Mount Vernon Triangle's Critical Mass

Mount Vernon Triangle may soon be a bit crowded. The small neighborhood, tightly encircled by L'Enfant's avenues, has been struggling for years to develop a critical mass of development, a moment that may now be at hand.

If all the projects currently in the pipeline for the neighborhood are built, Mount Vernon Triangle will more than double its square footage of office space, add 1,570 apartments/condos and 380 hotel rooms, and increase retail offerings by 157,500 s.f. Despite its shortcomings - no Metro stop, convention center, or arena within its borders, it can claim close proximity to each, a fact that continues to fuel development.

Case in point: two new projects by The Wilkes Company and Quadrangle, with preliminary designs by Hartman-Cox, and targeting a 2012 start date for construction: 400 K (300,000 s.f. office space, 12,500 s.f. retail) and 300 K (500,000 s.f. office space, 25,000 s.f. retail - pictured at left). Both are part of the larger Mount Vernon Place development that started with a pair of condominiums. Two additional buildings by Wilkes and Quadrangle are also in the works for the area: 440 K (planned as a 234-unit apartment with ground-floor retail, but that could turn into office space) and 255 H Street, a 400-unit apartment building.

Numerous other large developers have projects on the boards - Steuart, MRP Realty, Bozzuto, The Donohoe Companies, Kettler, and Equity Residential - but few have pulled the trigger just yet, and Bill McLeod, executive director of the Mount Vernon Triangle Community Improvement District said those who don't take action soon, "will end up missing out." McLeod, who has been with the MVTCID - created by Mayoral Order in 2004 - for the past five years, added that investors have been paying attention to the area of late.

Equity also hopes to start construction next year on the 170-unit apartment and historic restoration project "Eye Street Lofts", originally a vision of local Walnut Street Development that was iced in 2007. Equity - the largest publicly traded owner and operator of multifamily apartment complexes in the U.S. - bought the land fully entitled a few months ago. Equity will go before the Board of Zoning Adjustment on December 13th. With the area designated as a historic district in 2001, the project received HPRB approval in 2006 (as pictured below) to restore two circa 1880, 3-story townhomes, a 2-story garage/ warehouse, and a small former blacksmith shop in the alley. The building currently leased by BicycleSPACE will be razed.

Nearly a decade after Mount Vernon Triangle was first targeted for redevelopment by the Office of Planning and ten major property owners in the area in 2002, existing apartments are 96-percent leased, condos are sold out, 230,000 s.f. of office space is leased at 455 Massachusetts Avenue and, notes McLeod, only the top floor of the 392,000-s.f. office at 425 Eye Street needs a tenant.

The Meridian, at 425 L Street, a 390-unit apartment developed by Steuart Investments and Paradigm, is now under construction. The topping out of the 14th (and final) story occurred this past September, the project will begin leasing soon and should complete by next June. Phase II of the project will be a 300-unit apartment located next door at 400 New York Avenue.

Next in the queue in Mount Vernon Triangle is Kettler's $80 million, 13-story, 233-unit apartment with 7,000 s.f. of street level retail at 450 K Street (pictured right), under construction next spring and delivering in 2014.

Of great interest to those invested in the area is the timeline of the K Street Streetscape Improvement, the contract of which is currently being finalized by DDOT. The 18- month infrastructure project should be underway early next year, said McLeod, resulting in a mid-2013 completion date.

The long-anticipated $9m reconstruction of K Street between 7th Street and 3rd Street will bring new paving, sidewalks, streetlights, and plantings. Streetcars are also in K Street's future, though the District's focus is currently on funding other legs first, i.e. the H Street Corridor.

Driving much of the current wave of development regionally is the gradually opening financing spigot and Washington D.C.'s perch on the top of the national real estate market. But Mt. Vernon Triangle has something else more rare in downtown DC: empty space. The Downtown Business Improvement District (BID) notes that only about 5 million s.f. of unbuilt space remains available downtown, 2.5m of that at CityCenter and 2m of that above the Center Leg Freeway. That leaves the equivalent of only a few office buildings that could be built downtown before growth has to expand outward, and Mt. Vernon is the nearest spot.

Yet if all projects currently in the pipeline are realized, Mount Vernon Triangle will max out its 600-room hotel capacity, reach 93-percent of its residential capacity (4,250 units), 87-percent of its office space capacity (3 million s.f.), and 84-percent of its retail space capacity (335,000 s.f.). Of the 380 hotel rooms planned for the area, 350 of them are contained in what was once one of the most talked about projects for the triangle, "The Arts at 5th and I" a mixed-use development on the corner of 5th and Eye Street, still considered a "top tier" priority by Mayor Gray.

Donohoe and Holland Development won the right to develop the site in September of 2008, but couldn’t finance the project (pictured below) in the face of the recession. This fall, Deputy Mayor Victor Hoskins visited the ANC with a scaled-back, 250,000-s.f. building with two side-by-side hotels, one a 150 room boutique hotel and the other a 200 room extended stay offering 350 rooms above 10,000 s.f. of street-level retail.

