Monday, October 20, 2008
Industry Insight: Sami Kirkdil and Meral Iskir of SK&I Architectural Design Group
Tuesday, September 23, 2008
Insider Interview: Scott Pannick of Metropolis Development
Labels: 14th Street, interview, Logan Circle, Metropolis Development
How did you break into the development game?
I was a commercial broker for almost 20 years. The last 10 of which I spent acting as a representative for large institutional and corporate users in the development of corporate headquarters. Though I was a broker - I was in fact representing people in their real estate transactions and not the principle - nevertheless, I was actually acting in the role of a developer.
Was that here in the District or out of state?
I did projects here in Washington and elsewhere. I built the headquarters for the Educational Testing Service in Princeton and the headquarters for Bristol-Meyers Squibb in Princeton. I built the headquarters for Core State Bank of Delaware, close to Princeton in Lawrence. I also did the American Red Cross Headquarters here. The last project was to represent the federal government in the development of the headquarters of the Department of Transportation – although in that case I didn’t act as a developer, I acted as a representative for the government and, at the end of the day, hailed the competition to name the developer.
You started with Langston Lofts on 14th and then built three more on the same street. Was there an initial vision to stay on that corridor from the beginning, or was it just serendipity?
The two first buildings were almost simultaneous. One was Langston Lofts on the corner of 14th and V Streets and the other was Lofts 14 on the corner of 14th and Church. If you look at District zoning from Georgetown across, for the most part, you see fairly low density zoning and 3 and 4-story maximum buildings. The first time that you see zoning that pops up higher than that is 14th Street. That was also incidentally just where the development line was, where the renovated versus the un-renovated was. So, 14th Street was a very logical place to look to pursue development.
If you knew now what you knew 8 years ago, what would you do differently when developing a project in the District?
In all honesty, if I knew then what I know now, I never would have done this. From my perspective, the biggest obstacle has been construction. Construction is an enormously difficult business in its simplest times. It has turned out – and everyone has experienced this – that condominiums are, frankly, more complex than virtually anything. I had a construction manager who worked for me for a while who had built BWI Airport and made the comment that condominiums were more complicated that airports. It’s a building that has enormous density in it – in other words, there are kitchens, baths, independent mechanical units and every unit has its own plumbing system and its own selection of finishes. So you’re building a building with 80 or 90 individual units, all of them different, all them having complexity.
If contractors can do one thing and do it repetitively, it’s great. But because of the fact that this is urban in-fill development, it’s very very space constrained. And because of those space constraints – and lot lines limitations and Historic Preservation Review Board input - you end up building with 90 units using 35 different floor plans. If you’re out in the suburbs and you’ve got no lot line restrictions, you can work it out so all the units are the same. But when you are building in the city, literally every side of the building is constrained by height and lot lines, so you are trying to fill that box with usable space. It becomes impossible to just take something and repeat it.
Is your newest building, the Metropole living up to your initial vision?
I think it’s actually better than I had anticipated. I think it’s a beautiful building, it sits magnificently on the site and I think – I’m a developer so I have prejudices – if you’re going to live downtown, where better would you want to live? It’s kind of where the action is. There are two premier axes – one would be 14th and P and U Street being the second because it’s another street that goes all the way across town.
What sets the Metropole apart?
I think a number of things. One of my criteria working with the architects [RTKL] is that I want all of the units to have some kind of ‘wow factor.’ There are lots of units with 18 foot ceilings or floor to ceiling glass – lots of very exciting space. We were fortunate to be able to negotiate a contract with Vida for a major fitness facility in the building, which obviously in today’s world is something that people are interested in. We put 70 extra parking spaces into the building that will be available to the public, but will also be available to residents if there mother-in-law comes for a stay.
Lastly, I’d say that the architecture of the building is more dramatic than most others. If you look down the north side of P Street, there are 4 new buildings. We built the 2 buildings on the west and the east end of the block and if you look at the architecture, I think it’s more exciting. Higher end finishes and higher end materials.
What is your take on the current crunch that the housing market is undergoing?
I think it has two ways in which it affects us. One is that across the board for buyers of everything – whether it’s housing or corporate financing or whatever – money is more difficult to obtain. Therefore, lending criteria are more difficult and it strains some buyers. Many buyers have equity from previous homes and have no problem with it, but clearly, the credit crunch is a factor certainly for first time home buyers and people with poorer credit.
