DC Reveals Management and Style Guidelines for City Property

Mayor Adrian Fenty yesterday unveiled the Office of Property Management's (OPM) first-ever District of Columbia Facilities Plan - a "comprehensive strategy" for managing and consolidating the DC government's 18 million square feet plus of property and 3.7 million square feet of privately leased space in a streamlined and cost efficient manner.

The OPM plan outlines measures that will reduce the city's amount of leased space by 13% (roughly 500,000 square feet) over the next year by relocating staff to shuttered DC public schools and consolidating warehouse operations. It also provides concrete timelines for the construction of new District-owned office space - including the currently underway Department of Employee Services at Benning Road and Minnesota Avenue, NE (pictured) and the recently announced MPD Property and Evidence Warehouse in Southwest. DC Public Schools and Libraries, however, will be unaffected by the Facilities Plan, as they are governed by their own distinct agencies.

The plan includes a provision requiring all DC-sponsored projects to meet a minimum LEED silver certification. OPM Director Robin-Eve Jasper did, however, point out that the plan is “Version 1.0” and will be subject to revision as new opportunities present themselves.

"A lot of things change about property – about the needs, about the market and other things - are very dynamic in real estate. We will be regularly updating this plan to address new things that come up,” said Jasper.

In addition to the master Facilities Plan, OPM also used the occasion to announce the release of its HOK Architects-authored (and phone book thick) Workplace Design Guidelines that, in the words of District reps, “standardizes the materials and furnishings that can be used in District office buildings” through bulk purchases and codified style standards.

“This will be a common brand making sure that efficiencies bring big cost savings,” said Fenty. Because, as we all know, the best way to attract DC’s best and brightest to local government is by forcing them to all use identical mauve swivel chairs in their mass produced cubicles. Oy.

Room and Board Buys into 14th Street

Minneapolis-based home furniture retailers Room and Board have purchased a vacant, four-story building at 1840 14th Street, NW and plan to transform it into a fully rehabbed, 33,000 square foot flagship location - their first in the DC metro area. According to the broker who facilitated the purchase, Wayne Dickson of Blake Dickson Real Estate, the retail chain has big plans for the re-emergent 14th Street corridor and will use the entire space for their showroom.

"Room and Board is expecting this to be a regional draw for them...Through their catalog sales, they did a zip code analysis of where the majority of their customers were.  The building at 1840 14th Street was just about dead center in that customer base," he said.

Known to some as the Taylor Motor Building, 1840 14th Street began its life as a Ford Model A showroom, and, in subsequent decades, went on to to serve an array of uses, including stints as an arts space and church. Most recently, the building was slated for a residential makeover by Four Points, LLC, which paid some $10 million for the site. Plans for that project, the so-called T Street Flats, (or "Rapture Lofts") were announced in 2007, but never made it past the planning stages.

"Blake Dickson Real Estate has been working on that property for the better part of two years…It was most recently a church, called the Church of the Rapture, and then the initial plans by Four Points, LLC had a condo element,” said Dickson. “They bought that building at the top of the market and then later decided to go all commercial with it.”

As purveyors of handcrafted, American-made furniture, Room and Board will be among the latest in a string of upscale chain retailers, including Bang and Olufsen and Whole Foods, to set up shop along the once unfashionable 14th Street corridor - the same strip that recently lost its Storehouse furniture retailer, only to gain Mitchell Gold in its place. One block over at 14th and S Streets, NW, the JBG Companies also have plans on the boards for a new mixed-use complex with ground-floor retail. (Once that Apple Store gets announced, consider gentrification complete.)

Room and Board have retained omnipresent DC architects, Eric Colbert and Associates, to design the extensive renovation, which Dickson described as a “gut job.” The build-out is expected to take between 12 and 18 months.

Washington DC retail real estate news

Meads Row Bids Adieu to the Atlas District

Late last month, Washington DC's Historic Preservation Review Board voted down a motion for the protection of Meads Row – a series of nearly century-old structures at 1305-1311 H Street, NE that owners Tae and Sang Ryu plan to demolish to make way for a new Atlas District parking lot, much to the dismay of the ANC 6A. With no recourse now left to the ANC, the owners are free to pursue a raze for the property, although, in the view of some city officials, the Ryu's new pay-to-park will have anything but a positive effect on the increasingly developed H Street corridor.

"The 1300 block…is the heart of the arts and entertainment district of H Street,” said ANC Commissioner 6A03 David Holmes, who had been acting as the commission’s “point person” on the Meads Row matter. “It’s the most successful area of H Street in terms of its redevelopment and rebirth from the tragedies that affected it from the 1968 riots and the loss of interest in the business district….[Now] it has lots of bars, lots of restaurants, theaters and so forth. That block is based on the historic architecture of the area and the loss of any of that fabric is important to the business model of H Street.”

