commission on March 23, 2009, the hearing is set for September 10, 2009.
Tuesday, July 28, 2009
Labels: Mayor Adrian Fenty
OPM currently has a staff of over 300 that handles major capital projects, administers construction procurement for District agencies, and provides security and protection in public buildings. "It is only appropriate that the true scope and nature of the agency's undertakings be reflected in the agency name" said DRES Director Robin-Eve Jasper.
The mayor's office did not issue guidelines for how to verbalize the new name (pronounced "drezz" or spelled out as D-R-E-S?), but did state that the change would take effect August 1st.
Monday, July 27, 2009
The two parcels in question are held by Vornado, which would sell the remaining portion of Parcel 3 to Kettler for the realization of Metropolitan Park's next stages. Vornado previously sold the part of Parcel 3, where phases 1-3, stand to Kettler. When Metropolitan Park's design guidelines were set in 2004, it called for 3,212 residential units on Parcel 3. The Pentagon City Phased Development Site Plan shortchanged Kettler, allotting 2,282 residential units and 300 hotel units. Through a little bit of density reallocation magic, Kettler can now have it's 3,212 residential units (2,282 + 930 = 3,212). That leaves Vornado with 300 hotel rooms to use, or not, on Parcel 1D, assuming the Metropolitan uses all 930 allocated residential units remaining.
The first stage of the massive development is bounded by 12th, 15th, Eads, and South Fern Streets. The Gramercy, pictured above, is a luxury rental high-rise building from Phase 1.
Friday, July 24, 2009
DCMud: Tell us what is happening with the Watergate and where does Monument Realty fit in?
MD: The foreclosure auction happened and there were no bidders except for the bank, who purchased the property. Going forward we... have already put in an offer to the bank. We believe they should accept [the offer]. Whether they do or not - I can’t control what other people do, but they should accept it because we have the ability to pay more than what the bidders bid at the auction yesterday.
DCMUD: How did you feel when the gavel fell yesterday? There must have been a sense of relief.
MD: When I realized there were no legitimate bidders, bidding on the property? Yes it was a relief. I’ve spent 6 years working on this project, going through some turmoil and some unfortunate and unusual situations. So to lose it with all the knowledge and all the work we’ve done on it would have been frustrating It certainly would have left a bad feeling with me, because I know I can finish it. I’ve grown very fond of the building and the potential building.
DCMUD: You said you put in an offer - did you have an opportunity for extensive conversations with the bank previously about your future with the project?
MD: We didn’t have many conversations because previously we were partnered with Lehman Brothers. Because of Lehman Brothers's financial situation, the bank wasn't able to work with the lender to do anything. I have, through another investor that I am working with, informed the bank that we have the ability to move forward with something. But they didn’t want to talk to anybody until after the foreclosure sale. So we had to wait for that to happen before we could come back to talk to them.
DCMUD: How does monument see the development of its other large projects? Projects like Half-Street, do you feel that everything that happened with the Watergate affects them?
MD: Each one is really independent of the next. Different projects suffer in different ways depending on the financial structure, depending on what type of product they are, depending on where they are in the development cycle or process.
The Watergate, since it had a third party lender, and the lender was not Lehman Brothers, there was the potential that Lehman and we could lose [the property] to the lender, should the term of the loan run out. We were not able to pay off the loan and that is what happened. So in that situation, [the] goal was to be ready to come in after that event and try to negotiate a purchase price for the lender with whomever would be the logical partner....
The ballpark deals: Lehman and our other partner McFarlane are very heavily invested and we don’t have any firm timing yet, except of course on the office building; that’s going though the normal construction process, we don’t look at that the same way. We aren’t so involved in that aspect as the management of that development project... So that’s just an ongoing project that we have to look at in terms of what’s happening in the market today to work out the best way of creating value going forward. We’re looking at every day, trying to work out what we can do to create value going forward. As far as any of our other assets, again it depends on what the status of them are, who the lenders are, what they’re willing to do, who our equity partners are, what they’re willing to do and then whether we have other source of capital to do the best deal we can do.
