Skyland Town Center's Phase One

It's been a long slog, but the work is finally building momentum at Skyland Town Center, where construction on the 18-acre site is expected to complete this year and retailers have finally been committing.  Chase Bank and CVS have already signed leases for Phase 1 of the project, which will include 84,000 s.f. of retail and 263 rental apartments when it completes later this summer.  Rappaport has been in discussion with numerous restaurants as well, despite the obvious impediments to restaurant leasing at the moment.  Lidl and Starbucks, also both committed retailers, will get underway later this year, the latter will take the place of the CVS trailer now on site.  A second phase of the project will nearly double the retail (to 136,000) and residential unit numbers (to 513) when that phase begins, though a start date is not yet determined.  A 4-story medical office building will eventually round out the final development, though a start date is not yet set.

The contentious project is one for the history books.  Initiated by the National Capitol Revitalization Corporation (since dissolved) in 2002 to bring development to a decaying and retail-starved area in southeast DC, developers had visions of urban renewal and improved retail opportunities. Developers, primarily WC Smith and Rappaport, began to assemble and acquire the land, but the existing retailers and landowners weren't convinced the project had legs, and many chose not to sell or abandon their businesses to an uncertain future.  Enter the District government, which chose to acquire the remaining properties via eminent domain, i.e. a constitutional prerogative that permits the government to seize private property for "public" use.  Developers dangled Target as a future tenant, which fell through, but with the District government on its team the recalcitrant owners were defeated, and by 2011 Mayor Vincent Gray predicted construction was "imminent."

That was not to be.  Planners needed an anchor, and eventually signed Walmart, but in 2016, with no construction yet underway, Walmart withdrew from its commitment to anchor the site, as well as another site in Ward 8, and the search was on to find a replacement. The project broke ground in February of 2018, and in May of 2019, Rappaport announced that German grocer Lidl had signed on for almost 30,000 s.f.  The other leases soon followed, including one of the only drive-through Starbucks in the region.  Until the completion of phase 2 a large portion of the site will remain a construction lot, but for now, the neighborhood is one step closer to having the grocery options, sit-down restaurants and conveniences of neighborhoods west of the river that have so long bedeviled the residents in the project's vicinity.

Project:  Skyland Town Center

Address:  Intersection of Good Hope Road and Alabama Avenue, SE 

Developer:  Rappaport, WC Smith, District of Columbia

Architect:  Torti Gallas

Interior Design:  Carlyn & Co.

Construction:  WCS Construction

Use:  480 apartments, 134,000 s.f. of first floor retail

Expected Completion: Phase 1:  Fall 2020.   Phase 2:  TBD

Washington D.C. retail and real estate development news

Bigger, Greener: Skyland Files Another Zoning Amendment

Skyland - the very name implies the ever distant horizon - is back for another zoning review to fully entitle the real estate development project, this time to fit Walmart into the equation.

The most recent change regarding the large ‘town center’ complex is a PUD amendment that was submitted late last week by the development team behind the project. The original PUD was approved by the Office of Zoning in September 2010, but that was before Walmart signed on as the development’s anchor store last fall. The inclusion of the mega-retailer necessitated a number of changes to the plan—though nothing particularly substantive, according to the application. “The proposed PUD modification application is NOT proposing significant changes to the approved PUD project,” reads the document.

That means the development will continue to include 450-500 residential units, some of which will be townhomes and/or affordable housing, and retail space leasing will increase only slightly, from 311,000 s.f. to 342,000 total s.f.

The most serious change appears to be a decrease in the number of parking spaces needed. The total number will be down by about 300 “which meets one of the Office of Planning’s goals,” Matt Ritz, a vice president at William C Smith &. Company, pointed out.  Smith is one of the members of the development team, along with The Rappaport Companies, Harrison Malone Development, the Marshall Heights Community Development Organization, and the Washington East Foundation.

