Team Selected for SW Fire Site

There’s a new bright red fire station in the works for Southwest Washington. Deputy Mayor Neil Albert and DC Fire Chief Dennis Rubin joined Mayor Adrian Fenty today to announce the official selection of E Street Development for the redevelopment of two parcels adjoining Engine Company 13 at 450 6th Street, SW.

The development team – a partnership between Potomac Investment Properties, City Partners and Adams Investment Group – will construct over 500,000 square feet of new office and retail space on two District-owned parcels between 5th and 6th Street, SW. In addition, their mixed-use complex will also house a new, state-of-the-art, 22,000 square foot fire station that, according to the Mayor, “comes at no cost to the District of Columbia.”

“As you look around the station, you can see its great need of heavy maintenance, if not replacement,” said Rubin. “We feel like the time is right and that this is a great opportunity.”

The two Beyer Blinder Belle-designed projects will also be LEED certified and host a bevy of public service uses, including space for Kid Power DC and a café hosted by the DC Central Kitchen. Both Fenty and Deputy Mayor Albert pointed to their inclusion as deciding factors in their choice of E Street over two rival proposals from JLH Partners, Chapman Development and CDC Companies, and Trammell Crow, CSG Urban Partners and Michele Hagans, respectively.

“The E Street Development team stood out because not only of their ability to be visionary, but to provide certainty to the government,” said Fenty.

Michael Gewirz, President of Potomac Investment Properties, followed up on exactly what type of “certainty” his company would be providing to the project. “Some folks have asked what our concerns are given the current economic climate. I can say this: we wouldn’t be standing here if we weren’t capable of doing this project,” said Gewirz. “Right now, we’re just going to work as hard as we can with the Deputy Mayor’s office.”

And they’ll have plenty to work on in the coming months, as the City has yet to decide whether the property will be sold or leased to the E Street team. Albert said the final details concerning the land transfer will hammered out in the next three to four months with a groundbreaking set to occur within the year. In the meantime, Engine Company 13 – the unit tasked with monitoring aerial comings and goings at the White House – will remain open and operational until completion of their new facility.

Though no mention was made of the Mayor’s ongoing scandal concerning (ironically enough) a fire engine donated to the Dominican Republic, city officials were keen on pointing out the extent of the development currently underway in the blocks surrounding 6th Street. The large-scale office development, Constitution Center, is under construction directly across from the fire station’s present location, while its new spot a few hundred yards away will adjoin the District’s new Consolidated Forensics Laboratory.

Washington DC commercial real estate news

Olde Towne Gaithersburg is New Again

It's no secret that Gaithersburg has a bit of an image problem. It may be Maryland's fourth largest city, but it also lacks the basic accouterments young professionals seek for a live-work environment: restaurants, nightlife, shopping, movie theaters and the like (and the City Fathers seem to agree). Local developer Keystone Real Estate Investments LLC is the trying to rope in that demographic by using a tact usually reserved for the inner city: demolishing affordable housing projects in the Olde Towne city center and replacing them with a slew of rental apartments targeted at the twenty-something set.

Keystone's first act in this arena will be the Residences at Olde Towne - a 191-unit, two-building development scheduled to be built at the current site of the Diamond House and Diamond Acres apartments at the intersection of Water and Diamond Streets. Described as having an "upscale hotel"-type feel, the project has already been unanimously approved by the Montgomery County Planning Commission and pinned down a March 2011 start date.

Betting on success, the developer has already lined up a sequel a few blocks away. The Suites 355 will land at the base of old town's main drag, Frederick Avenue, and go even bigger: 268 “multifamily” units in a four-story building. The Suites, too, will replace an affordable housing development, the Executive Gardens, and, the way Keystone sees it, there could not be any more of an improvement.

“It is the blighted conditions of these [buildings] and the nearby area that cause these apartments to be deemed affordable housing, as there are no legal requirements for these apartments to be rented at affordable rent amounts,” says the developer. “The new 459 apartments on the two sites will include 69 Moderately Priced Dwelling Units…as required by the city’s Affordable Housing Ordinance.”

Though plans for the Suites 355 have yet to be filed with Planning Board officials, company reps have met with the Gaithersburg Mayor and City Council as recently as March 16^th to discuss their application. Both of the projects in Keystone’s portfolio will be designed by DVA Architects, and both will be aiming for a LEED certification.

