Half Street Fairgrounds Opens

Nationals fans at yesterday's home opener had the chance to see the newest open-air market at the grand opening of Half Street Fairgrounds. Recycled shipping containers were refurbished and painted to make space for restaurants and shops.

The recycled metal boxes fill a site that eventually will be developed by Akridge. But until new construction starts, the site joins the ranks of Brooklyn's DeKalb Market and London's BOXPARK Shoreditch in finding ways to reuse old materials and underutilized sites.

Adjacent to the ball park, vendors at Half Street Fairgrounds can take advantage of game-day shopping, with an entertainment and shopping destination for the neighborhood.

“Beyond opening day, Fairgrounds is expected to provide a dynamic shopping, dining, and entertainment destination to the Capitol Riverfront Neighborhood throughout the summer and into fall,” a press release states.

The site was created by Akridge, Bo Blair of Georgetown Events, which operates The Bullpen on the site, and Mike Berman of Diverse Markets Management, which operates the Flea Market at Eastern Market and the Downtown Holiday Market at Penn Quarter. It was designed by Christy Schlesinger of Schlesinger Architects. DCRE Commercial is the leasing agent.

Washington, D.C., real estate development news

Akridge's Half Street Half Way There?

Since Washington Metro Area Transit Authority (WMATA) did its best King Solomon impression, dividing its Southeast Bus Garage properties in half for two quarreling developers, only one recipient looks to be moving slowly forward with development plans, while the other has since gone bankrupt. While developers at Akridge reported making progress with their permitting, financing, and leasing efforts for their 700,000 s.f., mixed-use Half Street project, they insisted it would be a much more interesting news story come February or March, when more details emerge. But progress is progress, and news is news, and DCMud knows its readers are always salivating for every little morsel of information, no matter how small the crumbs.

So here's the latest scoop: Akridge is currently finalizing the construction plans, and expects to apply for permitting in the first quarter of next year. With a little bit of luck, the developers intend to break ground on the residential portion of the project by the end of next year. Although there is a distinct possibility the project ends up being constructed in phases, developers hope to build it all in one fell swoop, or at least in one drawn-out swoop, in which case a full delivery of all three buildings would happen roughly 22 to 24 months after initial construction. As developers, architects, and engineers lock in on the specifics of their construction plans, minor changes may be made, and details like number of units may be tinkered with, says Project Manager Adam Gooch, but nothing drastic.

The project's basic programming remains the same: two nine-story, Class A office buildings (totaling over 370,000 s.f.) and one 11-story residential building featuring approximately 280 units (outfitted with the standard amenities: rooftop pool and terrace, private courtyard, fitness center, etc). All three buildings will offer ground floor retail, totaling 75,000 s.f.. The retail spread will be multifaceted, each portion offering distinct sensibilities, and appealing to different demographics. Half Street will be the main attraction for passersby, featuring Class A retail and most likely to attract National's game-day traffic with "name brand tenants and white-table-cloth restaurants" says Gooch. The pedestrian alley in between the two office buildings will offer a more locals-friendly mix of cafes, delis, and boutiques. "It will be a glorified urban marketplace," explains Gooch, "In the vein of Eastern Market, a place where you can come home from work and grab a beer, grab some food, and pick up some flowers for your wife." Most hidden from foot-traffic will be the Van Street retail frontages, which will have a "grittier, more alley-like feel" due to the placement of curb cuts, loading docks, and trash pick ups. Here Half-Street residents might find a dry-cleaners, the local bike-shop, and maybe a sports bar.

Three firms combined forces on the design aspect of the project: HOK shouldered responsibility for the office buildings, Esocoff & Associates for the residential, and StreetSense for the retail. All three buildings will be LEED Certified, with the office buildings expected to earn LEED Platinum. While developers wait to activate the development site for construction purposes, Akridge plans to once again engage the public with their Bullpen Beer Garden during the 2011 baseball season. The 3,200 s.f. tented space will offer beer, wine, margaritas, and live entertainment to the public, and is also available for private events.