Other changes include lowering the height of parts of the building Walmart will occupy, slightly reducing the number of townhouses, and topping a section of the project with solar panels and a green roof, rather than with a final layer of parking as originally planned.

The revamped development should include slightly more green space, and the application hints at more ‘green’ elements to come: “Walmart has several sustainable goals for this project which will be achieved by the following features: use of water efficient faucets and toilets; implementation of an energy management system; high-efficiency HVAC design; LED lighting; sun shading devices on the roof; and a construction waste stream management program."

Ritz is hoping the project will get a hearing with the Zoning Commission before the end of the year and a public hearing sometime around March 2013. But it’s all up in the air. “The dates are with a grain of salt,” he said. “It’s all contingent on the Zoning Commission.” And the company is still a very long way from soliciting construction bids.

Still, as slowly as it’s going, there is definitely movement occurring at Skyland. In September, the city celebrated the start of a demolition process of some of the buildings in the existing shopping center. And of seven legal cases that were pending in early 2011 - all linked to the city's use of eminent domain on the project--only one is still unresolved.

Washington, D.C., real estate development news

Today in Pictures - Skyland

While the District government struggles to rid Skyland of its owners and tenants in order to make way for a more contemporary shopping destination by turning it over to developer Rappaport, the outdated shopping center looks ever more dilapidated and forlorn.














Washington D.C. real estate development news

Skyland Struggles Towards Uncertain Timeline

With the specter of a Wal-Mart vs. Safeway showdown over a decade-old exclusivity covenant having receded, the District can get back to resolving the many other issues standing in the way of the Skyland redevelopment in Southeast DC, a top priority of Mayor Vincent Gray’s embattled administration. But can Skyland overcome the many hurdles it faces?

Safeway, one of the District’s top private employers (15 stores), and high-profile retail anchor Wal-Mart squared off in November over an agreement Safeway had entered into with the owners of the shopping center, Skyland LLC, to bar certain types of competitors from the property after Safeway relocated to a nearby shopping center. Each side issued bland statements but retained powerful advisors; Safeway hired Maryland lobbyist Bruce Bereano, famously an ex-fraternity brother of Mayor Gray, and Wal-Mart hired David Wilmot, a local dealmaker who co-hosted a fundraiser with Mayor Gray just last month. Fast-forward a couple of days, and the matter was suddenly settled.

"A covenant exists on one lot of the many that comprise the Skyland redevelopment site," says Nimita Shah, Project Manager in the Office of the Deputy Mayor for Planning and Economic Development (DMPED) by way of clarification. “The District is in discussions with Safeway about the removal of the covenant and anticipates a resolution in the upcoming year. However, it is important to note that the Safeway covenant noted above will have no impact on the proposed Wal-Mart that is to be included in the redevelopment, given that its placement on the site is outside of the affected lot.”

Either no one at Safeway or Wal-Mart actually read the covenant before throwing down their respective gauntlets, or the issue was quietly resolved through backroom horsetrading (the very sort of thing that Gray denounced when he pledged to bring transparency to the mayor's office). At any rate, with this issue put to bed, does this mean that Skyland faces a clear runway to approval and groundbreaking? Far from it.

Since first seizing Skyland in 2005 by invoking eminent domain, the District has spent over $12 million on settlements. Three more tenants settled in 2011 – Hong Kong Inn, Hilltop Cleaners, and New York Fried Chicken – leaving perhaps as few as one holdout, though according to the District there are over a dozen tenants are still operating at Skyland. “Fifteen tenants remain in operation at Skyland," says Shah. “The District is in the process of working will all of the remaining tenants to coordinate their relocations over the upcoming year.”

Everyone out by the end of 2012? Count Elaine Mittleman, an attorney who represents several Skyland tenants, among the skeptics. Mittleman contends the eminent domain proceedings have been slipshod and disorganized. “Wild ineptitude,” Mittleman snaps when asked to characterize the District’s handling of Skyland. Mittleman also provided DCMud with extensive correspondence between herself and the District that seems to raise questions about who holds the titles to seized Skyland properties, as well as concerns about the eventual turnover of Skyland to private developers, one of whom is a close associate of Mayor Gray’s, and has done repairs at his home.