Secondly, the overall real estate and general economic news just makes everybody nervous and causes them to pause. The fact of the matter is that if you look at the DC condominium market, there are no more than 2 or 3 projects at most that we would consider to be comparable to our own without really looking at significant compromises on location or finishes. There’s really a very, very limited supply. It’s not like New York where there’s 25 buildings or even 50 that you could look at. In Washington, if you’re planning on living in a really high quality building, there’s really only 2 or 3 buildings that you can look at.
But the problem we have is that you turn on the nightly news and you hear the generalized problems in the housing market. Housing prices may be continuing to fall in Des Moines, but they did not ever fall in downtown DC. We didn’t lower our prices and I don’t of any high quality product that has either. Yet at the same time, the condominium inventory over the last 18 months has diminished dramatically - both because there continued to be sales and because projects have converted from condominium to rental.
I’ve been through this for 25 years and there is an absolute pattern that occurs every single time. The market gets soft – whether it’s by over-supply or credit crunch or poor economy – and everybody stops building. The market tightens and prices go up. Now whether that occurs in 6 months or 18 months is always hard to predict, but the fact of the matter is that I would bet that 3 years from now – and it could be 6 months from now – that prices go up and they’re going to go up fast. All of the sudden, people are going to say, ‘Whoops, there’s no more supply’ and grab for the last units. Then we’ll go into a 3 year period where there will be no product. Nothing. And people will say, ‘When are you going to build another building?’ And that’s the way the cycle goes.
Do you ever see yourself tackling a Metropolis project outside of the District?
You know, I’ve been asked that question many many times and I always say no. I did a lot of commercial projects in other jurisdictions, but real estate is a very local business –in terms of knowing the markets, knowing the players and knowing products. I’m not a guy who is interested in developing a big company with a big staff, so that we can do this on kind of a formulaic basis. I’d be more inclined to do projects that feel comfortable to me because of my own knowledge base.
I also am – for reasons of global warming and urban sprawl – ultimately an urbanite. I believe that cities are healthier for our planet. I could go to other cities and know nothing about them. I could go to the suburbs and feel like I was contributing to the decline of the planet.
What would consider your proudest accomplishment?
Probably the Metropole and I say that seriously. The earlier buildings I think came out beautifully, but they were, to some degree, learning experiences. Many of things that I saw in the earlier buildings that I was not as comfortable with we’ve now overcome as obstacles. Now I look at the Metropole and it’s a beautiful building. I’m very excited about its delivery in the next couple of weeks.
What is your dream project?
I’m going to contradict everything I just said. I think it would be really exciting to build a skyscraper. What happens when you build a really big building like that is – because of the magnitude and scale of it – you can put all sorts of amenities in it. A thousand unit complex can afford to support many more amenities. I’ve always been much more excited by big projects.
But that is going to be impossible to do on 14th Street. I do have some future projects, but they’re going to be on the same scale as we’ve worked on so far.
Wednesday, July 02, 2008
Industry Insight: Architect Phil Esocoff
Thursday, June 19, 2008
Industry Insight: Neil Albert on DC Development
Monday, June 09, 2008
Industry Insight: Michael Stevens on the Capitol Riverfront
Labels: Anacostia, Capitol Riverfront, interview, Southeast
With the stadium, Department of Transportation, and residential projects popping up around his 1100 New Jersey Avenue office, Stevens, the Capitol Riverfront BID Executive Director, agreed to sit down with DCMud to talk about what's new in Southeast. Stevens discussed how to bring development to a portion of DC formerly associated with housing projects and strip clubs, a river two tires and a soda can past picturesque, and why the Green Line is the new Red Line.
So what, exactly, do BIDs do?
It’s hard to say. They are management organizations that address issues of cleanliness, safety and cleanliness, development, advocacy, community building, infrastructure and transit access. Property owners vote taxes on themselves to get these extra services.
You seem to be in a unique position, as you had a hand in developing the BID. How did you get involved?
I was a consultant and I approached the property owners; they had been approached by the Capitol Hill BID, but the context of the mature Capitol Hill neighborhood was totally different. That is a mature townhouse neighborhood with commercial corridors. This is a twelve-story, high-density, mix of uses that’s going to have access to transportation, infrastructure, parking, and the new ballpark. I approached the property owners and said, “You need a BID here to deal with your very specific issues. You can’t bring the Clean and Safe from Capitol Hill and say, ‘here you’ve done it.’” I told them that this is literally going to be a twelve-story neighborhood versus the two and three stories of Capitol Hill. The freeway is also a very clear divider both physically and perceptively.
