Thursday, March 17, 2011

St. Patrick's Day Special: Kelsey Gardens for Sale

Kelsey Gardens is for sale. Well, still. Okay, erstwhile developers of the 280 unit apartment building in Shaw's burgeoning development strip put the property on the market exactly one year ago, but now are rebranding - just a bit - their city-sanctioned project next to the (possibly, someday) O Street Market.

Metropolitan Development had enlisted the help of Ideal Realty Group in March of 2010 to market the fully entitled project, which had been rebranded from Kelsey Gardens of low-income, crime plagued housing project fame, into Addison Square, a new mixed-income project embodying more modern concepts of lower income housing. Metropolitan sought a joint venture partner, financier, or outright sale of the property. But one year in, Metropolitan has dropped Ideal Realty in favor of MAC Realty Advisors, and dropped Addison as a marketing name.
Kelsey Gardens adjoins the O Street Market along 7th Street as would be projects looking for a suitor but - also along the 7th Street corridor - the new Shaw Library, Progression Place (underway), Howard Theater, and 2 potential housing projects at 7th and Rhode Island (1, 2)

Metropolitan paid $7m for the property in 2004, and has secured from the city $18 million in tax abatement, as well as a zoning change to allow the density in the form of a Planned Unit Development - with the catch that 54 of the 280 units be set aside for tenants making 60% of AMI. A sale of the property would require a purchaser to follow the plans, or be required to start the zoning process anew. Bruce Levin of MAC says his brokerage has compiled a substantial portfolio of apartments since its inception just a year ago, including View14 which is also on the market, but pulls no punches about his predecessor's inability to sell the plans, calling the past year "the low point" for marketing such projects. "But the market is very robust right now," says Levin. "We're crushing it" he says of the firm's portfolio.

It wasn't supposed to take this long. Neat signs still announce the project "Coming in 2010", and Metropolitan Construction Manager Jim Wurzel said in January of 2010 that he was "hoping we can start construction this summer." But ANC Commissioner and Shaw Main Streets founder, Alexander Padro was more sanguine at the time."We're probably talking 2011 or 2012 before anything is even torn down."

Lessard Architectural Group designed the project, which will (theoretically) include 14,700 s.f. of retail space along 7th. For the sake of Shaw, let's hope MAC crushes it here, and quickly.

Washington D.C. real estate development news


Erin said...

I say to developers: Invest in Shaw, it will be a great place to live, the most central residential locale in the city!

Anonymous said...

There's no reason that developers should have to go through PUD to create dense housing in such a central location.

Restrictive zoning like this just creates artificial scarcity and discourages investment.

Anonymous said...

How does this property make any sense at all, at this point? According to reports via the Washington Business Journal, the cost of the project will be $80.42 Million ($285,000 per apartment) for which only 54 are shown as affordable. In his 2009 Fiscal Impact Report, Nat Gandhi projected the actual value of the property per the development plan to be only $65 Million.

Why build a property at a cost of $80M with a value of only $65M and only 54 of a projected 280 apartments are going to be affordable? What am I missing here?

Q-Street said...

The developer was just at an ANC meeting a few months ago saying that they are breaking ground on the P street side of the property in late spring. Wonder what happened between now and then.

Unknown on Mar 23, 2011, 11:32:00 AM said...

If the set aside is at the income of 60% AMI that would be 112 unit at affordable income. The affordable tax credit are either 20/50 or 40/60. The set aside quaoted in the article is for the 50% AMI.

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