In April, it was announced that art in the form of the Liberty North Community Market would be coming soon to the site. The market arrived this fall, and with no plans to begin construction within the next year-and-a-half, the market's vendors have the 2012 growing season to get comfortable.

Donohoe has yet to visit the DC Council for approval its plan, which includes a 99-year ground lease from the District, something that may happen in the next "two to three months," said Jad Donohoe, after which 12 to 14 months will be taken to flesh out the design by Shalom Baranes, complete the construction documents, get permits, and secure financing.

Yet another project is less certain. It will require a 30,000-s.f. floorplate over I-395 between K and New York Avenue to build a 10-story, 1.7 million-square-foot Washington Global Trade Center with a sleek, open-clam-shell globe design (to the right), a development that has been proclaimed a long shot.

Washington D.C. real estate development news

More Art at 5th and I, but No Buildings

Art is coming soon to the empty lot known as The Arts at 5th and I - unfortunately, the art is not the beginning of the project by Donohoe Companies to build a high-end hotel, retail outlets and jazz club, but rather an open air market to draw crowds to the lot that remains empty. The Mt. Vernon Triangle BID has announced that the Liberty North Community Market will open on the site on Saturdays and Sundays, more than 80 vendors hawking

"arts, crafts, produce, prepared food, and home improvement goods." The news is a reminder that development of the lot, announced in September of 2008, is still not ready for action, but development leader Jad Donohue says the newest timeline points to a presentation to the DC Council in the next few months and construction possibly by the 2nd quarter of 2012. Donohoe also struck a less committal tone about the retailers. Previous announcements listed Spanish hotelier Melia for a 260 room hotel, 100 apartments, Boisdale Jazz Club, and Zenith Gallery's new home, but Donohoe would say only that "we're committed to doing a boutique, lifestyle hotel" but that they are "keeping all options open" regarding retailers. 

The site does not require a PUD, so zoning is not an issue, but the land is still owned by the District, so the Council has to approve terms. Donohoe says details "are still being finalized," but that he expects a 99 year ground lease. He also says that while financing has not yet gelled for the project, there is "alot of interest" from those that had pulled back on financing over the past few years. Promoters initially projected groundwork to start in early 2010, spokesmen for the project then said in August of 2009 that an agreement would be concluded within a month, and in November of 2010 that financing would be cinched up by the end of the year. But the District of Columbia implemented a plan to put parking on the site to generate short term income in February of 2010, an indication that construction was not imminent. The new market will include live music, arts and crafts, from the promoters of the market that once occupied the CityCenter site. Here's to hoping they will have to hunt for yet another site next spring... 

Washington D.C. Real Estate Development News

The Arts at 5th & I: Closer Than They Were

Development partners Donohoe Companies and Holland Development of the highly anticipated high-end hotel, retail outlets, and jazz club crowned "The Arts" think they are close to wrapping up negotiations with DMPED over the disposition of the currently District-owned site at 5th and I Streets NW. The heart of the project is a 260-room ME Hotel from luxury Spanish hotelier, Melia that promises to "seduce the open mind with art, design, music, and cuisine" (according their website). Perhaps more exciting for the neighborhood is the included Boisdale Jazz Club – the first US location from the London-based chain of nightclubs. It literally packs the previously promised music, cuisine, and libations into one smooth package. Also providing cuisine will be Cappuccinos, a "unique urban style cafe." The mind-seducing design is courtesy of Shalom Baranes, while the art will hang in what will become the Zenith Gallery's new home. Ninety-six mixed income residents are also included in the development plans.

Memphis Holland of Holland Development says that she and her team are optimistic that financing will be wrapped up by mid-December. Talks concerning the release of the property from the District to developers are "still in process" according to Holland. She promised, however, that they are "closer then they were," and hopes to have a deal finalized by the end of the year. But even if the deal can't be wrapped up prior to Vincent Gray's inauguration as Mayor, Holland explained that "we've been in communication with Gray's transition team for some time, and they're on board." Such words point to slow but steady movement in the right direction, but certainly do not serve as a precursor to groundwork, as the Zoning process awaits, and architectural details must be ironed out through a succession of informal and formal meetings.

Correction: Jad Donohoe of the Donohoe Companies recently contacted DCMud to amend one of the above facts, saying "I’m the project manager on this effort, and we are not in talks with the Gray team." Memphis Holland confirms this misinformation and apologized for the error. It should be affirmed, however, that the current DMPED staff has been in communication for some time now with Gray's transition team members, briefing them on all major projects.

Washington D.C. Real Estate Development News

Arts vs. Parking Lot in Mt. Vernon

The District and the Deputy Mayor for Planning and Economic Development (DMPED) are, at least for now, giving up on the Arts at 5th and Eye, the Donohoe Companies and Holland Development project, and installing a parking lot on the undeveloped District-owned site. Though the project team won the right to develop the promised high-end hotel, retail outlets and jazz club in September of 2008, no final agreement has been reached on the land exchange with the District Government since that time. The District Council is scheduled to review the revised project plan in March or April of this year, though that will not happen without an agreed upon land value.