Mr. Eisenhower, Mr. Gehry Go to Washington

The Dwight D. Eisenhower Memorial Commission has announced that they have selected architect Frank Gehry to design the forthcoming Eisenhower Memorial in downtown Washington. Situated on a four-acre Independence Avenue parcel and straddled by the likes of the National Air and Space Museum and Lyndon B. Johnson Department of Education Building, the prominent location will now host Gehry's first ever project within the District.

After tossing his name into the ring late last year, Gehry's as-of-yet undisclosed design has beaten a slew of potential candidates - including principals from Perkins and Will, Krueck and Sexton, Rogers Marvel Architects, Moshe Safdie and Associates, Natoma Architects and PWP Landscape Architecture – for the chance to lay out what the Commission is calling “a unique and engaging landscaped plaza type memorial, with an integral sheltering element to welcome visitors throughout the year and interpretive elements to bring the Eisenhower legacy to life.”

District residents, however, can look forward to more of DC’s famed downtown road closures once work starts. In keeping with the plans to make the Memorial “a unified, defined square,” the stretch of Maryland Avenue, SW currently bisecting the site will be scrapped in lieu of the congressionally mandated and approved Memorial.

The design phase for $90-120 million project is expected to last until 2013, with construction planned to begin shortly thereafter.

Homes, Not Houses for the Mount Vernon Triangle

Property owner Abbas Fathi has received preliminary staff approval from the District’s Historic Preservation Review Board to construct a “two-unit, three-story, three-bay wide brick veneer rowhouse-form building” at 1213 4th Street , NW. Unlike most District development these days, however, Fathi isn’t looking to cram the new development full of “stainless steel amenities” or flip it for a profit before the year is out.

“It’s not condos or rentals,” said Fathi. “Two families are going to live there and I’m going to give it to them.”

Fathi intends to deliver the units to members of his own large extended family that has roots up and down the East Coast and it’ not the first time he’s sought such a project. He’s also currently in the midst of similar initiative at 100 Bryant Street, NW – a property he picked up for $399,000 at January’s Department of Housing and Community Development “nuisance property” auction. Says Fathi: “My brother lives outside the area, but has been wanting to join us, so we’re going to renovate the house for him and his family.”

Designed by architect Bill Washington, the three-story project at 1213 4th Street - which is currently a vacant lot only few blocks from that large-scale testament to the breadth of Mount Vernon Triangle redevelopment, CityVista - will measure in at 3,3000 square feet, to be divided between its two future families. If Fathi has his way, both will be moving in as soon as possible.

“We’ve gotten both ANC approvals…because there are two [with jurisdiction in the area]…If we go and get full approval next week from the HPRB, the following day we’re going to go and apply for permits with the DCRA,” says Fathi. ““If we’re able to start in, say, March or so, we should be finished in about 8 months.”

The HPRB staff member tasked with evaluating the Fathi project has largely consented, with one interesting caveat. “There is the possibility that remains of a 19th century structure/occupation of the lot are present,” writes Meyer. “Archaeological investigations may be warranted.”

Given that the HPRB, as a whole, almost always follows recommendations made by staff, this should pose little to no problem for Fathi – especially given the diminutive dimensions of his 4th Street lot. Other quandaries raised in the report include window widths, dimensions of a cornice and the height of the “main entry header.” Nonetheless, final approval is expected to be granted at the HPRB’s March 26th hearing.

Howard Scraps Plans for LeDroit Park Development

Howard University 's Community Capital Projects division (CCP) has abandoned plans for their “New Homes at Historic LeDroit Park” project, according to University officials. Nonetheless, they don’t seem too keen on telling the neighbors.

Located at the corner of 5^th Street and Oakdale Place, NW, directly behind the Howard University Hospital, CCP had been advertising on the long vacant lot by boasting a laundry list of members on their development team, including Sorg and Associates as architects, Essex Construction Inc. as “construction consultants”, Howard President H. Patrick Swygert as “development sponsor” and Riggs Bank as a co-sponsor.

Curiously, Sorg and Associates told DCmud they have never heard of any such project, Swygert resigned his post as University President almost a year ago and Riggs Bank merged with PNC in 2005. What gives?

“The lots are being marketed for sale,” said Kerry-Ann Hamilton, Howard’s Media Relations Manager. “The University is not developing the parcels in question.” Curiously enough, however, they didn’t respond to inquiries regarding the cost of the mysterious parcel, which has yet to be advertised - in any capacity - as being for sale.

