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

Monument - Arlington Land Swap Approved

A real estate swap between Monument Realty and Arlington County, approved last night by the Arlington County Board, will allow the developer's Monument View project and the County's recreational "Long Bridge Park" development to move forward.

As DCMud reported last year, "Long Bridge Park," formerly known as "North Tract," will be a twenty-eight-acre "state of the art aquatics, health and fitness facility and park" running along the Potomac. Bounded by Shirley Highway Interstate 395, The George Washington Memorial Parkway, and 10th Street, the swap gives the county the last seven of the twenty-eight acres needed to complete the park.

Arlington Board Chairman J. Walter Tejada said the decision was a step in the right direction for the new Potomac facility. "The Board's action today brings us an important step closer to developing a much-needed and long anticipated sports and aquatics facility on this key site. The County will now complete the land swap and move forward," Tejada said.

Monument's portion, located on a 4.7-acre site at 333 and 335 Old Jefferson Davis Highway, just north of Crystal City, will include an eight-story office and retail building with 323,229 s.f. of office space and 3,512 s.f. of ground floor convenience retail. Unlike its Vornadoville neighbors to the south, the 352-unit residential building will rise only four to seven stories, probably necessary due to its proximity to and location directly under the flight path to Reagan National Airport.

Bounded by S. 6th, Ball, and Clark Streets, the residential project will "create a gateway to Long Bridge Park" on its southern edge. And since there is no such thing as an even trade with the government, as part of the plan, the developer will make a $2.5 million contribution to affordable housing as well as a $376,761 contribution to Long Bridge Park improvements.

Arlington, VA commercial real estate news

Imperial Intentions in Court House

Adding their share to the Byzantine world of residential development, Monument Realty's 262-unit Palatine project is opening up for occupancy as a condo-gone-rental. While the Arlington Court House area is not a good comparison to the second Roman Empire (we won't forecast its decline and fall), the building, designed by Davis Carter Scott (DCS), sits ponderously on Troy Street, and will include cast stone that looks similar to limestone, bringing a slight, well, monumental touch to the neighborhood.

A building description by former project manager at DCS, Kevin Pennington, back from the condo days of 2004 reads, "The Palatine Condominium is a contemporary twist on the neo-classical style of architecture. Perched on a hill like the palaces built by Tiberius and Nero on Palatine Hill...The Palatine is above the fray and bustle of the City below. The Palatine draws you near with graceful columns reaching toward the sky and arching together. The rich colors of the cast stone base bled upward to the comfort of the brick facade above..."

The less romantic story for the edifice is that the cast stone was, "something Arlington pushed for so the building will be a different scene in the area rather than just more brick," according to Gunn Prag, current Project Manager at Davis Carter Scott. The building sits two-and-a-half blocks south of the Court House Metro, overlooking Arlington Boulevard, and joins a list of completed projects in the Rosslyn- Ballston corridor, most of which began conceptually as condos, but have recently begun delivery as for-rent apartments.

“We are spanning two types of environments, so we go twelve stories up on the north side and then scale down to mid-rise level. We transition from the heights of the high density offices around us to the mid-rise level, a stepped-tower approach,” said Prag.

Described by project manager Glen Seidlitz at Monument as the “premier rental building" in the courthouse area, the units inside the tasteful building have all the ingredients for high-end condos, including stainless steel appliances and granite counter tops, but will instead be rented at market-rate prices starting at $1790 for a studio to $5905 for a three bedroom, two and-a-half bath townhouse with a den. Leasing is underway with delivery scheduled for the ides of July.

Because of the conversion, there will no longer be double level units in the towers, although the corner balconies are still technically multi-story amenities as they are without roofs. Other condo-to-rental adjustments include the elimination of the cauldarium - or rather sauna and the conversion of the business center to a more Roman style party room. Symposiums are more fun anyway.

Southwest: School is Out, Condos are In

Nearly a year after the the city's $6.2 million sale of the vacant Randall Junior High School to The Corcoran College of Art and Design, the mold is finally setting for the new mixed-use project at 65 I Street, SW, the soon-to-be largest residential building in the quadrant which will incorporate elements of the 50-year-old Randall school and new art facilities for Corcoran. The project's overseer, Monument Realty, and design firm Shalom Baranes Architects, have to go back to the drawing board one final time before the final action hearing on January 14th with the Zoning Commission. MR Randall Capital LLC, a legal entity created by the developers, will own the entire mixed-use structure. Corcoran is selling their real estate to MR Randall for an estimated $8.2 million, and is set to retain a condo interest in the 100,000-s.f. facility it will occupy. All has not gone cosily for MR Randall however; the Planned Unit Development application has had some turbulence in the past few weeks. 