DCMUD: So I hear you mention the office building on Half Street, that that was part of a giant project where there was a 2-acre hole in the ground, and had previously been told that construction would start in 20 months or so, what is the status of the project? You had said it depends on the financing on projects - was this one where you had third party debt...was it just you and Lehman or was it one of your other financiers?
MD: It’s Lehman, McFarlane and us. We dug the hole because it was cheaper to dig the hole while we were building the office building portion of the development with the thought that we would continue on at that point in time with the space available. At that point in time there was financing available-we were fine with financing. So when the world kind of stopped, the financing went away and obviously we had a hole in the ground. We managed to stabilize the hole, make sure it is at conditions satisfactory to the District of Columbia and obviously to us. At the right time we’ll begin construction again, with already having value from with what we’ve dug that ditch with. It’s stopped the project somewhat in midstream, [and] its a very visible space, which is a shame. But I’d rather stop it there rather than halfway up, or complete without any prospects of tenants. I’d rather be at this point in time than in the future. We own that property, free of debt, so we’ll sit on the property and wait for the right time to build the residential portion of the development. At that point in time, we will have created one part of the Half Street vision. And we can put in the retail that we expect to put in there and have whole bunch of great retail in line for the ball park.
In 1991 in the east end of DC we have the same situation where the Verizon Center is today, between there and 13th Street, and north of Pennsylvania Avenue was pretty much a no-man’s land and you look at it today, it’s hard to believe that there were people who wouldn’t walk in those areas at that time. It’s a vibrant area that is great and everybody loves being down there. That would be the same thing with the ball park area, it will just take time to do that based on where the market is and where the economy is.
DCMUD: How do you think your story and the story of the Watergate compares to others in the industry and other projects in this climate?
MD: I don’t know how other people have structured their financial situation with their investment partners. We always structure it in a way where we try to minimize our liability on any project in case this kind of thing happens. And we do that so that we can hold cash and be available to fight another day when things happen. To tell you honestly, this downturn is certainly has been a good thing, from the standpoint that there’s a lot of people who have lost a lot of value, however as a developer you know we can’t make money unless there are opportunities out there to create value. Where the market was prior to this downturn, was at a point where there wasn’t much value to be created. It got so heated up that I wasn’t interested in doing a lot of deals because you were betting on something that was basically false inflation. And I don’t think that’s a good way of doing business.
So that fact that the market has been affected, gives us opportunity to go out and buy if it’s at the right price, and develop properties based on the right value, the right construction costs and be able to make money again. And that’s where we started from in 1997 when we started the company and that’s where we’re back to that situation. And some ways, again its taking a little while to sort things out, [for] those opportunities to become available- and they will become available and that’s great for us. We’ve got a great team here and we’re ready to go moving forward and buy stuff and develop. It’s a good thing from that standpoint. It’s not a good thing from standpoint on the value we’ve lost of the deals we do have up and going but it is good for the future as well.
DCMUD: So you think there is definitely a future for Monument Realty in development?
MD: Yes, absolutely. For the good developers in town that understand that there will always be recessions and slow downs, that understand what relationships are all about, and that building relationships early in your career is important so that there’s always capital sources available, there’s always people to do business with you going forward. Absolutely there’s always a bright future for those people.For the people that are mired and stuck dealing with severe problems, they may not be able to buy new stuff in the near future while they get themselves out of these problems. For us, the problems started in the fall with [the] Lehman situation and we basically sorted through most of the problems even though it doesn’t look like it with the foreclosure of the Watergate. [It] was foreclosed financially [and] that was the culmination, so we could potentially move forward. [With regard] to our other assets, we are managing them and are able to look at other assets, that are becoming available on the market.
Labels: Bethesda, Clarett Group, Rounds Vanduzer Architects, Shalom Baranes Architects
At yesterday's Montgomery County Planning Board meeting, several noteworthy projects got the green light. Here's the run down:
4500 East West Highway in Bethesda: The board approved the Clarett Group's project for a LEED certified, 223,000 s.f., Class-A office building designed by Shalom Baranes Architects with conditions related to improved streetscape, public benches and lighting.