Thinking perhaps the project’s fortunes were tied to the University’s once ballyhooed LeDroit Park Initiative, DCmud questioned the head of the Initiative, Maybelle Taylor Bennett of the Howard University Community Association. She declined to comment on the status of the “New Homes” parcel or the Initiative as a whole – which is the product of a partnership between the University and (hard swallow) the Fannie Mae Foundation. Suffice it to say, the Initiative’s plans for “a new mixed-use Town Center on Georgia Avenue that will include community-serving retail and apartment housing” are probably not imminent.

UPDATE: Howard has since directed DCmud to the Menkiti Group, who is currently listing the 4,420 square lot at 2025 5th Street, NW for $430,000. According to their site, it is the "last remaining parcel from the HU/LeDroit Revitalization initiative."

The Millennium Arrives in Pentagon City

General contractors BE&K Building Group will top out construction today on Kettler’s 21-story Millennium at Metropolitan Park project – the second installment of what is planned to be an ambitious 8-phase, 10-building development in Pentagon City. The project’s first component, the 399-unit Gramercy, opened in 2006.

Once completed in April 2010, the Dorsky Hodgson Parrish Yue-designed building will feature 300 rental apartments with high-end amenities including “a rooftop pool, spa, fitness center and party room,” in addition to a first floor library and business center. More than 7,500 square feet of ground floor retail space will round the initial construction. Work on a “central park planned to serve residents of the entire Metropolitan Park complex” will begin in the project’s next phase – which Kettler’s Jamie Gorski told DCmud in February is currently scheduled to go to ground later on in 2010 with a late 2012 delivery.

New Capital for Capitol Gateway?

Almost a decade after it was first announced, Washington DC’s Marshall Heights neighborhood, bordering the Prince George's County line, may soon receive its long overdue shot in the arm. Developers just last week filed an application with the District government to demolish the abandoned towers on the site (or, in the words of the Office of the Chief Financial Officer, the "unclaimed" property). The Capitol View Plaza public housing complex and neighboring 14-story building, at 5901 and 5929 East Capitol Street, SE will soon be razed to make way for a 110,000-square foot retail center and mixed-income housing.

In 2000, under the administration of former DC Mayor Anthony Williams, the US Department of Housing and Urban Development (HUD) allotted a $30.8 million grant under its Hope VI program to the redevelopment of Capitol View Plaza's 12-story tower - then designated public housing for the elderly and disabled - across from the Capitol Heights Metro. Though the project had initially been scheduled to proceed in 2003, this is the first public sign since 2007 that the redevelopment remains on the District radar.

"5929 we purchased from HUD because it was foreclosed upon. Then we had some issues with FHA when we purchased the building because we had a financial gap. We decided it wasn't worth taking the risk if we didn't have a way to close that gap," said DCHA's Kerry Smyser of the delays. "FHA provided an upfront grant of about $12 million, but you have to use it on their footprint and there's more to do on that site than just to do with that building."

Indeed there is. Originally dubbed “New East Capitol” by the city government, the project has now been twinned with neighboring Capitol Gateway residential project, produced by the A&R Development Corporation and the Henson Development Company. Phase I of that development has delivered “nearly 240 duplexes, townhouses and single-family homes” to an area once notorious for its violence; time and development have gone a long way in imbuing the immediate area with a suburban je ne sais quoi.

That, however, is merely prologue to the 3.4 million square feet of office space, 1450 residential units - including 669 condominiums - and 300,000 square feet of retail space slated to spring up on both sides of East Capitol once construction of the Gateway project begins. Just last year, the development team confirmed that Shoppers Food & Pharmacy will be opening its very first DC branch, a 61,000-s.f. Shoppers Food Warehouse, as part of Capitol Gateway’s mixed-use component...someday. According to Smyser, DCHA is not currently projecting a timeline for construction, nor is A&R committing to a schedule. In total, the cost of the ambitious project is expected to exceed $1 billion.

Washington DC commercial real estate development news

Residences Open for Business on Georgia Ave.

The Neighborhood Development Company (NDC) officially cut the ribbon today on Petworth's newest residential project: the Residences at Georgia Avenue. With mortgage interest rates hitting an all time low, and condo prices having dipped, homes may be more affordable than ever; nonetheless, with Mayor Adrian Fenty on hand today, the developer celebrated the $28 million building at 4100 Georgia Avenue, NW, 72-units of affordable housing and a new Yes! Organic grocery store, scheduled to open this coming summer.