Washington D.C. Real Estate Development News

Making Half Street Whole

Construction noises and dust are a welcome sign at 1015 Half Street, a planned office project that fell victim to the economic times and has sat half-finished ever since construction stopped in mid 2009. The halted project was the product of a partnership between Opus East, LLC and Prudential Real Estate Investors until Opus ran aground and filed for bankruptcy in mid-2009. Now that court-appointed receiver, Douglas Wilson Companies, is in the picture, general contractor Skanska USA Building has a new $26 million contract to begin work again on the shell and bring 1015 Half Street to completion within the year. Skanska, which is developing the stalled office project at 10th & G, was the surprise choice in a bid awarded on April 23rd.

Construction, begun in October 2008, has now resumed, and will add 442,000 square feet of office space, complemented by 21,000 square feet of retail to the Capitol Riverfront neighborhood. The 10-story, WDG-designed building boasts a 2-story lobby, 8 1/2' ceilings, 3 stories of underground parking and views of the Capitol and Anacostia River. Opus purchased the property in 2007 from Potomac Investment Properties for $41.5m.

Skanska is shooting for a Silver ranking from the USGBC, the arbiter of greenness, by covering 60% of the roof with vegetation, using recycled materials, and adding bike racks and showers, among other features. Skanska Executive Vice President and General Manager, Chuck Brawley, said the project will "certainly be silver" but that the team is "hoping to get gold." Altogether a much different atmosphere than when the site was home of the Nation nightclub.

Skanska will still need to complete the building’s core and shell, including the building’s glass and precast concrete exterior skin before work on the interior commences, though Skanska anticipates completion by December. Brawley said his company "tried and succeeded to reuse the existing contractors" who had worked on the site, prior to the stall. About the significance of renewed work to the community, Brawley said the project is "realizing the potential of the area, moving the redevelopment along. We are excited to be part of this success." Skanska, headquartered in Stockholm, currently has 33 offices and 7,000 employees in the U.S. alone.

Washington, DC real estate development news

Half Street Digs Itself Out of a Hole

After weeks of speculation, construction is underway at Monument Realty's Half Street residential project. The prime real estate sits directly across from the Nationals' ballpark, was dug in the first months of 2007, with Monument's 275,000-s.f. office project rising on the northern portion of the crater. But when the remaining 2-acre hole sat vacant as the market was free-falling and funding of residential projects evaporated, speculation ensued about its demise. The hole became metaphorical as well as literal once it was revealed that Lehman Brothers, in a hole of its own, had an equity stake in the project.

But after 18 months without activity, construction is now underway on the site. Workers now seem to be assembling a subterranean parking garage at Half and N Streets SE - presumably a component of the hotel and 340-unit residential buildings planned for the site. And while the developer will not be able to hit their original target of a 2009 completion date, it does seem that rumors of the project's death have been greatly exaggerated.

"Monument is pursuing financing for the residential projects at the corner of N and Half Streets, SE. Clearly the changes in the market have made that task more difficult, but we have not made any plans to refill the excavated hole," says Monument Executive Vice President Russel Hines. "In addition to the office building [55 M Street SE], which will finish up in January, we are also building a portion of the garage that extends under the residential buildings – so, yes, there is some construction underway at this time."

In a related item, some portions of the Half Street project could be getting a new address, if a measure before the DC City Council goes through. According to the Washington Examiner, a vote next week will determine if a three-block portion of South Capitol Street (that also happens to border locale célèbre, Nationals Ballpark) will be renamed “Taxation without Representation Street.” Among those most directly affected by the switch would be Camden USA – which just happens to have a $105 million mixed-use project in the planning stages that fronts the avenue in question. We can see the signs now: Taxation without Representation Street Lofts now available! Have fun with that one, marketeers.

Washington DC commercial real estate news

Construction Underway at 1015 Half Street

Concrete poured into the ground in Southeast last Friday as construction at 1015 Half Street got underway. A product of a partnership between Opus East, LLC and Prudential Real Estate Investors, 1015 will feature 442,000 square feet of office space, complemented by 21,000 square feet of ground- level retail, in the thick of Washington DC's burgeoning Capitol Riverfront neighborhood.