Reconstruction of Safeway at Arlington Road and Bradley Blvd: The board approved the plan allowing Safeway, Inc. to replace the current 1950's era building with a modern, 43,097 sf. building, designed by Rounds VanDuzer Architects. In return, Safeway must achieve LEED status and will contribute at least $5,000 to the BUP for improvements on the retaining wall of the nearby Capital Crescent Trail.
Woodmont View Bethesda: The board approved the plan, with changes, by developers Laurence Lipnick and Battery Lane, LLC, for a 79 foot version of their of their condominium building, denying the height extension to 90 feet, ruling that such an amendment has to go through the Office of Zoning Administration. The builders have the option of pursuing a height amendment, which at a minimum will take another 5 months because of the Zoning calendar but, if granted, would not require another pass with through the Planning Board. $5 says they go for the amendment.
DC Village, an emergency shelter for families plagued by "persistent" problems such as pest infestation, was closed down as one of the Mayor's earliest acts in order to provide for "a better alternative" to homeless families; an accomplishment he had sought since his time on the DC Council.
"The project will not only bring much needed job opportunities East of the river, it will provide significant resources to off set [sic] our current budget gap" said Deputy Mayor Valerie Santos. The Metro authority will pay $6.45 million for the site, on which it plans to build a $90 million facility to house up to 114 buses serving the greater DC area, with the potential to expand service for up to 250 buses. WMATA has been negotiating the purchase since before the shelter's closure. The new garage will replace the bus depot on M Street, near the Nationals' ballpark, which Akridge and Monument Realty fought over in 2007 and 2008 and which ended in a draw, with the two developers splitting the land and razing the bus depot.
Thursday, July 23, 2009
No word yet on why Western Development got the boot, nor why the elimination of one of the four remaining teams was significant. The Deputy Mayor's office issued a press release on Thursday inviting all developers (all except Western, that is) to submit "final" bids in "early August," stating that "the three proposals were the closest in line with the Capitol Hill community's preference...because they all called for a mix of neighborhood-serving retail, new housing and great public spaces." Presumably, Western failed to meet those needs. The Western team, led by local Ben Miller, who helped develop Chinatown and owns Georgetown Park, was recently heralded by the Citypaper for its concept of a nonprofit incubator which, unlike the other contestants, obviously failed to make the appropriate to-do about retail and housing around the Eastern Market site, leaving it well-funded but too fuzzy for local tastes.
The school was closed in 2007, in part to free up funds for the DCPS headquaters. Responses to the District’s request for final offers will be due in early August and a selection could be made as soon as the end of August.
Is it possible to hide a six-story office building on an historic street in Dupont? Two Queen Anne style rowhomes in Dupont are one step closer to having a six-story structure built behind them. Today the Historic Preservation Review Board (HPRB) consented to plans presented by Creaser O'Brien Architects with the caveat that the building must not be visible when standing in front of a building across the street. If something goes wrong - HPRB will demand a top floor hair cut. Eek.
The two Dupont rowhomes, 1820 and 1822 Jefferson Place NW, have long been in use as office space and are currently connected internally. The planned addition is designed to appear as a unique structure behind the two existing structures. Among the concerns raised in the HPRB staff report was the 26 feet the new structure will rise above the roofs of the original structures, the other is the proposed removal of the original brownstone stair in favor of a retractable stair with a lift in order to provide accessibility.
First, the height issue. The HPRB has a standard by which additions are allowed in historic structures if the structure is subordinate to the original structure or, in some urban areas, if the structure is separate from or behind the existing structure and can be hidden from view. One such exception was granted on the same street in 2005, and the staff report applied these same standards to the proposed project at 1820-1822 Jefferson. The architects altered the planned height as measured from the curb from 67 feet to 65 feet inches. The board passed the recommendation to adopt the staff report with the caveat that the architects do more to refine the design aspects of the planned new build, which was described as minimalist and too modest.