"This project is a perfect example of how we can leverage our resources to both greatly improve the vitality of Georgia Avenue and provide residents with the kind of high quality and convenient neighborhood amenities they both expect and deserve," said Fenty.

The District's Department of Housing and Community Development and Housing Finance Agency cumulatively contributed almost $20 million towards the project; NDC will also receive more than half a million dollars in tax incremental financing from the city for their next scheduled project, The Heights on Georgia Avenue. DCmud recently discussed NDC’s upcoming slate with founder and CEO, Adrian G. Washington in a recent interview.

New Condos for U Street Corridor

Bonstra Haresign ARCHITECTS (BHA) is currently spearheading a top-to-bottom renovation of two neighboring, historic U Street area townhomes at 2029-2031 13^th Street, NW – across the street from The Ellington’s retail enclave and caddy-corner from the proposed site of JBG’s U Street Hotel. According to Bill Bonstra, founder and managing partner of BHA, despite the prominent location, the project has presented a few unique challenges.

“[It] is a dual 3-unit conversion with rooftop addition to two townhouses. A tough project as it needed historic approval with the Historic Preservation Review Board (HPRB) and any addition to townhouses, in that regard, is frowned upon strongly by the Board,” said Bonstra. “We had to clearly show them the addition was not visible from the street.”

Following completion of interior work, as well as the rear and rooftop additions cleared by the HPRB in 2006, the property’s owner, Negasi Gebreyes, will be marketing the six condos culled from the site for sale. According to Bonstra, work should wrap up “in a few months.”

Designs Unveiled for New Smithsonian Museum

The Smithsonian has revealed (via WashingtonPost.com) the first prospective designs for the Mall’s next museum: the National Museum of African-American History and Culture. And from the looks of things, it’s going to be the grandest one yet; proposals for the 350,000 square foot museum within earshot of the Washington Monument range from glass-encased and “table-shaped” to almost pre-historic with natural materials “rising as of out of bedrock and muck.”

Last week’s presentations at the Smithsonian included new renderings and scale models by the development teams previously identified by DCmud: Diller Scofidio and Renfro (now teamed with KlingStubbins); Devrouax and Purnell Architects/Pei Cobb Freed and Partners; Moshe Safdie and Associates (now teamed with Sulton Campbell Britt & Associates), The Freelon Group (now teamed with Adjaye Associates and Davis Brody Bond), Foster and Partners (now teamed with URS) and Moody Nolan Inc (now teamed with Antoine Predock Architect).

Among the new revelations unveiled along with the designs were that the project’s budget, formerly reported at $300 million, which has now almost doubled to $500 million – half of which will be funded through a Congressional appropriation. The Smithsonian is also now projecting a 2015 opening for the museum, following the previously projected 2012 construction start date.

Once completed, the Museum will stand on a five-acre parcel at 15^th Street and Constitution Avenue, NW – one of the very last prime plots abutting the National Mall. A final selection on the Smithsonian’s choice of architect will be announced by a Smithsonian-chosen 11-member panel next month, to be seconded (or not) by a final approval by the Smithsonian Board of Regents. The final design will then enter into lengthy submission processes with both the Commission on Fine Arts and the National Capital Planning Commission.

Both interior and exterior renderings of the proposed designs are available here.

McMansions II: Palisades

While George Soros is enjoying "a very good crisis," he is not alone. As work proceeds on 46 custom homes in the Palisades, at least some new home buyers are paying nearly $2m for a development of custom-built, embassy-sized homes in Northwest Washington DC. The Phillips Park development - overseen by international businessmen William Pryor and Felipe Paraud - will be delivering 46 "estate homes" with sprawling 9,000 to 17,000 square foot lots near the intersection of Foxhall Road and W Street, NW over the course of the next year.

Proof positive that not everyone is suffering, twenty-two of the available lots are already under contract, according to the real estate agent representing the project, Long and Foster's Susie Maguire. The custom-built homes themselves will measure in at 4,500 to 9,000 s.f. and sport designs from variety of architectural firms, including Barnes Vanze, David Jones, Muse and Neumann Lewis Buchanan. Priced from $1.5m, the homes began sales a little more than two years ago,

Phillips Park’s big price tag is in keeping with the parcel’s prestigious former use; it was formerly the site of “Dunmarlin,” a 26-room, 17,000-s.f. mansion owned by philanthropists Duncan and Marjorie Phillips - best known to metro area residents as the patrons behind the Phillips Collection art museum in Dupont Circle. 