They agreed to that idea and hired me as a consultant over two years ago this month to start pulling together the nuts and bolts of a BID, to meet with property owners to understand the issues and the development dynamic, and that’s when we started understanding how special this place could be. You have a development dynamic that will lead to the creation of a new mixed-use downtown essentially, that many mid-sized cities in America would kill for.
I worked in Memphis for four years, they have 6.5 million s.f. of office space, we will have 15 million, San Antonio is the seventh largest city in America, they have 5.5 million s.f. of office space. We’ll have 9,000 housing units, 800,000-900,000 s.f. of retail space, and 1,200 hotel rooms with four new parks and the Riverwalk Trail. So on 500 acres in this city, we’ll build almost ten percent of the existing office market. I had to start making points of comparison to understand how much stuff will be happening down here and how close it is.
That 15 million s.f. of office space means 95,000 daytime employees. 9,000 housing units means 15-16,000 residents. 900,000 s.f. of retail space is like a mid-sized regional mall, but it will be diffused through the neighborhood and in two mixed-use projects rather than in one building. The 1,200 hotel rooms are in six, 200-room hotels. We have the Marriott of 200 rooms which is already exceeding all of their sales expectations. In our efforts, we try to brand this as an office and business center, as an urban neighborhood, as a retail hotspot, as a tourism destination, and then as a great waterfront and parks environment. This will be a regional destination that embraces the river. We call it our front porch, rather than our back door so we have opportunity to engage and embrace and use river like it’s never been done before.
What is your view for the BID five years from now?
I think you’ll see a lot of the amenities that people are looking for start rolling off. Two parks will have opened, maybe a third, which starts to provide that open spaces system that builds community. You will see a number of restaurants which office tenants want, but that also serve residents. You will also see retail from the Forest City Project. You will see a lot of buildings that are coming out of the ground now, finish and start leasing up, which will add another layer of activity, and then people will start to understand that this is a new neighborhood emerging on the river that it’s not this far away place. In five years you will see a grocery store if not two, and very nice ones on the market, not Safeway or Giant – Whole Foods and Harris Teeter are looking at the area.
You seem to have a lot of green space and green buildings, has that become a branding thing for Southeast?
Oh yes, we have the largest green roof building system on the East Coast in the DOT building. The ballpark is the first LEED certified stadium in the country, we have special standards for tree wells, and they will catch storm water runoff and naturally filter it before going into the Anacostia River. Then Canal Park will be a model of environmental sustainability, it will catch storm water runoff from surrounding blocks, capture, filter, recycle, and reuse the water on sight. We are hoping to capture it on the rooftops of other buildings as well. A lot of that was planned before ballpark. I think the city should be very proud because they were very prescient about area. This is ten years of economic development positioning.
It started in 1998 when NAVSEA (Naval Sea Systems Command) consolidated all the regional operations to the Navy Yard campus and brought 14,000 employees and improvement to the Navy Yard, and that spurred five new buildings in the area to house contractors who worked as part of the BRAC (Base Realignment and Closure) process. The federal government should be proud. Then you have Mayor Williams who was a visionary guy, then you have the federal government which said, “we want the DOT down here,” and that sent a certain signal and then GSA worked with Norton in the SE federal center and Forest City was awarded development rights to the area, so that was a huge perceptual change. People said, “if Forest City wants to be down here…” Then the Hope VI grant at the Capper Carrollsburg, then the ball park – we even say the ballpark, while catalytic, is just gasoline on the fire. The other major factor in all this, is downtown will be built in four years – Mount Vernon Triangle, NoMa, and us are in competition with each other to capture that growth.
Where Golden Triangle and NoMa have a lot of commercial tenants coming in, it seems that there are a lot of residential projects coming here, how does that affect the BID?
I want to clear that up. We’ve had a lot of tenants come here. We have the 2 million s.f. Department of Transportation with 6,000 employees. That is bigger than ATF. There are 14,000 employees in the Navy Yard campus and 12,000 contractors associated with the navy yard campus. Plus we have the William C. Smith Headquarters, Parsons Engineering is coming… So we have around 27,000 employees, I don’t think there are that many in NoMa. So we’ve done pretty well from an office tenant standpoint, and were much farther along in the development cycle for residential. It’s the proximity to the river, to Capitol Hill, to the ball park, and what’s in the pipeline here for new parks that will support a lot of community development. We definitely consider ourselves a mixed-use neighborhood. And Golden Triangle, downtown, Capitol Hill are mature districts compared to NoMa, Mount Vernon Triangle, and us. The younger BIDS confront similar challenges.