Aiming for March 2010 completion, the 10-story, WDG-designed building boasts a 2-story lobby, 8 1/2' ceilings, and views of the Capitol and Anacostia River. The development team also plans a green identity, employing recycled building materials, water-saving plumbing features, a 60% green roof and taking advantage of the site's proximity to the Navy Yard Metro to achieve a LEED Silver certification. Opus East is serving as the general contractor for the project.

The site may be notable to longtime District residents as the former home of the Nation nightclub and, for those with longer memories, the Capitol Ballroom. The project was initially under the control of Potomac Investment Properties, which turned it over to Opus in July of last year for a pre-bailout price of $41.5 million. The project is currently budgeted at $135 million - a small figure compared to what the development team stands to gain, if 1015 and the glut of other Capitol Riverfront projects currently underway can weather the economic downturn.

Half Street's Hole Story

Washington DC's Monument Realty seems to be on top of their game at the ballpark, delivering a 275,000-s.f. office building by the end of the year, owning several other parcels of prime real estate near the stadium, and now having settled their lawsuit with WMATA and Akridge to acquire even more - namely, much of the Half Street real estate they don't already own. So why has Monument left its most visible site empty for 18 months? Monument began digging the nearly 2-acre hole across from the ballpark entrance, at the corner of N and Half Street, SE, back in January of 2007. The cavity is the future home to the residential portion of Monument's Half Street project - a 340-unit residential development. According to the developer, financing for the project is still, well, in a hole, but will soon get built. Russell Hines, Executive Vice President of Monument Realty, said the timing of the dig had to coincide with Monument's adjacent office building. "When we excavated the hole, we did it as part of the office building. It was more efficient to dig both at the same time. We knew we weren't building the residential portion at the time because we weren't done with design or pricing. So we got GMP pricing bids earlier this summer and have been working with and talking to lenders. We are still working on financing for the residential buildings. We started construction but haven't advanced it; we are down at the bottom of a hole. We are looking to be back under construction this year and then complete the project 20 months out," he said. 

Half Street, however, is just one part of the developer's ballpark holdings. The developer has three other sites. Monument owns 50 M, on the Northeast corner of M and Half Street, across from the metro, a site which they are marketing as a build-to-suit or a free lease development. "We have been getting interest from tenants on that - smaller buildings and smaller associations," he said. Monument's other holdings are the product of their June settlement with WMATA. The developer will create two more large office buildings on the hotly debated sites that will replace the old Domino's on the corner of M and South Capital Street and the BP gas station at the corner of N and South Capital Street. According to Hines, Monument will soon begin the zoning process for these buildings. "One of the things it (the settlement) did was finish off a puzzle; there were a bunch of pieces we owned that have come together. Over the next year, we'll be taking both through the zoning commission approval process and that process takes from 6-10 months, maybe as long as a year," he said. Hines added that the developer will spend most of next year designing and marketing the properties, but will keep an eye on the market. "At that point when we have zoning, we will see where the market is and what we want to do. We have no immediate plans. We have a whole office building to lease on the Metro - we wont run out and build another until we get the first one going." Half Street's office building is "nearing completion," but has not yet signed any tenants. The entire 775,000 s.f. Half Street project, being built by Clark Construction, will ultimately deliver a 200-room hotel, 50,000 s.f. of retail space, and about 340 residential units designed by Shalom Baranes. 

Monument has remained steadfast that despite some challenges, the company is overall healthy. Founder Michael Darby recently told the Washington Business Journal, which had published an article highlighting financial setbacks of the developer, such as its conversion of several condominium projects into apartments, that "we are not in trouble," and that "we have not had trouble finding construction financing for the residential building in the first phase at our Half Street project." (WBJ, June 6, 2008). But with so many impecunious developers stung by the twin evils of lower consumer expectation and heightened financing restrictions, many industry watchers are spooked by any apparent sign of distress. Not so, Monument insists; the show will go on.