The historic mansion was controversially demolished following its sale to Saudi businessman Rafik Harir in 1988. At the time, its $13 million price point was the largest sum ever paid for a residence in the District.

As the development is custom-built, construction is ongoing, but the first few homes sold will begin to deliver later this month. Gibson Builders, Horizon Builders, O’Neill Development, Lifecraft Builders and MB VISNIC are all serving as contractors on the project. Financing is provided by ING Direct. UPDATE: Palisades Park is a shared listing between Long & Foster and the firm of Arnold, Bradley, Sargent, Davy and Chew, Inc.

McMansion Watch: Chevy Chase

Even through the worst of economic slowdowns, the Montgomery County hamlet of Chevy Chase has proven to be one of the most insulated from market declines - at least with regard to home values. The fact may have something to do with schools, proximity to DC and Metro, walkability or history, but certainly housing is the dominant factor, and close-in single family homes have fared best. Which helps explain the surfeit of increasingly imposing, over-sized homes that have dominated the architectural style of new homes. With that in mind, here's a look at some projects currently underway:

Properties 1 & 2: 3823 Bradley Lane

Two single family homes will soon be situated on these dual 17,000 square foot development lots, which formerly hosted the now-demolished Nigerian ambassador's residence.

Developer: Sandy Spring Classic Homes

Architect: GTM Architects

Builder: Sandy Spring Builders, LLC

3810 Club Drive

Formerly home to a split-level rambler that has increasingly become the target of developers, this parcel has been reborn as a goldenrod...chateau? Or English manor, we're not sure.

Developer: Mitchell & Company

Architect: Mitchell & Company

Builder: Mitchell & Company

3516 Turner Lane

Wrapping up construction next month, this garage-centric home sits on a 7,000 foot lot a block over from Chevy Chase's only (and tre exclusive) shopping center on Brookville Road. The convenience will only run you $2,199,000.

Developer: McNamara Bros., Inc.

Architect: Studio Z Design Concepts

Builder: McNamara Bros., Inc.

UIP Moves in on Historic Connecticut Ave Space

Urban Investment Partners (UIP) is currently two months into their $1.9 million renovation of The Macklin – the 70-year old, 17-unit apartment building straddling the same stretch of Connecticut Avenue as some of Northwest’s most beloved destinations, including the Uptown Theater and the Ireland’s Four Provinces Restaurant and Pub.

Located at 2911 Newark Street, NW, the Macklin will receive a thorough 21^st century upgrade, courtesy of Bonstra Haresign Architects. The development team is completely overhauling the building’s aging heating and cooling units, plumbing system, baths and kitchens – the latter of which UPI boasts will include “all-new wood cabinetry, granite or stone countertops, under-cabinet lighting, stainless steel finish appliances including mounted microwaves and dishwashers, and new tiles.”

Additionally, the Macklin’s floorplan also includes the 11,000 square feet of retail space directly below the building at 3400-3412 Connecticut Avenue, NW, which now houses the new UIP offices after their relocation from Arlington.

The Macklin renovation is ambitious if only because it seeks to improve upon the original designs of Mihran Mesrobia – the architect behind such DC landmarks as the St. Regis and the Hay-Adams Hotels, as well as the one-time chief designer for iconic, early 20^th century developer, Harry Wardman.

Nonetheless, UIP succeeded where others had failed in mid-2008 when they acquired the formerly rent-controlled Cleveland Park building for $9.5 million. Earlier, in 2006, the Macklin had been the subject of a failed attempt at redevelopment by the Hastings Development Corporation, which sought to more than double the amount of units on site and install a parking garage beneath the property. Faced with the resident and community opposition, the proposal never made it beyond the planning stages.

According UIP’s Steve Schwat, the renovation is currently scheduled to wrap up in October. UIP’s own in-house general contractor, Urban CM, is overseeing construction.

The Macklin is the third such historic renovation currently that UIP currently has underway in the District. The others can be found at 1921 Kalorama Road, NW and 1706 T Street, NW, both in Adams Morgan.

DCMud Voted Best Real Estate / Development Blog by CityPaper

The Washington City Paper today voted DCMud the best real estate / development blog in the DC area in its annual "Best Of" edition. Thanks to the City Paper for its insight on DC, and for voting us the top real estate site. Congratulations to DCMetrocentric for getting the nod for runner-up.