When the HPRB refers to an element slated for removal as a "character-defining feature," you've got problems. Proposed removal of the brownstone front stairs faced competing priorities of accessibility and historic preservation. Board members were unwilling to accept the proposed plan to remove the original stairs and decided to defer the decision until other accessible options could be found. Namely, the potential of having a lift at another location onsite that had been previously altered and therefore would not have a historic effect.
Finally, the board passed a plan to require the group to perform renovation work on the existing historic buildings, feeling this was a fair request given the "monumentality" of the proposed structure. Whoa, six-stories; NYC is rotfl at that one. Proposed renovations include installing a more historically accurate replacement door and providing more green space in the public area in front, in keeping with the appearance of the neighborhood.
Wednesday, July 22, 2009
Labels: Bethesda, Morrison Architects, new condos, Woodmont Triangle
With developers for the Monty, Trillium, Rugby Avenue, 4900 Fairmont, Auburn Avenue, 4851 Rugby Avenue all unable or unwilling to move forward in Woodmont Triangle, developer Laurence Lipnick and Battery Lane, LLC will try for site plan approval of Woodmont View at the Thursday meeting of MNCPPC, on the question of whether to allow 46 two-bedroom condominium units in a 9-story building, replacing the small office building on the corner of Battery Lane and Woodmont Avenue, and turning the single family home on the north end of the site into a "philanthropic" venue. The county's planning staff report has recommended approving the project, but with a few catches.
The plan began with an approval in March of 2004 for construction of townhomes on the site, but with a 110-foot building going in across the street, or at least the prospect thereof, and lots of low-income and multi-family housing in the vicinity, building townhouses no longer seemed like such a good idea, and so the developer made a plea for the extra density.
Complicating the plan - please mind the arcanery - is the Bethesda-Chevy Chase school district's moratorium on new construction that began July 1st, intended to stop development until the school system catches up with population growth. The open-ended moratorium clearly proscribes the subdivision of lots, but may less obviously affect the conversion of an office building into a residential tower. Woodmont View does not subdivide the existing lot, but still raises the fur on the neck of planners who see it as breach of the meaning of the moratorium, and the county has to rule on the matter of its school impact before it will issue a construction permit. All this "for 1.9 children," according to Debra Borden, an attorney with Linowes and Blocher, referring to the number of children the study deems will need accommodation as a result of the development. No 1.9 children left behind, it seems.
The height issue is the developer's Hail Mary to get 90 feet out of the site, originally zoned for 65 feet, and granted a 14 foot exception due to the provision of 8 subsidized units. The developer has requested an additional 10 feet 8 inches, an addition which would keep the building at 46 units but increase the size of each. A county synopsis of the project notes approvingly that the new design facilitates transit-oriented development, "help[s] provide a northern gateway to the Woodmont Triangle," contributes to urban planning guidelines with streetscape improvement and three levels of underground parking, and that 9 full stories would "be compatible with the surrounding buildings." Nonetheless, their Spidey sense tells them its still just too darn high.
According to project architect Eric Morrison of Morrison Architects, who has designed renovations to local embassies for the Czechs and Argentinians, and was the local architect for the much vaunted Finnish Embassy, the apparent height of the building will not change, but will only add to the stepped-back level of the ceiling behind the ornamentation. Morrison says that the peaked facade is due to Bethesda's mandatory inclusion of attractive rooflines. The design will also be broken up so as to appear "not as one monolithic structure," according to Morrison, who also likens this and its twin on the other side of Woodmont Avenue, to "a nice gateway" to Bethesda.
Oh, and Lipnick must provide and maintain a bicycle on the premises for travel to NIH (not for other purposes, mind you), along with pump, (not making this up) tube, bike lock, and both kid and adult helmet (color not specified). In perpetuity. Which seems like a very, very long time.