Serious questions also remain regarding the project itself. There’s no firm consensus on whether Skyland is in fact a viable site for redevelopment; critics have pointed to the lack of public transportation options (the nearest Metro station, Anacostia, is a mile and a half away) and an already dicey traffic situation. There are also multiple competing projects in Southeast – St. Elizabeths East, Poplar Point, and Kenilworth-Parkside, just to name a few - as well as another Walmart planned nearby, on East Capitol Street. In the face of these doubts, the conventional wisdom is that with millions and years spent and so many promises made – none more than by the present administration - the District can hardly back out now.

Or can it?

People who point to the 2005 Supreme Court ruling that empowered the city of New London to oust intransigent homeowners so they could build a Pfizer plant as proof that Skyland is all but inevitable, overlook the fact that the Pfizer plant was never actually built. The drawn-out process of settling with and vacating tenants, as well as appeals and the administrative labyrinth of state seizure of property, can often outlast the patience of prospective tenants. Before Wal-Mart agreed to anchor Skyland, a similar Target deal fell through. Who's to say Wal-Mart won't walk, if litigation drags on for another year or three? Is Mayor Gray prepared to

follow through on his threat to block Wal-Mart's four other stores in the District if they don't put one in Skyland?

Some cite the possibility that the District's resolve on Skyland is, at least in part, opportunistic. If it comes together, it will be a victory for some mayor's scorecard. But if it doesn't, that mayor (like the last three) can still curry favor with the voters of Southeast by telling them he tried. In fact, the prospect of a mayor fighting the good fight on behalf of the city's least-served quadrant, only to be stymied by other forces, is arguably a more valuable asset in a general election than a mere shopping center, however big and shiny. But the Mayor has been personally advancing the cause of Skyland to private businesses that might have a stake in the proposed development.

Elaine Mittleman disagreed with this cynical view of things – with conditions. Mittleman believes that the District sincerely wants Skyland, and wants it badly, but just got in over their heads. “The District courts rubber-stamped everything, basically, and there was never any comprehensive plan, just a back of the envelope thing,” Mittleman says. “It seems like they have just not put in the proper effort. It seems like they just magically thought it would happen.”

For their part, lead developer The Rappaport Companies, who won rights to Skyland way back in 2002, doesn’t seem the least bit perturbed by these latest developments, either stoically patient or just resigned to sticking it out for the long haul.

“The Skyland project is definitely gaining momentum, and the Mayor has made this a priority,” said Sheryl Simeck, Vice President of Marketing and Communications at Rappaport. “But it is still too early in the process for us to be able to supply construction dates," (despite Mayor Gray's prediction it would break ground last year.) "The District continues to work on resolving the outstanding legal issues involving eminent domain. Development cannot start until these last few issues are resolved.” At this time, no one is prepared to say when that will be.

Washington D.C. real estate development news

Mayor Predicts Lift Off for Skyland

D.C. Mayor Vincent Gray predicted on Tuesday that the contentious development of the Skyland shopping center will be underway as early as September. News of the impending construction caught its developers and occupants by surprise, but both seemed to take announcement of the project's birth in stride.The foundering Southeast D.C. shopping center has been in the government's crosshairs for more than a decade, with Washington D.C. planners dreaming of Skyland Town Center, an economic nativity centered around big box retail and new mixed-use, 18 acre community. Planning for the site began more than 20 years ago, and rather than buy out the owners individually, in 2005 the city began eminent domain proceedings against its many owners, and has since claimed title to the property with the intent of handing it over to developers to redo. But jettisoned owners, backed by property rights advocates, have fought tenaciously to reclaim their titles they say were wrongly seized.