Industry Insight: Adrian G. Washington of the Neighborhood Development Company

As the founder and CEO of the Neighborhood Development Company (NDC), Adrian G. Washington has overseen numerous development initiatives in the District with a primary focus on boutique condominiums and affordable housing in Columbia Heights and along a resurgent Georgia Avenue corridor. In between working on a current slate of projects that includes the Residences at Georgia Avenue, the Heights on Georgia Avenue and a proposal for the mixed-income redevelopment of the Park Morton public housing complex, Mr. Washington spoke with DCmud about the state of development in the District of Columbia, the challenges of affordable housing and what the future of the residential market. 

Can you give us an overview of the company? 

I’ve been doing this for about twenty years. I started out as basic as it gets - rehabbing brownstones – and moved up from there. Then, I worked for a big corporate real estate company called the National Housing Partnership and we did a lot of affordable housing stuff. I started NDC about ten years ago by doing really the same sorts of things – rehabbing brownstones. By the next year, we were doing 4-unit buildings, then 10-unit buildings and it sort of just got bigger and bigger. It really kind of took off about five years ago. I brought in my partner here and a couple of junior partners, a couple of vice presidents who really brought it up to a professional level. We started doing bigger projects. We were lucky to be on teams that got selected to do CityVista and the old Convention Center site, now called City Center. We really kind of rode the condo boom when it was hot; we had a lot of really cool boutique projects. So it started out focusing on Columbia Heights because we’re always emerging neighborhood focused. When Columbia Heights became more established, we sort of shifted it. So for our last projects, we’ve done a lot of stuff up and down Georgia Avenue – projects like the Lofts at Brightwood and Lamont Street Lofts. We’ve also done some affordable rental projects like the Residences at Georgia Avenue. As the economy shifted, we started doing more affordable rental projects. Our Heights at Georgia Avenue project will be almost like a sister project – same size, same kind of concept with affordable housing on top and retail on the ground floor. Then we proposed on the Park Morton site and we’ll also be proposing on two of the DC school sites. We’ve teamed with EYA on the Hines School site and with Equity Residential on the Stevens School site. 

Indeed, most of your new construction seems to be focused on Georgia Avenue.  Are you still bullish on the area? 

We hope so. We like it. We’re headquartered here and I live about five minutes away. We’ve always been focused on this area and we just saw it as the next “cool neighborhood.” You have Columbia Heights to the east and with Georgia being a Great Street, the city’s been really interested in what we’re doing and certainly helped out on a lot of things. We’ll be coordinating with them for some of the infrastructure improvements with Great Streets. It’s a really great transportation corridor. It’s got some good parcels that are available and, particularly at the start, there were some great industrial buildings that you could convert to lofts. There's not as much now, but it’s a great area and we kind of adopted it as our backyard. We really wanted to be focused on particular neighborhoods, which is where we are. 

How does the current state of the market affect a company that’s primarily focused on affordable housing? 

I think it’s been good and bad. When things started getting tougher, most people - me included – said affordable housing financing is not going to be affected by the credit crisis. Well, in fact, it has. The most popular mechanism for financing affordable housing is the low income housing tax credit, where essentially you get credits that allow companies to reduce their taxes. Well, a lot fewer companies have taxable gains these days, so the market for that – while it hasn’t crashed – has declined considerably. Also, the District a lot of times provided gap financing. A lot of that comes from the Housing Production Trust Fund that is funded by sale and recordation taxes. At the same time, the gaps have gotten bigger because construction costs went up and land values went up. The District used to be fairly flush and now they’re pretty tight. That’s been a little challenging, but the good thing is that the demand is still there. Land prices are starting to retract a little bit and construction costs are starting to mitigate. So it’s much tougher, just like private development is much tougher. But I think DC is really strong market with basic fundamentals like what you can rent things for and demand. I really haven’t seen things as bad yet as I read in the papers and I’m optimistic because demand for things like condos and rentals really haven’t declined as much as the headlines suggest. 

One crucial element of development is retail. CityVista, of course, has a Safeway and your newly completed building, the Residences at Georgia Avenue, is planned to include a Yes! Organic Market. How do you go about making neighborhoods once thought undesirable attractive to retailers?