The four buildings in question were designed by early 20^th century DC architect, Charles Meads, who was also responsible for some 105 structures on Capitol Hill. Of those, only 73 remain today, with the remainder having been demolished to make way for the Congressional Office Buildings and Senate Park. Meads Row represents the very last remnant of Meads’ H Street properties, which once numbered seven. During their heyday, the buildings boasted an assortment of “well-to-do” shopkeepers, who lived above their storefronts in the buildings’ second-story residential flats.

The properties' history in the area, however, was of little import to the HPRB, who in their denial of the landmark application, state,"Judged only for the H Street buildings Meads work would have to be considered typical of that of Washington's designers-builders of that era." Unsurprisingly, Holmes disagrees.

“These are some of the earliest buildings along H Street and they were important because the builder was trying to set a tone for H Street…They are very upscale and would be appropriate on Capitol Hill, closer to the Capitol, but he was putting it right at the boundaries of the old city’s L’Enfant plan,” he said.

Today, most of the Meads Row properties in are in functional, though somewhat degraded, condition. 1311 H St. has been condemned by District authorities and currently boasts boarded-up windows and a damaged roof. Despite attempts from the ANC to facilitate historic restoration tax credits for the buildings, which directly neighbor the Atlas Performing Arts Center, the owners have expressed interest in no development scheme for the site other than asphalt.

“It’s as if they wanted to put [the properties] in that condition. It’s a practice we’ve seen on Capitol Hill in the historic district too…People want to put up a new three-story building and sell it, so they allow the old building to be demolished by neglect,” said Holmes. “He’s doing it simply to reduce his [tax] assessment by taking down the historic buildings and eliminating the improvements, so he won’t have to pay taxes on the land value…It’s a tragedy. These are important, attractive buildings.”

The Floridian Goes South?

Buyers at The Floridian condominium in Shaw received some unwelcome if unfortunately common news last week when they were informed they would be unable to settle on their contracts until a lien and lawsuit involving one of the lenders was resolved. The condo project at 919-929 Florida Avenue, by Kady Development, has been funded by "a number of different" lenders, including Bank of America. Contract holders have had their settlements delayed until the disputes are resolved.

"The situation is that the seller, about three weeks ago, disclosed to all of our potential purchasers and [current] owners that he is having an issue with the lender and hopes to get it resolved within - what he said at the time - a month, but that he couldn’t be certain. So, we've been working with anyone who is under contract and new potential buyers and telling them that information,” said Gerard DiRuggiero of Urban Land Company.

“[We] can’t settle [contracts] at the moment. So, it’s just weekly updates and we’ve cleared that with all the buyers. Again, people are remarkably flexible and we’re giving them the information that we know. The residents seem to be handling it well and they love the building and the location,” said DiRuggiero. The Florida Avenue project sits amid several sites that were intended for development, such as the Atlantic Plumbing site, but that never materialized.

However, as of last week, the 118-units in the development’s dual, Eric Colbert-designed 8-story towers boasted an occupancy rate of 50% according to the sales team, though DC government records show only 29 recorded sales - after having begun sales in October 2005 and beginning settlements in the first half of 2008. Like the Metropole, a nearby project which was taken over by the lender in April and has been all but invisible since, the Floridian’s sales center at 913 Florida Avenue, NW, remains technically open for business…for now, at least, but without a date certain for resolving the issue. The project was built by Tompkins Builders.

Post your comments about this project below

Tweaking Hine or Six to Four

Two weeks after publishing a short list of potential developers for a dilapidated Eastern Market school, the Washington DC government has announced that it has cleaved two of the six developers from the list. District officials announced that Quadrangle Development and Equity Residential/Mosaid Urban Partners were off the list to develop the Hine Junior High School at 335 8th Street, SE, leaving four contenders.

The 43-year-old, 131,300 square foot educational facility was shuttered in 2007, in order to redirect $6.2 million worth of school funds toward leasing costs for the District of Columbia Public Schools' headquarters. Developers have proposed a variety of retail, non-profit, housing and office uses for the building. The four survivors are:

1. The Bozzuto Group/Scallan Properties/Lehr Jackson Associates/E.R. Bacon Development, LLC/Blue Skye Development/CityStrategy, LLC

2. National Leadership Campus/Western Development Group

3. Stanton Development Corporation/Eastbanc Inc./Autopark Inc./The Jarvis Companies/Dantes Partners

4. StreetSense/DSF/Menkiti Group

A few lucky District officials will host a discussion panel on the property on June 10^th at Tyler Elementary at 1001 G Street, SE. The meeting will begin at 6 PM and is open to the public. Eastern Market will officially reopen on June 25th.