Washington DC commercial real estate news

Monument v. Akridge - Everyone Wins

In a Solomonic decision, the Washington Metro Area Transit Authority (WMATA) today agreed to sell the controversial Southeast Bus Garage properties at the ballpark - skirmished over by Akridge Development and Monument Realty, LLC - to both developers. WMATA's decision ends a legal fracas for control of the property WMATA bestowed upon Akridge, an award Monument claimed was improper. The site is located at the corner of Half and M Streets, just one block from the new Nationals ballpark and across the street from the Navy Yard Metro station, and includes a bus garage and employee parking lot. Akridge will pay over $46 million for the 69,607 s.f. bus garage while Monument will pay over $22 million for the 27,558 s.f. parking lot. 

Today's sale is the culmination of an ongoing saga spurred by Monument's lawsuit against WMATA's sale of the properties to Akridge last fall. Monument, which already controls the other side of Half Street, contested the sale and in February won an injunction prohibiting sale of the garage, pending further consideration by the judge. Monument Realty had originally planned 100,000 s.f. of retail for the site on the western side of Half Street, the main strip leading to the ballpark, which would have added to their 275,000 s.f. of office space, 50,000 s.f. of retail and 320-unit residential project already underway on the eastern side of Half Street. 

He's out; no he's safe... The suicide squeeze began when both Monument and Akridge responded to WMATA's solicitation for the garage. Because Monument’s proposal contained an escalation clause that Metro’s offering specifically forbade (oops), WMATA disregarded the escalation and judged Akridge's bid higher, awarding the site to Akridge for $69 million. But Monument asked for the instant replay, pointing back to December 2005 when the Anacostia Waterfront Corporation (AWC) pronounced that Monument Realty was the Master Developer for the Half Street Area. Under this declaration, the master of the street had the right to develop all District-owned properties along Half Street. As Monument's holdings increased to include the eastern side of the street including the Navy Yard Metro, AWC tried to negotiate the acquisition of the bus garage to complete the package. 

Here's the Pitch...Strike One 

Monument, all the while still acquiring real estate in the area, made an unsolicited bid on the bus garage, working directly with WMATA, not AWC, which had just gained control of the area. Metro, deciding to make the call on its own, responded to Monument's offer with an Invitation for Bidders, hoping to get more out of a competitive process. But when the District asked that WMATA end the solicitation and coordinate with AWC, WMATA complied.

Strike Two 

It was then that District stepped in and proclaimed it would purchase the site and negotiate directly with developers. WMATA withdrew its invitation and agreed to sell to the District. 

Let me sleep on it.... WMATA says the District subsequently decided not to purchase the bus garage. WMATA, thinking itself free of its first-right obligation, issued a second Invitation for Bidders. This time, ten companies bid – a process that ended last September and resulted in Monument’s bid being disqualified and Akridge being awarded the site. But in drama worthy of a Meatloaf baseball metaphor, Monument sought a Temporary Restraining Order against WMATA on October 26th to enforce the District's right of first refusal as an intended third party beneficiary, claiming breach of contract, fraud, and breach of fiduciary duty. The District Court threw out the tort claims because of WMATA's sovereign immunity, but did not throw out the remainder. Monument re-filed on January 2 of this year, with a revised motion for a preliminary injunction against the sale, which the judge granted at the end of February. At that time, Co-founder and principal of Monument (and former Akridge exec), Jeffery Neal, said,"The Court recognizes the merits of this case by taking the serious step of ordering injunctive relief. We are committed of the Capitol Riverfront neighborhood as evidenced by our investment of tens of millions of dollars in this project over the past several years. We've always had a grand vision for Half Street and realize the importance of the project as it is the gateway to Nationals Park. It is great to know that we still have the opportunity to make the city's goal of having a coordinated development plan. A successful project for us also equals success for the city and for The Nationals." In February’s injunction, the District Court found that WMATA was obligated, based on its own Policies and Procedures, to offer the host government (here, the District) the first right of refusal on any property it sells, priced at fair market value. The decision stopped transfer of the land until the court could review the merits of the case, and left the highly valued property in legal limbo, just as the stadium was getting ready for opening, and set the stage for today's resolution. 

It never felt so good, it never felt so right The compromise announced today will grant Monument a smaller parcel than Akridge, while WMATA happily walks away having closed a deal for about the same as Akridge's $69 million bid. And it will avoid alot of icy stares across high-priced skyboxes.

Washington DC commercial property news