Post your comments about this project below
Labels: Bethesda, Capital Crescent Trail, Rounds Vanduzer Architects, safeway, supermarkets
The planned structure would replace the single-story, 25,568-sf., 1950's era building with a modern, 43,097 sf. two-story building with elevated sales floor located above structured parking at and below ground level, much like its Social sibling. The architect for the project, Rounds VanDuzer Architects, plans to use a variety of materials to break up the largely unfenestrated building with pavilion-like structures, including a brick base with stone, steel, stucco and glass accents.
Improved sidewalks and streetscapes will provide pedestrian access from several points on Arlington Road and at the corner of Bradley Boulevard. Though there is no direct access to the adjacent Capital Crescent Trail, the plan provides for a covered bike station with drinking fountain and air pump on premises to improve bike access - so you can bike to the grocery. Additionally, the plan includes vehicular access directly from Arlington Road and via a right-in, right-out driveway off Bradley.
The storefront will feature a revolving public art exhibit, orchestrated by the Bethesda Arts and Entertainment District. Safeway will also provide financial support to the Bethesda Urban Partnership (BUP) for beautification of the Capital Crescent Trail retaining wall which runs along Arlington Ave., a response, in part, to local resident concerns.
The staff recommended approval with conditions, most notably meeting requirements for stormwater management, and achieving LEED certification at minimum. Transportation conditions include adding bike lockers in the parking garage as well as showers for all those employees who commute via the poor man's metro. The plan goes before the Montgomery County Planning Board for review tomorrow, July 23rd.
Tuesday, July 21, 2009
Labels: auction, Monument Realty, PB Capital Corp., Watergate
Ten bidders, including hotel chains and developers both US-based and international, registered, having demonstrated their $1.1 million deposit. However, the $25 million opening bid apparently was more than they were willing to bite off. Several developers remain interested in the property, including Monument, which may ultimately work with PB Capital to buy the property back and continue their plan to develop a hotel with some areas zoned for residential use.
The would-be 16-story residential project would have replaced the eateries on the corner, including Indian restaurant Haandi, with 118 units of housing at the corner of Fairmont and Norfolk Avenues. With approval of the application likely, developer 4900 Fairmont, LLC has until January of 2011 to file a site plan with the county. The project was initially approved in December of 2007; the extension request will be formally heard at the county board's July 30th meeting.
Bethesda real estate development news
Monday, July 20, 2009
The sale terms listed on Alex Cooper's website detail a process that will require $1 million up front (the starting bid was not disclosed), so be prepared to show the money to get in the door. Paul Cooper, principal at the auction house, said the response so far has been "tremendous," but that he had “given up speculating” how many bidders might show.
As seen in this document Monument was given the standard 30 days notice to pack the linens and move out, or secure funds to prevent foreclosure. But with financial times like these and the bankruptcy of Lehman Brothers, the financing partner on the project, no financing has emerged and the gavel will fall tomorrow at 5301 Wisconsin Ave N.W. at 10:15 AM.
So if you want to get a chance at owning a piece of history, bring $1m. Which, you might feel good to know, is less than it would have cost to buy a single unit back in the day.
Washington DC real estate development news
Saturday, July 18, 2009
DCMud: First, tell us about Prospect Diversified.
JM: We are investors in multi-family properties - both value add and ground-up development opportunities. Transactions in that market, however, are sparse. Sellers of property still expect that it’s worth what it was in 2006 during the condo conversion and development boom. Today’s economic and underwriting conditions have eroded values considerably since then, but sellers are having a hard time shaking that historic context.
DCMud: Can you detail some of your past firms and projects?
JM: I was with JBG from 2000 to 2005 and with Lowe Enterprises for about a year and a half. Then I joined Trammel Crow from October of 2007 to October of 2008. When I started with JBG they were just starting to focus on residential development in the urban core. They identified six vacant sites, and I'm stressing vacant because there was no displacement of residents required to provide this very significant addition to the housing stock. There were two in the West End/Foggy Bottom, and then 1210 Mass, 13th and N, 9th and E which is now a condo called the Artisan, and a site at 6th and G called the Cosmopolitan. They were all expected to be rental apartments but today only two remains rental – the rest went condo. Many of those deals were done in joint venture with Equity Residential.