Industry Insight: Steve Schwat of Urban Investment Partners

Since co-founding Urban Investment Partners (UIP) at the turn of the millennium, UIP principal Steve Schwat has overseen a diverse portfolio of real estate and development projects in Washington, DC and Prince George's County. In addition to owning and/or managing roughly 2800 rental units throughout the city, the firm has developed several for-sale condo projects, including The Archbold in Glover Park and Providence Square on Capitol Hill.

As the area condo market began its steep descent a few years back, UIP turned its focus to a practice Schwat calls the "value add" - a program that provides "substantial rehabilitation" to blighted or vacant buildings with updated amenities and streamlined utility systems. Schwat spoke with DCmud about UIP's expanding list of services and the state of DC development in general from their newly acquired Connecticut Avenue offices, directly beneath one such "value add" property currently under renovation: the historic Macklin apartment complex at 2911 Newark Street, NW.

Can you tell us a bit about how UIP came together and the work you do here at the firm?

I’m one of the original principals. There are three of us. We started back around 2000 and I have been in Washington since 1980, when I went to school at GW. I’m serial entrepreneur of sorts. I’ve owned a number of different businesses and I have a background in sales. My initial interest in real estate was doing single-family homes, and then I did my first condominium project in the early 80s, by renovating an older historic-type building. I sort of caught the renovation bug.

I enjoy starting companies, administrating companies and getting them running. What been as a hobby in real estate turned into a full blown career. My two partners, both of whom are Dutch, have been in real estate for a very long time. There was a combination of their deep experience in real estate investing and my knowledge of Washington and ability to create a functioning operation.

UIP doesn’t only operate as developer, but offers general contracting and property management services as well. Can you profile the organization for us?

UIP was always the rental group and all of our rental properties are owned under some kind of UIP entity. Drummond Development was our for-sale company and, if we do a for-sale project, it’s done under Drummond – just to keep the different types of investment separate. Then we have Urban CM, which is our construction group, and we currently do our own construction on projects up to $5 million. That may expand sometime in the next year or so if we do bigger projects.

Our property management group started in January of this year. We hired Dave Barton, who was running Randall Hagman’s residential management group, and when he resigned, they sort of sent him off with his staff and about 700 apartment units. So, we now manage our own properties. Before that, we were hiring third-party property managers…[but] we’d always envisioned having our own property management company, simply because we were constantly dissatisfied with the level of performance we got from other companies.

As it turned out, as the industry changes and the capital markets change and businesses are consolidating, we’d been considering it for so long that it didn’t seem like a consolidation move. In the end, in a market where you’re starting to worry about your ability to do as many deals this year as you did last year, it’s certainly a benefit to bring a fee-based entity in. You were giving away 5% before and now you’re bringing it in yourself. That’s not to say property management is highly profitable business. For us, it’s not yet, but it’s highly profitable for us as asset holders and asset managers.

How do you go about finding and selecting properties for rehabilitation? They all seem to be historic, yet something with an architectural history like the Macklin seems like a more obvious choice than say, 1921 Kalorama.

The prominent history, from an investment perspective, is probably fifth down on the list of the top five priorities. It’s certainly more fun to do architecturally significant buildings than it is to do historically insignificant buildings...What we look for in a property if we’re going to do a "value add" is “Can we increase the rents? Can we decrease the expenses? Does the building need the improvements that we’re talking about? And is there a method within DC rent control that’s going to allow us to achieve those goals?”

That’s really the key when you’re marketing inside a rent controlled environment like the District of Columbia. It’s not a matter of looking for loopholes; it’s a matter of utilizing the system in a legal way, taking buildings that are in need of substantial rehabilitation, putting it all together, and, in the end, doing what is a justified renovation of the building.

But, in that, you have two things that directly conflict. One is the city’s desire to maintain affordable housing. [The second is that] if you’re going to pour a million dollars into a building to renovate it, that’s something that will cause you to increase, not decrease the rent. Dig one level deeper and that conflict becomes a reality where you have people living in grandfathered buildings with antiquated heating, cooling, and electrical systems…If you were to build that building today, it would never meet code. But because it’s been grandfathered in over so many years, it technically gets past the code. But that doesn’t mean it’s safe or that the electrical system doesn’t need to be replaced.

Within rent control, there are a number of tools you can use to increase rents. But you can’t just take a crapped out building and increase the rent because it’s still crapped out. You can’t take a building that you wouldn’t live in…and just raise the rents because that’s not very moral. So there’s a balance of working within the rent control environment and achieving that perfect storm of, “Is the property currently requiring improvement? Is the property currently renting below market rate? Is there a tool within a rent control that we can use to increase the rents while working with the Office of the Tenant Advocate and the Rent Administrator?...[That is] separate from my political opinions on what preserving and providing affordable housing should be. That is not to say that I agree 100% with the District, but there is the law and you have operate within it.