At the behest of the Office of Planning and the Department of Transportation, some minor changes had to be made to alleviate traffic concerns. As of the December 10th zoning hearing, new problems arose. A group called Square 643 Associates LLC, is worried about the project's potentially negative effects on their already-approved P.U.D. for the historic Friendship Baptist Church, just across the street. To add insult to injury, their legal representative from Arnold & Porter LLP, went on the record before Zoning to complain that the H Street facade was "not sufficiently rendered at the street level to enhance pedestrian experience." (Proving again that high fences make good neighbors.) ANC Commissioner David Sobelsohn had mixed feelings about the project yet the "net positive" for the community, largely presented in the benefits package offered by Corcoran, pushed him and his colleagues into unanimous support. "We are concerned because its going to be a huge development, and the access to the [residential] building will be through one of four partially or fully closed streets. [But] after final analysis we were very pleased with the benefits that will come to the community." Assuming no more impediments arise for the project, SW will soon see the construction of this 499,843 s.f. brand-spanking-new development, 100 feet high with roughly 480 condominiums, more than 100,000 s.f. of new Corcoran facilities and three levels of underground parking.  Shalom Baranes Principal Patrick Burkhart described the look of the new building: "As a counterpoint to the symmetry of the restored Randall School buildings along Eye Street, the new residential structure set behind them is a studied assymmetrical composition of ochre brick, metal and glass, whereby the new compliments the old through contrast." 

The $6.2 million that Corcoran coughed up (which was subsequently donated to the school system's maintenance fund - thank you Mayor Fenty) began a long list of "donations" the gallery will be making to the city, including: An "After School For All" program for DC Public Schools, 96 affordable condominiums in the new building for families earning up to 80% AMI, preservation and renovation to the "significant portions" of the Randall school, an assortment of scholarships to neighborhood undergraduate and graduate students, and a host of other community-oriented services including a Randall Neighborhood Day which will offer free admission to Corcoran's 17th Street Gallery (including special exhibits) every year, beginning next Thursday, December 27th. Corcoran is planning to move into its newest campus no later than 2011, making it the third functioning space after its main building on 17th and the gallery in Georgetown. To be sure, the architectural team will be hard at work to assuage the recent dissidence. In the meantime, the NCPC will give their slant on January 3rd, regarding whether L'Enfant would have supported it. Well, that's not exactly their criteria, but that's a future story.

Washington DC commercial real estate news

List Narrowed to Four Developers for Catholic U. Mixed-Use Project

Catholic University has shortened its list of potential developers for its planned mixed-use residential/retail complex to four companies, and hopes to have the winner selected by this June, according to the Washington Business Journal. The targeted site is an eight-acre area in the South Campus, below Michigan Avenue NE, just west of the Brookland Metro station, now occupied by three student residence halls (Spalding, Spellman and Conaty Halls), St. Bonaventure Hall, and empty lots now used by the Brookland farmers’ market (the halls will be razed and new halls will be located on the main campus for students). The four shortlisted developers are EYA, Monument Realty, Trammell Crow, and Abdo Development. Catholic hopes this private development will revitalize Michigan Avenue NE and the area around the metro stop, and well as generate revenue for the school.

Watergate Hotel's Conversion to Co-Op Off?

In 2004, Monument Realty bought the infamous Watergate Hotel, located at 2650 Virginia Avenue, NW, with hopes of converting this historic landmark into an upscale, 96-unit co-op. But while sales started one year ago, there is now word that the developer is reconsidering this plan, and – seeing the demand for luxury hotels skyrocket – is now exploring the possibility of keeping the Watergate Hotel … well, a hotel (though one renovated into a five-star destination). The original co-op plan called for architect firm Hickok Warner Cole to redesign the hotel into co-op units starting at $850,000 for a one bedroom (and penthouse units beginning at $4.5 million), with the building hosting a spa, health club, private theater, and a roof top terrace overlooking the Potomac River. Monument is expected to reach a final decision by the end of April on the direction it will take on this project.