Those were two very different cases. In terms of CityVista, Safeway was part of the team right from the beginning. Actually, before we became part of the team, Safeway and Lowe Enterprises, our partners, were already linked to that project. Safeway saw it as a great place to put a new urban model Safeway. The thing with Yes! Organic is that we approached them very early on. We didn’t have a broker or anything. They just saw it as a great location. We had some personal connections with Gary Cha, the head of the company, and, as matter of fact, he liked it much that he wanted to buy it because he saw the potential of the neighborhood and said, “I want to get in on the ground floor.” That’s how we’ve done it. We had the Meridian Restaurant at our Lofts at Brightwood project and it was the same type of thing – a really entrepreneurial retailer that was willing to take a chance and invest in the neighborhood in the same way we were. That’s how we traditionally work – not through brokerage channels, but with retailers who’ve really gotten it and want to get in early on a project and help design the project to meet their specifications. It sort of goes together. 

At this point, it’s safe to say that CityVista has been a success, while other projects in the immediate area have stumbled. What would you chalk that up to? 

 It’s funny because we just had a case study that ULI did and they put together all the people –developers, contractors, lawyers and architects. One of the things that we talked about was doing a true mixed-use project – some condos, some apartments and retail. It’s really hard from a construction standpoint, from a legal standpoint, from an architectural standpoint, but if you get right and you get the right mix…synergy is a corny term, but it really applies to this. We got this great Safeway, we got Busboys and Poets and we have a real mix of retailers at the base, all of which people really want. These kind of lifestyle-type things help it be a place where people really want to be. NoMa is still kind of an emerging neighborhood and people want to feel like they have a sense of community – a place where they can live, they go downstairs to shop, they can go out to eat, they can go to go the gym. And not just a little in-house gym, but a really cool gym like Results. It’s a really cool place and what we’ve seen is that it’s drawn people from all over. You think it would be people who live in different parts of DC, but we have people from Prince George’s County and Virginia. It’s just been a nice sort of synergy and I think the rental component energizes the condo component and the condo component energizes the retail component and vice versa. And I think it’s priced right. It’s not entry-level pricing, but it’s not super-luxury pricing either and a lot of people can afford it. We knew we were going to sell like that.

NDC has a record of vying for some prominent District issued RFPs, including Park Morton, CityVista and 5th and I. How would you characterize your relationship with the Fenty administration and the Office of the Deputy Mayor for Planning and Economic Development? 

I’m not an insider or anything, but I value and appreciate what they’re doing and I’d like to think that they feel the same about us. I feel that our goals converge. They’re interested in developing Georgia Avenue and we are too. They’re interested in promoting local businesses and I live in the city, I work in the city and I hire people in the city. It’s matter of being on the same page and understanding their challenges. For me, having been inside the government at one time, I understand what it’s like to be on the other side of the table - the challenges that you have from a political perspective and from a legal perspective. A lot of times, you go through these long agreements with people and can seem like, “Why are they asking for that? It makes no sense.” Having been on the other side of the table, I understand that they have to get certain things through certain offices and fiscal years and so on. Having spent a bit of time in their shoes helps me understand what their hot buttons are and what’s important. That helps the negotiation process. The important thing is that we share the same goals. We want improve neighborhoods. We want to work with the community. Like most developers, we feel that we have to reflect what’s going on and what people are looking for. 

Are there any details that you can share about your proposal for the redevelopment of Park Morton? 

The first thing that I really want to emphasize is that we’ve teamed with a really great partner. They're called Community Builders. They’re Boston-based, but they have a DC office. They’re really the leading non-profit developer in the country. They’ve done over 20,000 units in terms of projects. They really specialize in these sorts of difficult public housing transformations. They have a great human capital program and do things like job training, education and public safety – things that affordable housing demands. Our team, with our local knowledge and our skill, is a great combination. Essentially, we stuck pretty close to the plan that was developed when we were part of the task force that designed the original Park Morton plan that was in the RFP submission. They’re looking for a three-phase plan – roughly a third, a third, a third - that will provide homes for all the current people who are there and then mix them up with moderate income and market rate. It’s, give or take, 500 units of housing. We’ll be demolishing this area [along Park Road] for Phase I and building a total of 195 units. We’ll have [a separate] building dedicated to senior citizens and mixed-income units. Prior to demolition, we would provide for the relocation of families that are in there now and put them in units in and around the area, so they could stay in the neighborhood. We’d then demolish the [second area along Morton Street] and move people into the first phase, along with new people from outside the community and build another roughly 250 units. Then, finally the third [along Lamont Street] would be building condominiums. By that point, we think the neighborhood will have improved, the market will have improved and that it would a great place to do a condominium building. 

Many owners of undeveloped property are now caught between inability to get financing and maturity default. How is NDC positioned to make it through the next two or so years? 