That said, some of the District’s rent control laws are antiquated and somewhat backwards in their thinking. The concept of maintaining affordable units in an otherwise upscale building has some inherent issues that are problematic...If you build $700,000 houses or condominiums, is it appropriate to have a $200,000 condominium in that building? Issues like amenities and monthly maintenance fees are also in direct conflict with one another.

Does UIP view new construction as profitable arm of the business? Or is the company content with sticking to renovations culled from DC’s vast inventory of vacant buildings?

Well, a vacant building is what we see as a “value add” building. So, yea, we’re all over that. And, yes, potentially for condominium sales, I think the market – although it dropped off precipitously at some point after 2005 and has remained low – still has absorption in DC. There are still people looking to buy condominiums. For instance, The Shelby at 1706 T Street or The Macklin at 2911 Newark Street, both have condominium registrations associated with them, so they could be sold as a condo at some point in the future. But that’s not our plan or the way we underwrote them. We underwrote them as rental properties and we renovated them as rental properties.

Ironically, coincidentally, fortuitously, though, a renovation of a rental property…is very similar to the renovation you do for a condominium because you have to self-contain utilities and make it simple, so that someone can own it. There’s a lot of synergy there in renovating a building for rental, where you’re reducing your expenses. Part of our whole “value add” strategy is not only increasing the rents, but also decreasing your expenses from five, six grand per unit per year to something less than three grand because you’re not heating the building with a highly inefficient furnace that burns all day long…as opposed to replacing it with a self-contained unit that the tenant is responsible for. It’s amazing how green a technology that is…If leave, I turn it off; I come home, I turn it on.

The definition of “value add” is in how you exit and, if there’s one thing I’d like to say, it’s that “It’s the exit, stupid”…I like to talk about my condominium experience because we did a lot of “value add” renovations with condos. People go, “Oh no, condos,” but the sale of a condominium and the sale of an apartment building is the same thing. It’s just a contract selling one on a wholesale basis and another selling condominiums on a retail basis. A condominium unit is generally worth more than a rental unit, but, the point, is it’s a really a matter of what the equity wants and what the market is saying.

We have a friendly competitor that recently completed a condominium building on Vernon Street and they’re having a really high velocity of sales. We just finished an apartment rental two blocks from there and we rented out all our units in less than a month. There are strong market indications for both. We thought we’d start to see the rental ceiling – what’s the highest we can rent these units for – and we haven’t seen it…With the inventory higher now than it was two years ago, people have a choice. If you’re building something in a bad neighborhood or an undeveloped neighborhood or uncharted territory, I think you’re going to have problems. The only time you didn’t have problems was when supply and demand were so imbalanced that people were writing contracts just based on paper plans…We’re certainly a lot closer to reality today than we were three years ago. Three years ago, it was more important what the appetizers at the opening party were than how people wrote contracts.

With a well located property, you can sell condominiums today. We’re just over the last few months, after two years of not even mentioning the word condominium, I actually had a meeting with an equity partner who said, “We’re not afraid of condos. If you show that you think it’ll work, we’ll do condos.” And I think the market is saying just that.

Does that mean we’ll being seeing more from-scratch, new development from UIP in the future?

We’re just starting to look at ground-up construction. We’re starting to look at developable property that we stopped looking at for a year or so - some as rental, some as condo. For a while, you couldn’t buy developable land for a price that you could rent at. Seller anticipations are starting to come into line with buyer expectations. There was that time when if you had a vacant building for sale, it was a hundred grand a year because it was assumed you’d do a condo and sell it out at three hundred grand a year…Now you got the guys that bought the buildings for a hundred, paid a little more money to get rid of the last two or three tenants…carried it for a year and they now have a vacant building – with a big fat tax bill, a nasty interest carry cost each month and nobody that is willing to finance a condominium.

Ok, so go rental? But if you’re on 10^th Street, NW, an area that’s not supporting $2000 or $3000 a month rentals, how are you going take a hundred grand a unit, spend another seventy grand to renovate it and then rent it for $1200 a month? You’re losing money, so no one’s going to finance that.

There’s a lot of that type of property out there and that’s the type of property that we’ve been looking a lot at lately. There a lot of distressed owners – I won’t call them sellers yet – and they’re trying to figure out how to get out.

Given the tumultuous state people like that have found themselves in, what advice would you give to fellow DC area developers?

I’d go back to the basics and say that the money is in the buy. You can’t underpay for a property, you can only overpay. And once you’ve overpaid for that property, only time will help you erase that. So you have to buy property…and look at it on an income producing basis. The question is, “Can I buy it, fix it up and rent, while staying cash positive?” If you can’t, nobody’s going to finance it. And if no one’s going to finance it, why would you invest a million dollars of your own money to generate fifty grand a year in income? There are plenty of alternative places to put that money.