Meanwhile, erstwhile developers Rappaport Companies and William C. Smith & Co. et al have continued to promote the expected vitality from a redesigned building despite the lapse of time and lack of forward motion. For several years promoters and the District government maintained that Target was on board, anchoring the project, lubricating capital, and ensuring success. With Target now officially out, Walmart has become the dream (potential) anchor. But with a thicket of legal challenges, no signed tenants, financing uncertain and lack of a land agreement with the District, the project seems much the same as it did 5 years ago, excepting approval of plans by the Zoning Commission last summer.

Despite the Mayor's confident prediction, the developers are sanguine, noting that much work remains even if some demolition takes place on the Mayor's schedule. "There are still eminent domain issues" says Sheryl Simeck, Vice President of Marketing and Communications for Rappaport. "The next step is for the District of Columbia to own all of those parcels. We've taken it as far as we can." Lawyer Elaine Mittleman, representing several owner-tenants, agrees, and says the transfers of title were not only unconstitutional but ineffective, making demolition unthinkable. Mittleman's suits have been denied by the courts, but other suits continue to work their way through the legal dockets, and Mittleman points to a variety of ailments to the District's claim to clear title.

Still, the government might win by attrition, outliving tenants slowly driven out by uncertainty and by a neglected shopping center that becomes ever more decayed. Some tenants have paid rent to the District government, others have not done so for years. "It's a tragedy" says Mittleman. "There's no funding, no agreement, no title, no tenants. It's the opposite of economic development." Mittleman says the government has stonewalled her FOIA requests and has failed to provide answers to many procedural requests, complicating representation of the owners. Still, having seen eviction deadlines come and go, tenants remain more frustrated than fearful, and yet none seem to doubt the ultimate resolve of the government to see the project through.

The development team also includes Harrison Malone Development LLC, the Marshall Heights Community Development Organization (MHCDO) and the Washington East Foundation, Silver Spring based architects Torti Gallas, and Washington D.C. based WCS Construction.

Washington D.C. real estate development news

Rappaport Hits Minor Setback on H Street

It's back to the drawing board for developers and architects working on Gary Rappaport's H Street redevelopment project. The Rappaport Companies' Parcel Seven Associates, LLC has been planning a large mixed-use redevelopment project running on the south side of H Street between 8th and 10th for over three years now. The rather enormous project, stretching two full blocks and replacing an outmoded single-story shopping strip, is expected to begin work on part of the 52,000 s.f. of retail and 400-odd residences within about two years, but save the 2nd half for much later. Developers endured the requisite series of conversations, meetings, and compromises, and were finally able to bring both DDOT and the ANC (6A and 6C) on board. But the Zoning Commission was not entirely wooed by the long line of witnesses pleading for approval of the obligatory zoning change at Monday evening's public hearing, and unanimously decided to delay final action until September 27th. This gives the architects and developers until Friday, September 3rd to officially respond to requests made by the Zoning Commission, and opponents of the project until September 10th to retort and fault Rappaport's modifications.

There were a number of minor issues with the plan in the eyes of the Commission, but the major hold up was the appearance of the project's closest neighbor in opposition to the project. This was not the first time developers had heard this family's concerns, and Rappaport insisted that they had labored to accommodate the neighbor's concerns about building height and traffic flow. But the strong reservations communicated by the 8th street neighbor were not mitigated to the extent the Commission expected, so Zoning requested more careful consideration of their concerns, particularly the family's anxiety over the likely increase in large trucks turning into the alley around the corner of their home.

One Zoning member requested that the architects refine the pavilion design on the opposite corner, at 10th and H Street, to generate a bolder and more interesting beginning to the rest of the building, while also tying together and re-enforcing the entirety of the design. "It lacks the kind of stylings and flavor of the rest of the building," he lamented. Another panel member was disappointed that the amenities package was rather light when weighed against the aggressive amount of FAR being pursued by the project (4.0 FAR of residential and 6.0 FAR of commercial space). The entire Commission also expressed their interest in seeing a slightly more aggressive phasing timeline; at present, phase two construction would not begin for about seven years thereafter, a timeline "that will depend upon the rate of absorption" of Phase 1, according to Rappaport.