DCMud: What's your prediction for how residential development is going to shake out in DC?
JM: On the financing side, many of the larger construction lenders are out of the residential business. Some of the local banks will actually look at these deals, but they’re just not penciling right now because cap rates have risen, rents are flat, and risk capital is demanding higher returns. The condominium development market is dead, so it’s only rental properties that we’re looking at, particularly stabilized buildings in need of repositioning and renovation. We have offers being considered on those kinds of buildings, but, to date, we’ve not closed on anything. We’re looking at areas where there is already a well established and well understood market – partially because the art of financing is the storytelling that goes along with it, these neighborhoods include Columbia Heights, 14th Street, U Street, and as far east as 9th Street by Howard University. These are areas that, when the market was growing, you could see residential migration in that direction. Now that the market’s flat, it’s probably where development is going to continue once things improve.
It’s helpful to note that DC has a lot of unusual characteristics - the entitlement process, layered on top of the historic review process, layered on top of a tenants’ rights process. I think having sense of all these elements and knowing the players helps in specializing in the DC market.
DCMud: As a developer, what is your greatest frustration of building within DC's rules?
JM: Mandatory inclusionary zoning is legislation that requires, in many newly constructed buildings, that a portion of the units to be affordable. The City gives the developer some additional density to offset the additional cost for this requirement, but the affordable housing they’re asking for is not really workforce housing. It’s housing for folks at the lower end of the income spectrum and the rents are accordingly low. But sometimes giving a builder more density is not always a plus because he might have to change to a more expensive construction type, and because the city has certain height restrictions, sometimes the envelope in which you’re building can’t actually take more density. Given the huge economic burden of the affordable housing and at the legislated income levels, the extra density rarely provides a dollar for dollar offset for the requirement.
DCMud: But some would say it is worth the trade-off.
JM: Affordable housing is going to be an important goal for any urban municipality. But it needs to be balanced against the unintended consequences. The total number of affordable units the legislation might actually produce is tiny when compared to the existing affordable housing stock in the city. But the impediment to production of market rate housing, due to the legislation’s material impact to a project’s economics, means fewer income tax-paying, urban consumers that DC so desperately needs to remain vital.
Everyone thinks that developers are making money hand over fist and we’re not. We’re making risk-adjusted returns for the capital invested with us, and right now, we can’t even make those returns because of the current economic conditions. That means it’s going to take that much longer for the urban renewal to continue. We’ve done a pretty good job as a real estate business community – on the commercial, retail and residential sides – in taking areas of the city that were underutilized, and without displacing anyone, bringing jobs and residents to these neighborhoods. The Mount Vernon Triangle is just one example.
DCMud: Speaking of the Mount Vernon Triangle, you serve on the board of the area's Community Improvement District. You've worked on some prominent projects in the neighborhood, but what is the CID up to these days and what is the outlook for the MVT?
JM: CityVista is the biggest one that one I’ve worked on – 650 units, 100,000 square feet of retail with a 55,000 square foot Safeway in it. The Safeway is doing very well and, as Chairman of the Mount Vernon Triangle CID…I follow closely what’s going on there. The CID has played a crucial role in helping bring additional services and attention to this area that only a few years back was mostly a series of parking lots. The CID is focused now on providing safety and beautification services to the area, and with the help of several grants we’ve been able to upgrade the landscaping in the Triangle. As more development delivers in the Triangle, the CID will be able to provide a growing set of services.
I was involved in the development of a building for JBG called 555 Mass and, when I moved to Lowe Enterprises, I went to work right around the corner on CityVista, so I’ve been involved with the neigborhood’s revitalization for nearly ten years. CityVista has done remarkably well considering the climate we’re in right now. I understand that the lease up of the rental apartments has been brisk. The condos sold well out of the box in 2006 and then hit the headwinds, but, even so, it’s been the fastest selling project in DC.