Where do have to be these days? DC is faring a lot a better than other areas these days, but investors don’t want to invest in DC real estate unless...you can assure them going in. I don’t see much stuff being sold for less than seven (cap rate). Maybe some AAA, pension quality development, like Mass Court, will go…but there’s not a lot of that kind of product out there. But if you’re talking about the kind of stuff that we buy – 20, 30, 40-unit buildings and small retail stuff – you’d better be at an eight cap.

[Look at] the 14^th Street corridor or U Street or Adams Morgan. Christ, look at 18^th Street and the vacancy right here in Cleveland Park. You’d better have a pretty good deal – a good buy, a good tenant and reasonable cap rate – if you’re getting into a small retail or small apartment building. And the interesting thing is that’s what we like to do. We like to find that opportunity.

With that in mind, what’s next for UIP in over the course of the coming year?

I see us moving forward with a very aggressive and very prolific acquisition strategy. Last year, we acquired some $60 odd million worth of real estate and bought five buildings with our equity partners. This year, we’ll be closing on two properties over the next couple weeks. We sold one or two earlier this year, which was opportunistic and advantageous…I see us making between half a dozen and dozen acquisitions over the next six to eight months.

I’ve got a stack of potential properties. We’ve got a couple deals that are small retail, a couple deals that are small residential, we have a couple big, multi-hundred unit deals and a couple that are potential bank deals. And they’re all in DC. We own property in PG County – Hyattsville, Riverdale – and we are good at managing those garden-style walk-ups as well. We own a bunch of that and we’re looking a lot of it too, but I’d say that’s probably 20% of what we do. The 80% of what we look at is DC, from Southeast to Northwest, and distressed owner deals, bank deals, failed condo associations, failed tenant associations and failed development plans. We’re looking at a lot of that.

We’re looking at some properties that are owned by non-District headquartered companies. There are a lot of larger commercial real estate companies that got into the District and are now trying to get out. They hate the District, they hate rent control, they hate TOPA. We don’t love rent control either, but we’re damn good at it and we’ve been doing it for ten years.

Coming Soon(ish): Wheaton Town Square

Spurred on by what they've deemed the "success of Silver Spring redevelopment" and "stagnation" in their own front lawn, Montgomery County's Wheaton Redevelopment Program (WRP) is gearing up to issue a solicitation for offers for a large-scale, mixed-use Town Square project on what is currently a collection of Washington Metropolitan Area Transit Authority (WMATA) bus bays next to the Wheaton Metro.

"We were hoping [to get the solicitation out] this summer and we think that maybe that's still possible. Once we go the WMATA board, it'll much more realistic to put together a schedule," said WRP Director, Rob Klein.

"We'll go to the community before and show them the elements that we're considering. But, by and large, what we're aiming to do is keep the requirements to a minimum, so that we hire a development team based upon their expertise, their experience, their wherewithal and the creativity they’ve shown with past projects. Then, like Silver Spring, [they'll] work with the stakeholders."

Using recommendations made by the International Downtown Association (IDA) as a model, the WRP is aiming to redevelop the County-owned, triangular site (bounded by Georgia Avenue, Viers Mill Road and Reedie Drive), along with other area parking lots and few select private parcels “that make sense for redevelopment,” via a public-private partnership. Though the ultimate mix of uses won’t be settled upon until a developer is selected, the WRP’s tentative vision sees the Town Square as a new arts and retail destination, ala Silver Spring’s revitalized downtown; part and parcel with that will be a new Metro-centric location for the Wheaton Regional Library.

"[The library] relocation was recommended by the [IDA], instead of proceeding with the renovation of the existing library…If the library comes downtown, the recommendation was that an arts venue be part of it. Another thing we’ve thrown out is possibly an auditorium will be part of it. All that would have to be tied into a massive redevelopment solicitation,” said Klein. The idea of shuttering the current library, however, has drawn the ire of many local residents and a campaign is now underway to preclude the possibility of a move.

Nonetheless, area bibliophiles have plenty of time before their books are due once and for all, as there’s no definitive timeline for the project as it now stands - but not for want of effort by WRP. Program staff will appear before the WMATA board this week to seek a “letter of understanding” from the agency with regard to use of the bus bay parcel.

Furthermore, the Town Square’s fate is linked to that of the Wheaton Sector Plan, first drafted in 1990 and now under revision, that goes before the Montgomery County Planning Board later this summer. According to Klein, changes to the updated Plan will “work in tandem” with the goals of his team, as they select sites for redevelopment, deal with issues like the library and court interest from the development community.