But don't mourn for the Rappaport Companies, a somewhat retooled design should afford the developers the PUD they've been seeking, and panel members were generally optimistic and encouraged by the scope and direction of this project. A final action ruling later this fall does not serve as a serious threat to their hopes of beginning construction in 2012.

The process of give and take is not new to Rappaport; the project was even bigger before it was first rejected by the Commission in 2008. Over the last two years, the design team, including project architect Torti Gallas, has appeased the community by situating the massing of the buildings in the middle and the back to better negotiate changes in the roofline (ranging from 50 to 90 ft.) and blend the new building into the existing facade. The once uniform design has also been reformed to feign the appearance of multiple, distinct buildings strung together, replicating the nature of street frontages on the rest of H Street. The architects have offered large setbacks for the bottom floor retail stores to provide for maximum pedestrian traffic flow and the potential for outdoor dining terraces.

Other amenities being supplied to the community include landscaping and improvement of public space. The project will also look to minimize traffic congestion, and encourage environmental responsibility in achieving a LEED Silver Certification upon finished construction. Parcel Seven has also agreed to support a proposal for the creation of a Historic District for H Street NE. Moreover, a small portion of the residential units will qualify as affordable housing. And while one Commission member pointed out that several of these "amenities" are actually requirements (killjoy), the project seems to have convinced the majority of the community that its arrival is much more of a positive contribution than a hindrance.

The public record on this case will be reopened in late September as the developers attempt to appease the development site's most immediate neighbor, as well as reassure the Zoning Commission that their project is ready for construction to begin.

Washington DC real estate development news

Skyland Hearing Nixes Neighbor Concerns

Skyland Town Center had its day before the Zoning Commission on Monday, reviewing the development team's Planned Unit Development (PUD) application for the Skyland shopping center and residences. The applicant's sponsors are proposing that the city rezone the entire site, currently a mix of residential and commercial usage, to an entirely commercial C-3-A district.

The rezoning is central to the developers dreams to turn the aging, low-density retail site into 450-500 residential units and 280,000 s.f. of retail, creating a mixed-use destination retail center. The project has been mired in controversy, not the least of which is the fact that reluctant owners of the property are locked in a struggle with the city and development team, which together want to use eminent domain proceedings to force the owners off their land. Owners contend that the city has pushed the envelope of judicial proceedings rather than negotiate with the owners for sale of the land, noting the unenviable fate of property owners in similar circumstances. In the now infamous Kelo decision, the Supreme Court ruled in 2005 that developers are within their right to force owners off their land in the name of economic development, a result which still makes conservatives and property rights advocates seethe.

Yesterday's hearing brought up additional concerns, this time from a nearby group of homeowners with the opposite problem. In a May 12th letter submitted to the Zoning Board by Fort Baker Drive residents, attorney Martin Sullivan suggested that the most effective method for protecting the adjacent homeowners from construction risks could be forcing Skyland to purchase four of their homes. Ironic, given that the owners of the underlying Skyland properties don't want to sell, but the city is forcing them to do so. But neighbors believe this would protect them from damage resulting from the excavation and construction process going on next door. In a double irony, the developers have declined the offer, and the Zoning Commission appears unwilling to make them do so.

In last evening's hearing, Commission Chairman Anthony Hood went as far as to "commend the applicant [Skyland Holdings]" for its thorough construction management plan and its responsiveness to neighbor concerns.

Although not completely unsympathetic to the Fort Baker Drive homeowners, Chairman Hood found that the construction management plan submitted by Skyland Holdings was more than sufficient in addressing concerns about property damage. Any repair and damage to the properties that are sustained during construction of Skyland will be repaired by the developers, said Hood, and promises to do so are "enforceable."

