Rock Spring Centre, Optimistically Pushing Forward

Rock Spring Centre of North Bethesda, a 53.4-acre tract of land within the Garrett Park area, sandwiched between the two legs of I-270, has been partially built, stalled, transferred, and reworked in the decade-plus since the development was conceptualized, and the land rezoned, from high-rise residential real estate to commercial property, back in 1997. Of the remaining 30 acres of land to be developed, Washington D.C. based DRI Development Services says it is moving forward; plans are approved, an architect is on payroll, and retail leases are being pursued, lacking only an equity partner, said Chris Spitz, president of DRI. 

DRI's most recent plans for the site were approved by the Montgomery County Planning Board this past February, but the last step - partnering with an institutional investor or real estate investment trust - is still elusive. DRI will need approximately $375 million to fund the land development, said Spitz, adding that, once complete, it will be akin to "a smaller Reston Town Center." Spitz says that DRI, a wholly owned subsidiary of Transwestern, is looking to start construction in the spring of 2012, with delivery in the first quarter 2014. DRI will lease 210,000 s.f. of retail space and 90,000 s.f. of below-grade entertainment space. Retail is broken up into 53 spaces as follows: 2 anchor tenants, 2 banks, 7 full-service restaurants, 9 quick-service restaurants, and 33 other retailers. To date there are no retail leases signed, says Bill Miller of Transwestern, despite what Miller says is "strong" ongoing interest in the development from potential tenants. "We're very close to having a theater deal [secured]... and we're talking to a few health clubs for the space below grade." Of anchor tenant space, Miller said that a deal "is close" for the largest anchor spot, just shy of 30,000 s.f. The rest of the nine building development will consist of 550,000 s.f. of office, 200,000 s.f. of hotel (200 rooms, operator unknown), and161 residential units, 1.2m s.f. in all. DRI took over development of the site from Penrose in 2008, and is in a long-term lease with land owners Davis Brothers and Camalier LP. DRI has hired Boston-area architects Arrowstreet, which revealed new images of the project last week. 

Architects say the development will be LEED certified, though not which program, and that the project will have "regionally appropriate landscaping." An original three-phase development plan for Rock Spring Centre was approved in 1999. Yet to date, only the first phase, the AvalonBay Apartments, has been built. Since 2004, the site has been dormant, with a second phase - also residential - approved, but never completed. The third, and final, phase has been reworked, from an upscale "urban village" known as Canyon Ranch, scratched in 2006, to the development as it now looks. DRI also has long gestating plans to develop the 1800 block of Wilson Boulevard in Arlington, a full-block office project near the ballpark, and had planned to develop the prominent Gallery Square, the corner parcel at 675 H Street, since been purchased by McCaffery Interests Inc. and Douglas Development. 

Bethesda, Maryland real estate development news

Foreclosure Hits Chinatown Landmark

One of downtown Washington DC's most visible buildings may soon be developed into a 9-story retail-centered mixed-use project; that is, if it's not foreclosed on. Sitting next to DC's Chinatown arch, one of the few exceptions to downtown's shiny newness is 801 7th Street. Yeni Wong and her Gallery Towers LLC were served a notice of foreclosure for the two contiguous lots at 675 H Street and 801 7th Street, NW in October for the $13,491,471 note plus attorney's fees. Wong, President of Riverdale International, reportedly paid more than $10m for the property in 2006. The lots were slated for auction on November 17th, but the sale was canceled, according to the office of David Prensky at DC's Department of Consumer and Regulatory Affairs. The corner of 7th and H housed a CVS, but now sits vacant and boarded with signs promising construction that has yet to begin. Owner Wong started a public dispute by filing a law suit in September 2006 against then tenant, CVS, after the store refused to vacate the premises despite an eviction notice in the spring of 2006. Wong wanted the CVS out to facilitate the LLC's plans to develop the site for a mix of uses including office, residential and retail. According to the website of developer DRI, a Transwestern Company, 675 H Street was to become home to two buildings: one would restore the corner space and rise 9 stories over the arch, the other would be a new Class A office building behind the main storefronts. The total project would have yielded 110,000 s.f. of office space and 50,000 s.f. of retail. The planned development never came to fruition and between October 2008 and February 2009 Gallery Towers had 4 liens placed on their Chinatown property. In the meantime, Eichberg Construction briefly began work last summer after fencing off the site, but work quickly halted. 

Washington DC real estate news

L is for Lease

More office development has arrived in the corridors of power (aka the Downtown Business Improvement District). DRI Development has brought an 11-story, 170,000 square foot building to 1331 L Street NW, only five blocks from the White House. While the building primarily serves as the new headquarters of the Mortgage Bankers Association (MBA), the SmithGroup-designed, glass-faced project also has 11,000 square feet of retail space on the block for would-be tenants.

The project is energy-efficient all the way - from the LEED gold certification (a rarity for District office space) to the "hybrid vehicle preference" parking spaces. The glass facade ostensibly admits the maximum possible amount of natural light and saves on energy costs. (Although admittedly, five high speed elevators don't sound like too “green” of a luxury). The facility’s amenities include a ground-floor fitness center, a landscaped rear court, a private rooftop terrace and "a crystalline glass tower element" over the building’s primary entrance.

Once the building was completed last spring, it sold to MBA - who now occupy only a third (approximately 68,000 square feet) of their latest acquisition. The rest -both retail and office – are being brokered by Transwestern, the parent company of DRI. A Transwestern retail leasing agent, Alex Walker, says “a restaurant and possibly a café” are planned for the site, but a timeline for such developments is still up in air. With the market still in what is best described as “rough shape,” this could be opportunity to snatch up space in a prime downtown parcel that still has that new development smell. That is, if you don’t mind sharing an office with the same guys who milk you for mortgage payments every month. High speed or not, that could be an awkward elevator ride.