“This [project] is a strange hodgepodge and I have not seen one like it before…This is going to be tricky,” he said.

Burnham Place Idles Toward Union Station

Akridge’s landmark $10 million development agreement with the General Services Administration to build over the rear of Union Station – the so-called Burnham Place project – was announced in 2006 and scheduled to go to ground this year. Their ambitious plans for 3 million square feet of office space, a 400-room hotel and residential towers, however, may have to wait if proposed upgrades to the transportation hub go forward later this year. But the developer posits that any boon to Union Station is also one in the plus column for Burnham Place.

“There’s a…Circuit Transportation Bill that is coming up before Congress that we’re working on. It would be six years worth of funds that would support Union Station improvements…The private development, of course, is an entirely different matter,” says Mary Margaret Plumridge, Director of Marketing and Communications for the developer. “The Akridge development of Burnham Place at Union Station certainly would benefit from an enhanced Union Station, but the public and private projects are separate.”

Nonetheless, Akridge spokespeople say the Burham Place development team is in constant communication with Amtrak as they tweak a development scheme that will see new construction from the back of the train station, over in-use tracks, above the “Hopscotch” H Street Bridge and beyond. Before lying brick one, it’s a project that some are already valuing at over $1 billion.

“We are working on pre-development work that includes design and engineering studies,” says Plumridge. “We’re working with Amtrak through the design and engineering processes, the project requires that we build while the trains are running…We’re even having some very preliminary discussions with some potential [office] users.”

Despite the incremental progress, a formal timeline for the project has yet to be and Akridge has also been unable to provide any new renderings of the façade, beyond the aerial jell-o mold shot (pictured) released in tandem with the project’s unveiling in 2006. Multiple inquires from DCmud to the project's architect, Shalom Baranes, have gone un-returned.

Santos Tapped to Lead ODMPED

Oh, Neil Albert, we hardly knew thee. In a move that surprised few, Mayor Adrian Fenty has appointed Valerie Santos the new Deputy Mayor for Planning and Economic Development (aka, the Mayor’s Affordable Housing Czar), following Albert’s recent promotion to City Administrator. Santos' appointment will be subject to a vote by the DC City Council at as-of-yet unscheduled confirmation hearing.

Unlike her predecessor, who rose to the Deputy Mayor post from the heart of economic development that is the DC Department of Parks and Recreation, Santos is a dyed-in-the-wool real estate maven, having served as a vice president at Jones Lang LaSalle, a manager at Ernst & Young’s real estate division and as a Masters student in Public Policy at Harvard’s Kennedy School of Government before entering the lucrative civil service field to become her old boss’s Chief Operating Officer.

So just what does a Deputy Mayor for Planning and Economic Development actually do? Here’s what Neil Albert told DCmud in a 2008 interview:

I see myself as convener of private sector and the natural community residents who sometimes have needs that complement each other and sometimes oppose each other. In many cases, my role is just to be the arbitrator…Our job is bringing the balance between the haves and the have-nots in DC, so we have the big law and lobby firms and the non-profits and the associations who are squeezed by real estate taxes right now, but that add to the flavor of DC. Instead of them having to relocate to suburbia, we step in and try to provide incentives to keep them here.

Among the overdue projects that Deputy Mayor Santos will be tasked with “arbitrating” in the coming year are, according to ODMPED, the Southwest Waterfront redevelopment, CityCenter DC, the O Street Market and the goings-on along the Minnesota Avenue/Benning Road corridor. That’s on top of her duty to oversee the “cluster of agencies” that fall under ODMPED’s purview, including the Department of Small and Local Business Development, the Department of Housing and Community Development, the Office of Planning and the Department of Consumer and Regulatory Affairs.

And in a possible case of Sotomayor fever, Santos had been publicly known as Valerie Santos-Young right up until…well, this announcement. 

Washington DC real estate development news

NoMa Celebrates First Hotel

Not so long ago, there wasn't much reason to go to NoMa, and no place to stay if you did. Now, at least the latter problem has been solved. Representatives of Marriott International, the Finvarb Companies and the DC government came together today to cut the ribbon on the NoMa district's first hotel - an 8-story, 218-room Courtyard by Marriott with 10,000 square feet of ground floor retail and a direct connection to the Gallaudet University Metro. Elizabeth Price, President of the NoMa BID, told DCmud why the new development is an important stepping stone into the continued redevelopment of Northeast neighborhood.

"This...will really start to change us from an office dominated neighborhood to more mixed-use. It's a place that will attract visitors and tourists, but also support the office space." said Price. "It’s very attractive [to them] because it’s affordably priced, it’s one stop from Union Station and it’s close to the Metro. It has a lot of appeal for many different types of users.”