What kind of input do the current residents and all those future residents and companies have in the BID and what is their role?
There aren’t a lot of residents yet, there are about 1,000 in the BID’s area, with 2,000 units under construction. Some will roll off this summer. Over the period of a year, we met with the Capitol Hill Co-op, the DCHA that’s building on the old Capper Carrollsburg site, and we met with all property owners individually and collectively. We have quarterly meetings with owners to say, “Here are the issues, lets prioritize, and go over the BID tax leading up to filing.” We have had enormous public input and since then, we have created a Board of Directors of twenty-one voting members, of property owners, and five at-large non tax-paying community stake holders. We have an extensive committee structure that supports the actions of that board.
You mentioned the Capper Carrollsburg project. What are your expectations for that?
It will be an instant neighborhood over the next five years. It was such a transformation of this area when they tore down the really bad public housing. It was a perceptual and physical change that was instantaneous, our crime rates went way down, the bad housing was eliminated, and people started to see what could happen with rebuilding. We will double the number of housing units to 1,550. What’s also good is that it introduces, instead of just having a consolidation of affordable or low income families in one complex, this will be a blended income strategy that introduces different economic levels, home ownership versus leasing, and the 350 townhouses will be fantastic. We are creating higher density units.
Do you think there will be a time when, after a baseball game, you will say, “Hey kids, want to go hang out by the Anacostia waterfront”?
Absolutely – next season, next spring. The bike trail has come to the 11th Street Bridge. We will bring it under the bridge to tie it into the already built Navy Yard section. Next year the Riverfront Park will be done. In fall 2009, Yards Park opens, and that will be five acres, then Diamond Teague Park will open that spring.
How do you think that infrastructure will continue to evolve? It seems that now the Capital Waterfront area is a place to which you take the metro to the ballpark for a few hours and then leave, but that kind of transit puts a strain on infrastructure in terms of driving and the Metro.
I’d say sixty-five percent of ballpark patrons are Metro-riders. I think it has worked fairly well, I know that people have said they have waited for two and three trains, but I think Metro is learning and that they add more cars and increase frequency. The parking lots have only been half and a quarter full – that’s fantastic!
How do the BIDs work together, what is the communication between them?
We have a BID council that meets every six weeks, there are eight bids, we are newest. We’ve been up and running for almost a year. NoMa preceded us by about 3 months and Liz (Price) has done a great job. We all collaborate because we have issues of commonality, infrastructure, and transit accessibility. We think there might be maybe one central employment pool for all of the BID Clean and Safe teams, that we will purchase goods together, but for now, we advocate together, do strategic planning together, and look at how we can do things better. We share what we are doing. It’s very good company.
How does the budget work?
Our budget is about $1.4 million and it’s all through BID tax, although we do accept contributions or sponsorships. We have a several-layer BID tax. There is a formula all the way down, first we tax unimproved land, or buildings under 15,000 s.f. It’s twelve cents per $100 dollars of value, ... Then we realized that there were land uses that didn’t put as much demand on service – public storage, industrial uses, so that is also taxed differently.
Can you explain the Clean and Safe idea you have been mentioning?
BIDs were started forty years ago when downtowns across America were experiencing declines and were dirty and dangerous and experiencing an exodus of retail and office to the suburbs. BIDs were created as management organizations to provide additional services to what municipalities were willing to do in the financially strained time. Property owners essentially voted taxes upon themselves, beyond what the city does. They taxed to get a pool of money to improve geographic area.
One of the first things to come out of that was Clean and Safe teams. They are men and women in uniform with pans and broom, power washers, and street sweeps who work to make the areas as clean as possible. It is streetscape improvement. The safe part consists of Hospitality Safety Ambassadors, men and women in uniform on patrol at street corners, by Metro stations, handing out information, and answering questions, so visitors have someone to talk to. They can also intercede in aggressive panhandling and notify the appropriate service.
We’ll expand to weekend service, now they work from about 7:30 am to 4:30 in the afternoon. We want the most impactful services on employment days. As we add more residential units, we will add weekend services. One-third of our budget goes to the clean and safe teams.