DCMud: Of all the three jurisdictions included under the umbrella of the “the metro area,” which one do you think holds the most promise as the market begins to rebound?
JM: I really like Arlington. I can’t think of another well-established and semi-urban place that is as open-minded and thoughtful while also understanding the economic drivers of our business. They’re pro-growth and smart growth. The way they’ve been able to create density around every Metro stop is something that DC hasn’t really gotten its arms around yet. In Arlington, it’s a well-understood entitlement process and you know you’re going to have a guaranteed market…Anything along that Metro line is golden.
But, the District is good because there is no entitlement process if you are building according to the existing zoning. If you have no historic issues to deal with, you can essentially apply for a permit and start building. You don’t have anyone telling you what exterior stone to pick and commenting on architectural details like rooflines and window styles, as is the case in the remaining surrounding jurisdictions. Quality buildings begin with quality design by architects, not community activists, city planners, and elected officials.
DCMud: With the market shutting down, there are a lot of developers that are no longer affiliated with a large firm. What's it like going out on your own, and what would you recommend to others?
JM: I think our business is in a transition...when I first got into real estate in the early 90’s the majority of the players were smaller, entrepreneurial groups capitalized with third party joint venture partners. It transitioned to fund-based and institutional capital closer in form to investment bank or private equity funds. That transition sucked some of the excitement and entrepreneurial benefit from the development process that drew so many of us to the business in the first place and replaced it with hyper-reporting, organizational charts, and group-think decision-making. Speaking for myself only, I wanted to return to the very basics of our business – identifying opportunities, selling the dream to investors, executing a plan, and harvesting returns. To the extent I am pursuing that goal I feel extremely gratified, but as I said earlier, this is a tough market to start any kind of venture.
Friday, July 17, 2009
The new Marriott Courtyard is designed to meet the Gold LEED standard set by the U.S. Green Building Council, using low-VOC materials, solar-powered trash compactor, a reflective roof, and HVAC systems that don't use ozone-depleting refrigerants. Very cool. In addition, "100 percent of its energy" will be provided from wind power through the use of renewable energy credits by purchasing energy through an alternative provider, which in turn sources energy from an assortment of wind farms. Michael Ward, VP of Development at Grosvenor, said the hoteliers expect the alternative energy to cost the hotel an estimated $6,000 per year in increased charges.
Designed as one of Marriott's "refreshing business" concepts, the hotel replaces the traditional check-in desk with "welcome podiums" (an inn-convenience?) and business-oriented lobby. The hotel was purchased in 2004 by Grosvenor Americas, managed by Bethesda-based Hospitality Partners, and operated by the Courtyard, a sub-brand of Marriott.
The original hotel was built in 1970; the new Marriott comes online at a propitious moment, with the opening of Wisconsin Place, a large mixed-use project, now beginning to open for business.
Chevy Chase real estate development news
The District government unveiled its request to developers today in a bid to redevelop three District-owned sites in the West End. The three sites, relics of a recent era when much of the downtown neighborhood was low-rise or vacant, are now anomalies amidst new, higher density condominium projects like 22 West, the Ritz-Carlton, and Columbia Residences. The RFP issued this morning calls for development proposals to redevelop the West End Library, fire station, and special operations police unit, all of which must continue in operation in some capacity, with the police unit likely being relocated.
The RFP was released on Friday. The District is seeking "creative proposals," due by October 2nd, with broad latitude to develop an overall plan, while (nudge nudge) taking into consideration neighbor's overall vision for the neighborhood - a plan that foresees safe, lively streets with a local retail center, and more vibrant Washington Circle, revamped to be more of a meeting place. Non-negotiable items for the 51,000 s.f. of land include replacement of the library, which must remain "in the immediate vicinity," and while respondents are not required to adhere to the plan's main wish list, plans that don't will require "community stakeholder" buy in.
Highlights of the RFP's wish list include "livelier streets," sub-surface parking, workforce housing, "activity generators" like move theaters, "green demonstration" buildings, incubators, and outdoor meeting spaces. Preference will be given to plans that "maximize the development envelope." A heavy presence of "disadvantaged" businesses is, of course, assumed, and the land is available either for sale or lease.