In addition, in-house amenities like a swank bistro, business center and swimming pool, guests at the $53 million first hotel will also have the privilege of flaunting their eco-awareness from atop the Courtyard’s green roof that will consist of “100 percent grass when fully grown” and offer a world-class view of the Capitol (or the sexy Florida Avenue/New York Avenue interchange, depending on one's orientation). But green initiatives aside, all the parties involved were prideful of another first that the hotel represents, as the District’s first Hispanic-owned Marriott.

Ray Bennett, Senior Vice President of Lodging and Development for Marriott International, touted the project as the latest fruit of his company’s “Diversity Ownership Initiative,” which has more than 300 new, minority-owned locations in the pipeline. Included in that figure are another five locations that the hotelier is pursuing with Bobby Finvarb and his development partners on the NoMA project: Harmon, Wilmot, Brown and Bagwell, LLP and Welburn Development, both of which are local, African-American owned businesses.

According to the NoMa BID, the new hotel, at 1325 2^nd Street, NE, will also soon be getting a new neighbor, as work labors along right next door on developer StonebridgeCarras’ large-scale Constitution Square project.

“[That project] continues to grow and that’s where we’ll have our first Harris Teeter, along with residential, hotel and office space,” said Price. She also provided a status update on Akridge’s Burham Place development behind Union Station, saying that the project and is still “several years away” and that the stimulus-funded restoration of the DC landmark it shares space with would likely have to conclude before work could begin.

In the meantime, for those keeping tabs on development in the area, that’s one down and many more to go. But, for a more up close and personal look, check out NoMA for yourself when the BID’s Summer Screen Festival starts up on June 10^th.

Washington DC commercial real estate news

District Announces Contenders for Downtown School Redevelopment

In their second announcement in as many weeks, the Office of the Deputy Mayor for Planning and Economic Planning has revealed the teams vying for redevelopment of a DC public school – this time for Thaddeus Stevens Elementary School at 1050 21^st Street, NW. The school was "the first modern school in the District built for African-American students,” is listed on the National Register of Historic Places and was the last DC public school to host a First Child when Amy Carter attended in the 1970's. Much like last week’s announcement of competitors for the Hine Junior High School site near Eastern Market, ODMPED says the proposals they’ve received include "various combinations of new housing, office space, hotels and neighborhood-serving retail" for the surrounding K Street/Foggy Bottom area.
The Stevens project has only seen three would-be development teams: Peebles Development LLC/The Walker Group; the Moddie Turay Company; and, lastly,the Neighborhood Development Company, in partnership with Equity Residential (which also has a bid in for the Eastern Market school) remain in contention. After initially soliciting the project in late 2008, the Deputy Mayor’s office has apparently knocked two-thirds of the responsive developers – including the Capitol Hill BID, Akridge and Donohoe Development – out of contention. 

"[The final] three teams have presented some interesting ideas and demonstrated the capacity to get the project done,” said newly minted City Administrator Neil Albert via press release.  The three teams and ODMPED reps will be on-hand to present their competing plans at a community meeting on June 11th. The forum will be held at the Francis-Stevens Education Campus at 2425 N Street, NW and begin at 6:30 pm.

NYU to Build Student Center in Downtown DC

Downtown DC will soon be getting a little taste of Greenwich Village, now that New York University’s College of Arts and Sciences (CAS) is moving forward with plans for 75,000 square foot, LEED gold-certified “multipurpose center” at 1307 L Street, NW. Entitled the NYU-DC Center, the educational/dormitory facility will house some 200 students studying off-campus at the site of former local dive bar Stoney’s (since relocated to swankier Logan Circle).

The Hickok Cole-designed complex will feature a lecture hall, seminar rooms and office space for NYU’s Office of Government and Community Affairs and John Brademas Center for the Study of Congress, below five-stories of student housing - should be easy to concentrate there. Though the NYU-DC Center won’t be operational until 2012 or 2013, the University is already attempting to spark interest in the center amongst its student body by lauding the selected site as “close to many NGO’s, and near one of Washington’s newest cultural centers, the 14^th Street corridor” – two factors that make it ripe for both cushy summer internships and late night downtown escapades. Students of economics, politics, art history, journalism and other CAS mainstays will be eligible for study at the Center. The project was spurred by a recent donation (of an undisclosed sum) from NYU alum and Washington litigator, Ronald Abramson.

Once completed, the Center will serve as NYU’s thirteenth off-campus (but first domestic) study abroad site; the University already has other locations across five continents in far-flung locales like Abu Dhabi, Shanghai, Ghana, Buenos Aires and Prague. However, seeing as NYU is one of the most expensive colleges in the nation (if not the world), student transplants to the District might be able to get a break on rent at Paradigm Development’s new Washington Center student housing complex, currently under construction in NoMA.