In August, Memphis Holland, a Partner at Holland Development, told DCMud that the group hoped to have a resolution to their negotiations by the end of September. More than four months later, Holland indicates the developers are continuing to meet with the District in order to finalize a contract for the land and determine an appropriate land value. It would seem the District grew tired of underutilized land, opting for a paid parking lot in the meanwhile (not that Mount Vernon really needs more of those). The ANC had resoundingly supported the development during the RFP process, but the protracted negotiations and new surface parking lot have set some neighbors on edge. ANC Commissioner Keith Silver is protesting the DMPED's parking lot decision and the District's alleged exclusion of the community from conversations with the developers about the proposed development. According to Holland the developers had "absolutely nothing to do with the final decision by the District to have a parking lot as the temporary use for the site," but "we have been told this will not impede our objectives to develop the site, as planned, for a mixed-use development." Holland added that the group is continuing to work with project partners including Sol Melia and Boisdale as well as the neighborhood retail mix including Zenith Gallery. That said, the parking lot decision shows a lack of faith by the District government for the near future of construction and development at 5th and I Streets in Mount Vernon. 

Washington DC real estate development news

Monument Back at the Helm at Watergate?

Monument Realty appears to be seeking contractors for renovation and construction on the Watergate hotel, suggesting the DC developer may be closer to a work-out on the property it lost to the bank earlier this year. Lender PB Capital Corp foreclosed on the famed hotel this past July, and held an unsuccessful auction, with none of the 10 bidders jumping at the $25m starting bid. Since then, there has been no confirmed word on the fate of the historic structure overlooking the Potomac River. In an interview with DCMud following the auction attempt, Monument's Principal and Co-Founder Michael Darby indicated he had raised the necessary funds to buy back the property, but later accounts suggest the bank turned down the developer, possibly hoping to get a sweeter deal with Holland Development, which was rumored to have been interested in the property. An industry source says Monument is seeking contractors for a "top to bottom renovation of the existing 13-story, 250-room hotel. Renovations will include reducing the number of rooms, while expanding the rooms that do remain to 650 s.f." The project costs are estimated at $20 million. When DCMud inquired about Monument's plans, Natasha Stancill, spokesperson for Monument, responded "we are going to pass on commenting." Which of course increased our suspicion. 

Further supporting a rekindling of the romance between bank and borrower is the fact that Holland now appears to be out of contention. In a statement to this journal, Memphis Holland of Holland Development confirmed that Holland is now just watching the action. "The Watergate Hotel is a complex and exciting project. We were just one of a myriad interested in contributing to the growth and development of the Virginia Avenue/Kennedy Center area. We look forward to watching as this development takes shape and becomes a vibrant center of activity," said Holland. Nor will the former architect be part of the redevelopment effort. "Hickok Cole Architects is not going to be working on the Watergate Project if and/or when the project restarts. I would suggest that you speak with Michael Darby at Monument." said Jeff Lockwood of Hickok Cole Architects. Thanks, tried that. Original plans for the building were to convert the 250 rooms into an 96-unit coop, but Monument reportedly sold only 11 of the high-end units, which started at $850,000 for a one-bedroom home - and that wasn't for the good view. 

Washington D.C. commercial real estate development news

Mount Vernon Triangle Waits for All that Jazz

The Arts at 5th and I will keep Mount Vernon residents waiting for just a bit longer. Donohoe Companies won the right to develop the promised high-end hotel, retail outlets and jazz club in September of 2008, but the District has been negotiating the terms of the land lease for the project with Donohoe. According to Memphis Holland, a Partner at co-developer Holland Development, the group hopes to have a resolution to their negotiations by the end of next month.

Assuming the land disposition is approved by the City Council, the developers can then begin the planning process. Planning will take at least 12 months and construction would not begin until an unspecified time thereafter. The group is not expecting any zoning issues at this time, but in this business, you never know.

The 475,000-square foot development will center around a new 260-room ME Hotel from luxury Spanish hotelier, Melia, and also include a bicycle retailer, hardware store, book store/café and new outlet for the Zenith Art Gallery. One update to the original plan is that the Boisdale Jazz club will likely not be in the hotel, but rather at a location down the street at 5th and K, which Donohoe is negotiating terms for, leaving the in-house space for another restaurant. The building at 5th and K falls under the confines of the Historic Preservation Review Board so the structure would be preserved and renovated for the club and restaurant.

According to Holland, the developers have been in constant communication with the community and once they have approval from the City Council will re-engage the local ANC and the downtown neighborhood association. Zenith Art Gallery recently closed its physical location and is functioning from an online gallery. According to Judith Keyserling of Zenith, the gallery founder anticipates that the new space is still several years off.

It is unclear when the plans for the remainder of the 5th street project will fall into place. For now we know that the hotel, restaurants and retail are in the works, but the music won't be heard for a few more years.