The Mayor's office issued a press release at the short ceremony and cited "a unique opportunity to leverage to value of this land to not only build additional housing and neighborhood-serving retail, but to build critical first-class community facilities and significantly minimize the cost for our residents." Each of the two-story buildings is more than 40 years old and outdated for the services they should provide, according to the Mayor. The city expects to begin reviewing offers in the fall.
Redevelopment of the library site, like that of many of the District's libraries, has been contentious and slower than anticipated. The District started the process in the summer of 2007, when the Council passed legislation that would facilitate development by way of sale to Eastbanc Development, which developed the Ritz Carlton hotel and condo, but local opposition to the non-competitive process halted the sale. Many of the opponents sought a plan for the site before transfer to a private owner, community groups have since held planning meetings to give design and use recommendations.
Washington DC real estate development news
The progress Arlington is looking for is the new streetcar line (streetcars are the new blog...everyone's got one). Barbara Favola, the County Board Chairman, said taking control, "will make it easier for Arlington to ensure the transformation of Columbia Pike from a suburban highway to an urban, pedestrian focused and transit-oriented main street." The county will pay for maintenance and other expenses ranging from $180,000 to $450,000. A small price to pay for a progressive County, tired of review processes and applying for design exceptions from VDOT, which often led to project delays. Over the past 10 years, the County has spent about $12 million on capital projects along the Pike with another $9.5m slotted for the future.
Joan Morris, VDOT Public Affairs representative for Northern Virginia, told DCMud that "this was a first" but that the County's plan had been in the works for a while and VDOT had been kept abreast throughout. The project ultimately has to get approval from the Commonwealth Transportation Board, a 17-member board appointed by the governor to oversee VDOT. The board meets monthly and the Columbia Pike issue should go before it in the fall, either October or November, and barring unforeseen complications, the exchange should take place in January.
Wednesday, July 15, 2009
Details of the Request for Proposals have yet to be released, but the District seems willing to leave open the possibility of one developer for the three sites, or separate developers. It is not yet clear what uses, if any, the District will require of the developers, and whether the developers will be required to keep services on site or permitted to relocate the services.
According to Feras Sleiman, a spokesman with the Office of the Deputy Mayor for Planning and Economic Development, the most important criteria will be that each of the services be maintained "with no interruption." At least one site, the special operations division for White House detail, seems irrelevant to services for West End residents.
A press conference will be held on Thursday at 10:30am at the library.
Labels: Canyon-Johnson, Donatelli, Georgia Avenue, Petworth
Though construction is still incomplete, the development will soon add 156 rental apartments and 5 rental town homes. The building will offer 20% of the space as affordable housing, something the community has long desired, according to Fenty. Residents will also have access to 187 underground parking spaces in addition to the Metro. The ribbon cutting ceremony took place on the landscaped roof, which boasts views of the National Cathedral, Capitol Dome, and National Monument.
The retail space will be divided into 8 bays and the occupants will include a cafe, two sit-down restaurants and potentially a wine store. Local businesses from the U-Street area (familiar with Donatelli's project there) are considering coming to the area to build their second or third DC-location in the Georgia Avenue/Petworth Community, according to the developer.
Funding for the project came from several sources including $15 million from Canyon Johnson Urban Funds (a partnership with Magic Johnson), $55 million Citibank and $2 million of Graggs and Donatelli's own coffers "because of the financing state."
Donatelli was awarded the low-income supporting contract without govt. subsidy by the Office of the Deputy Mayor for Planning and Economic Development through a competitive process in 2004, and construction began in 2006. The project was originally intended as a for-sale condominium, but the meltdown in condo prices in Petworth forced the conversion to for-rent units. Chris Donatelli has had a busy few weeks, just last week we reported on his planned development adjacent to the Benning Road Metro. Donatelli, which also revitalized Columbia Heights, is building another, smaller apartment building across the street from Park Place.