Our more focused readers will have noticed a twist, something that landowners complain of as one of the injustices of the system that is pushing them out: that the applicants for the zoning change do not hold title to the land. The development team has applied for, and the city is considering, rezoning land that neither owns. Advocates for the owners have challenged this aspect of the PUD process, so far to no avail.

Skyland Holdings LLC is a joint effort of The Rappaport Companies, William C. Smith & Company, Harrison Malone Development LLC, The Marshall Heights Community Development Organization, and the Washington East Foundation).

By June 4th, the Skyland team will have to submit its final community benefit plan and list of proffers to the Zoning Board. Look for a final ruling on PUD at the end of June.

DC Real Estate and Development News

H Street Goes Big

Score yet another win for H Street. The dare-we-say trendy neighborhood that is sometimes maligned for its beleaguered street front, but just as often loved for its gritty resurgence, is closer to getting one of its biggest projects to date. The H Street Connection, a 433,000 s.f. residential and retail project that will fill two full blocks along H Street, cleared a major hurdle in its path toward District approval. Developer Parcel Seven Associates (a.k.a. Rappaport Companies), has been given approval recently by the Advisory Neighborhood Commission (ANC), an event that is certain to make its stock go up when the project goes before the Zoning Commission (ZC) for review. Designed by architects Torti Gallas, the new project will likely get a zoning hearing this summer. The ANC's support will be given weight during the hearings, which come now after more than two years of conversations between the developers and the community. A development of this size will certainly be transformative, but its larger effect may be suturing the voguish Atlas District with the still struggling corridor to the east, roughly from 3rd Street to 10th Street, where major developments are planned but seem on indefinite hold.

The H Street Connection's 52,000 s.f. of retail and 346 to 423 rental units will fit into the space between 8th and 10th Streets NE, replacing a one-story strip mall built in 1987 and occupied by stores like GameStop and RiteAid. The community gave a big thumbs down to the iteration first presented in November 2007; a letter from the ANC described the design as a "monolithic contemporary facade." The development team has since adjusted the design to create the appearance of multiple buildings more in line with the "rhythm and architectural style" of the surrounding neighborhood. In keeping with the community's requests, the massing will sit in the center and rear of the new structure, allowing the sides to step down to better match the surrounding two and three-story townhouses. The developer is asking for a density of of 5.0 FAR, less than the 6.0 allowed in the PUD zoning application. Below-grade parking will add 340 residential spaces and 65 retail spaces, with garage entrances off 8th and 10th Streets. 

According to ANC 6A Commissioner, Dr. Drew Ronneberg, "the city has a strong interest in having the site host 100 additional city-owned parking spaces that would serve retail establishments outside the building." Among other concessions, the developers agreed to a laundry list of community benefits to mitigate traffic congestion and encourage "green" living. The project will have to meet LEED silver requirements, though does not have to seek actual certification. There will be bicycle spaces aplenty in the parking garage, and lockers and showers for retail employees who bike to work. The developers agreed to provide one $20 SmartTrip Card to all initial and future residents up to $15,000, to fund up to $45,000 for a bike share station on undefined public property (quite a bit less than the Union Station bike hub cost), provide car sharing spaces, and pay for a one-time, one-year car sharing membership for initial occupants to max out at $19,000. We can see the marketing materials already. Ronneberg said the ultimate goal behind the community amenities was to "help catalyze...the development of H Street" and that after hammering out the amenities over the past six months "there's certainly nothing major the ANC asked for that did not make it into the package." Chip Glasgow of Holland and Knight, attorney for the developers, said "we have been working with the ANC for a couple of years and it has turned out to be a very good process. We are very pleased with the result...and people are excited." Glasgow indicated he hopes to be in front of Zoning in April or May and to have a hearing "sometime this summer." As for a timeline thereafter, he would not speculate, though Ronneberg suggested a 2012 start would be the earliest the community would expect anything. 

Washington, DC real estate and development news