I think we’re well positioned. We’re either lucky or smart. I’m happy to take either one. We’ve done condo projects over the years and about two years ago, we began to sort of feel something in the air. Four years ago, if you built something, people were lining up. As far as two years ago, things began to slow down and we decided to decrease our exposure to condos. We did a couple of projects, but they were very value priced and we were able to sell out of those. Right now, we have zero exposure to condos. Our project across the street, the Residences at Georgia Avenue, is a moderate income rental. We’re in lease up now and we’re getting tons of responses, so we feel very good about how that project is going to perform. The Heights on Georgia Avenue that’s basically across the street from Park Morton, we just got through with PUD and we’re just looking for financing now. Again, we think we’ve created a product that’s moderately priced and we’re pretty optimistic that we’ll get financing for that. We think that we’re in a very good place. We’re lucky to be part of CityVista that, amidst all the problems, is performing well. We’re well-positioned and I think it’s a great time to be a developer. A lot of newcomers and weaker competitors will be going away. It’s more challenging – you need more creativity – but that’s kind of cool.  

Is it possible to be profitable selling new construction there in this environment? 

I think so. It has to be the right place and the right design. And one of the really crazy but cool things is that things change so quickly. Our focus has been on the kind of building - it’s called podium style - that has first floor retail with four or five stories of residential above it. It’s a stick-built product. What happened in the last few years is that the delta between concrete buildings and stick-built really expanded. This was kind of a nice sweet spot in terms of building a building that’s six-stories high, but the cost per square foot was a lot lower. That was the threshold and, if you wanted to go any higher than that, you’d have to go with concrete. We really looked at this as model for the Heights and Park Morton and we’ve seen prices for this come down. What we don’t know is if concrete construction is going to come back down and become much more competitive. You’ve got to moderate, just from a supply and demand perspective – not just in the US, but around the world. A lot of stuff is clearly not going to get built. Commodity prices, concrete construction, oil and gas, steel – all that’s come down and the demand for labor has come down as well. 

Do you see NDC starting any market-rate condominium projects in the near future? 

Oh yeah, absolutely. Whether you’re condo or rental, I think that DC is great place to live. I think in terms of a competitive advantage, with the new administration and the Stimulus Package, that the city is becoming more in demand. I liked the city before the market went down and I like it even more now. I think that supply and demand is going to come back into balance. We’re seeing things like the month’s inventory start to come down. Real estate is cyclical. We had a particularly strong up cycle and now we’ve had a particularly strong down cycle, but it’s going to come back. Just in terms of how long it takes to do things, if you look at the demand, I think the trade-up buyer has kind of decreased a little bit and speculative investment buyer has gone away completely. But that first-time buyer and the price point from three to five hundred thousand has pretty much stayed there. But nothing’s getting built. Nobody, for any kind of project of any significant size, is starting. There’s nothing in the pipeline now and the way these projects work is that if you’re not in the pipeline now, you’re not going to deliver for at least three years – more like four or five. As the economy straightens itself out and demand is solid and starts to increase, the supply is going to be way low. Things that will be delivering in two, three or four years, I think there will be a great market for. We could easily do a boutique building of under a hundred units in that time frame. I’m really bullish on that.

Washington DC commercial real estate news

More Money for Macedonia

The Arlington County Board has approved up to $2.855 million in low-interest loans for the Nauck Development Partners' (NDP) affordable housing redevelopment of the Macedonia Baptist Church

in Arlington. Per the terms of the approval, all of the building's 36 units are to remain "guaranteed affordable" for a minimum of 75 years.

NDP, which is a partnership between the Church, the Bonder and Amanda Johnson Community Development Corporation and AHC Inc., previously sought another $2.86 million low-interest loan and $40,000 County grant from the Board in January - both of which were summarily approved. NDP has secured $14 million in financing for the project, nearly $6 million of which is drawn from County funds. Part of the Macedonia's funding package will come in the form of 4% tax credits and tax-exempt bond financing via the Virginia Housing Development Authority, which the development team had been vigorously pursuing since last summer.

Located on three neighboring parcels at 2219, 2229 and 2237 Shirlington Road in the Virginia suburb of Nauck, the Bonstra Haresign-designed Macedonia will host the aforementioned 36-unit affordable in addition to two sections of commercial office space and a “small business incubator.” AHC Inc.’s Project Manager, Curtis Adams, told DCmud last December that the development team plans to begin construction in the late spring of 2009.