You’ve had a big year with the Nationals Park opening, how has it been working with the Lerners and the sports industry?
The ballpark has run very smoothly, each game is an opportunity for 20,000 -40,000 fans to come and see a new neighborhood being built on the river, the Lerners have been good partners with us. They are on our board of directors, the Sports Commission is on board as an at-large member (not voting). They run a thirty second video on our BID before every home game. That clip really starts to position in peoples’ minds that this is the Capitol Riverfront and that it’s a new neighborhood being built around the new ball park. People are astounded when they come down here – its fifty years of overlooking an area of the city that has now caught fire and is, we think, farther along in its development cycle than Penn Quarter was when the MCI Arena opened. We think the ballpark will have a similar catalytic effect.
With all of these deliveries approaching and all of the development going on, what has been your greatest accomplishment?
I would say getting a BID started with a board of directors and staff and the Clean and Safe Team, also, one of the first big accomplishments as a BID was getting a special assessment district created in concert with the Deputy Mayor. We realized that this development could not be supported by the current infrastructure and so we had to rebuild it all in concert with the DOT five-street reconstruction.
How would you change the overall development process of DC?
I think I’d streamline the development review process to make it more predictable and less time consuming. I don’t think its predictable, I think it takes much longer than developers anticipate, so they incur enormous interim financing costs. What would take three years in another city could take nine here. The city also needs to fix infrastructure – across the board in the United States, we are facing massive infrastructure issues – we have realized how woefully underfunded our infrastructure is in cities across the country. We need to improve mass transit, water, and sewer. Those are the huge pieces. Here we are trying to create mass transit options beyond what we have. We are thinking about streetcars and light rails, we were predicted to have street car across the 11th Street Bridge that would tie into M Street and connect Southeast and Southwest and then head up 7th Street to downtown.
Is there a timeline or is it just an idea?
I think it is conceptual because there isn’t funding for it yet. All of this is driven by funding. We could see the light rail, best case scenario, in five to seven years, worst case, ten to fifteen years. Its more than just funding though, its engineering, acquisitions, relocating utilities, then building.
What is the timeline on Florida Rock?
It was just in the paper last week that they their PUD has been approved and they are waiting on architectural approvals, but now they are talking about whether they want to build or just sell the land.
How does their decision and development affect the BID?
If they build, the quicker they do, the quicker revenue goes up for us, it is a key piece of waterfront linkage but also the front yard to the ballpark. A lot of people don’t like it, it doesn’t bother me, it’s the industrial heritage of the area.
How are some of the other developments in the area coming along like Half Street and JPI’s three buildings?
For Half Street, Monument and Akridge are going to negotiate before court, so someone will be made whole and we hope that happens over the summer. JPI’s 70 I Street opens this month, 100 I Street will open in July, 909 New Jersey will open in summer 2009. Those are said to be the fastest selling projects in DC. Then, Velocity Condos open in spring 2009, Faison’s 265 units open this summer as well, in August. 100 M, which is adjacent to Faison, will finish in September, Parsons Engineering in January, and 1015 Half Street is their second building and I hope the Department of Agriculture will choose that as their new site.
William C. Smith has two tracts here and we pitched to NPR to come too, but they chose NoMa because it’s on the Red Line. We said, “you have 175,000 cars on a daily basis, unimpeded views of the Capitol, and you’re in the Riverfront district!” There is such urban walkability here.
How many people do you have on staff?
In terms of staff, there are three of us with a fourth coming later this month. We are fairly small, but growing.
How do you guys go about getting your message out?
We’ve had numerous articles in the press over the past year: NY Times, Washington Times, Washington Post, On Site Magazine for The Washington Business Journal, Landscape Architecture Magazine, Luxury Condo, DC Modern Luxury, Washingtonian.
We like to say, “NoMa’s had a good month of publicity; we’ve had ten years of publicity.” We use our website; we’ve done forty to fifty presentations on the BID to the public. You’re going to have ups and downs of media coverage. Our property’s owners aren’t as aggressive in shouting that they have a Harris Teeter coming as other places. It’s about tours to the brokerage, public presentations, media coverage, website, publications, and community events. We were part of a boat tour with 430 Brokers, we went by riverfront sites and each of us got a chance to talk about our sites. We are on the Real Tour on the 19th.