Washington DC real estate development news

Arlington’s North Tract Project Back on Track

After months of appearing to be called off, Arlington officials have now announced that the county has reached a preliminary deal with Washington-based Monument Realty to swap and obtain the land necessary for it to move forward with its North Tract project, a world-class athletic and aquatic facility along the Potomac River south of the 14th Street Bridge and north of Crystal City. Under this agreement, Arlington County would receive from Monument the final seven (of the total 30) acres needed for its project. In return, Monument will gain a 5-acres site at the south end near Crystal City. Originally, the county was to also receive $25 million as part of the swap, but this arrangement was terminated by Monument last September. The recently announced new deal leaves out the monetary payment from Monument, which plans to build a 685,000-sf, mixed-use residential and office complex on its new site. As for the North Tract project, Arlington County expects to begin the first phase of the complex in late 2008.

Monument Realty Cancels 2nd Condo

Monument Realty has confirmed they are abandoning their second large condo-conversion project in as many months, citing a strengthening of the rental market and a weakening of condo sales in certain submarkets. Sales at The Prime, a 256-unit building at 1452 N. Taft St. in Arlington, near the Courthouse Metro station, have been halted, and the building will return to its former status as an apartment building to be managed by Monument. The DC-based developer bought the 14-story, 4-year old apartment building last year, and began sales in February of this year, with approximately 50 of the units having received written contracts. The Prime was to have been completed by the end of the Summer. In June Monument canceled sales at the Park Center in Alexandria, a 571-unit conversion, of which only about 60 units ever sold. The developer still has five other projects – mostly conversions - actively selling in the area, including the famed Watergate Hotel, where 13 of the 96 planned coops have sold. Monument added that it sees “very strong condominium demand…in the medium to long term,” and that “buyers who are waiting for condominium prices to drop further may be surprised to see that they do not.”

Last Piece of Ballpark District Puzzle Bought

Big things come in small packages, at least if you're a major developer with dreams for the new Southeast DC Ballpark District. Last week, after a year of negotiations, Monument Realty purchased a tiny, 1,344-sqaure foot lot holding a dilapidated house for the seemingly lofty price of $1.1 million. But its value far exceeds the purchase price for Monument, as this parcel – located at the corner of N and Half Streets, SE and at the north entrance of the new ballpark location – is the last piece the developer needed for its planned 2 million square feet of office, residential and retail space. Having already spent $50 million over the past year buying up this land, not having this final lot would have spelled trouble. Monument Realty plans to start building this project next spring, and have it completed in 2009.

Monument Backs out of Condo Development

Monument Realty has announced it is cancelling its planned conversion of the 571 unit Park Center condos in Alexandria's West End. The three apartment towers, dating from the mid-1970's, were purchased by Monument for the purpose of conversion into condominiums and were undergoing renovation. No settlements have occurred on the individual condos, which a spokesman said is currently about 50% occupied by tenants. Only about 60 contracts were written on the property since sales began in June of last year. Monument will retain the property for now and rent the remaining units; purchasers are being offered their security deposits back, with interest. Monument is currently in the processing of converting the famed Watergate Hotel into 96 coops, and owns approximately 12 acres of non-contiguous land in the vicinity of the soon-to-be stadium, including 3.5 acres adjacent to the stadium on Half St. Monument is currently selling condos at the Chase, a condo conversion in downtown Bethesda, the Palatine and the Prime, both highrises in Arlington, and at Potomac Place in Southwest DC.

The Chase is On – Grand Opening This Weekend

What’s rarer than finding a needle in a haystack? How about moderately priced condos in downtown Bethesda, near the metro and steps to shops and restaurants? This could explain the interest surrounding the grand opening this weekend (May 18-19, 10-4 pm) of The Chase at Bethesda (7500 Woodmont Avenue). The Chase is the conversion of a late 1980s apartment complex by Monument Realty into modern condos, with renovated kitchens (granite, stainless steel, etc.), bathrooms, and hardwood floors. There are also two lit tennis courts and pools, and a fitness center. Pricing starts in the mid-$200s for Jr. One Bedrooms (474 s.f. - a bit tiny) and goes up to the $800s for Two Bedroom and Den units (1241 s.f.). According to a Chase sales agent, contracts cannot be written until after this weekend, and only by appointment (already they are full for June appointments).