Arlington’s First LEED Gold Apartments Get a Name (and a Game Plan)

As reported last month, the Arlington County Board has approved the very first LEED gold-certified residential project in their fair portion of Northern Virginia. Now, Erkiletian Real Estate Services (ERES) informs DCmud that while the building may not quite start on time, at least it has a name – The Tellus (as in, "Tell us if going green is an actual selling point") – and a means to achieve the US Green Building Council’s second highest rating. Quoth the press release:

The Tellus will use storm water retention for on-site irrigation, obtain a portion of its power from a green source grid, and incorporate on-site solar. A beautifully landscaped outdoor plaza using native, drought-resistant plants will replace an old impervious parking garage. Bicycle and smart car options will be available to residents. Additional green building elements include low-flow plumbing fixtures and modern recycling systems. Plans also include a $75,000 public art project in partnership with Arlington Parks, Recreation & Cultural Resources.

The Lessard Group designed the building that will replace the Arlington Courthouse’s aging Executive Office Building at 2009 14^th Street North and include 254 rental residential units, 8,127 square feet of office space, first floor retail and an additional 2,257 square feet of "flex" space. A further selling point is the Tellus’ planned 26,000 square foot park that, from its perch atop a neighboring three-story parking garage, claims to offer views of downtown DC in all of its monumental gridlocked glory.

The current office complex on site, however, still stands and a date for demolition has yet to be decided. Though originally set for a third quarter 2009 start, ERES Development Manager, Bill Denton, says merely, “Construction plans are coming together well.”

Artomatic Does Southeast in Style

High culture and high-rise office space don't often collide, but they did today as DC arts organization, Artomatic, opened the doors on its landmark 10^th anniversary exhibition at Monument Realty's new 275,000 square foot, LEED silver-certified building at 55 M Street, SE in the Capitol Riverfront. With galleries on each of its nine-stories, this year's Artomatic celebration overlooks Nationals Park and the city's monumental core, while featuring the work of more than a thousand artists of just about every discernible sort – painters, sculptors, videographers, musicians, tattooists, poets, dancers and more. And, to wash down that load of multimedia, bars, retailers and vendors -- including the Hard Times Café, Red Bull, Cake Love, Busboys and Poets and the Flying Dog Brewery – are scattered throughout. The city legislators present, including Ward 6 Councilmember Tommy Wells and Congresswoman Eleanor Holmes Norton, touted this year’s festivities as the beginning of the “new 20003.”

“We’re no longer an emerging neighborhood. We’re here,” said Capitol Riverfront BID board member and Cohen Companies Executive Vice President Eric Siegel – who, in his acting his role with the latter organization, helped develop the Velocity Condominiums project a stone’s throw away at 1025 1^st Street, SE.

BID officials are projecting that Artomatic will draw some 70,000 visitors to the neighborhood (now dubbed “The ‘Front” for short) during its five-week run. The exhibition is open to the public starting today, Friday, May 29^th at noon. The opening gala will begin around 8 PM tonight and feature a fire dancers, 24 bands and performances and a discussion with PostSecret creator Frank Warren.

Artomatic 10 will close up shop on July 5^th, but until then, the exhibition will available for perusal on Wednesdays and Thursdays from 5 pm – 10 pm; Fridays and Saturdays from 12 noon -1 am; and Sundays from 12 noon – 10 pm.

And, having just returned from the sneak peek, let me state it plainly: it's pretty kick-ass.

Washington DC commercial property news

DC Proposes Tax on Co-op Sales

The Washington, DC Council has proposed taxing the sale of co-ops in the District, a move that would bring the transaction tax on co-op units into tax parity with the sale of fee simple and condominium sales. The new tax measure, buried deep in the Fiscal Year 2010 Budget Support Act of 2009, proposed by Chairman Vincent Grey, proposes to add a transaction fee to the sale of a co-op unit for both the buyer and the seller - 1.1% for sales under $400,000, 1.45% otherwise.

The sale of co-ops, technically a transfer of an economic interest rather than transfer in title, is not currently taxed by the District of Columbia; the proposed law would add an "economic equivalent" tax at the same rate as the transfer (tax on the seller) and recordation (tax on the buyer) taxes currently imposed by the District. While co-ops represent only a small fraction of real estate transactions, the District reckons it could pull in an additional $5m to $6m per annum for the next few years with the additional tax burden, compared to the $118m the District siphoned from transfer and recordation taxes last year.

The absence of recordation taxes is one of the few incentives to buying into a cooperative, most of which have more onerous rules than condominiums, carry underlying obligations to the purchaser, and bestow on the Board of Directors the power to reject applicants, all of which tends to suppress the price of co-ops below that of an equivalent condominium. The tax would take effect next year. In other words, sell now.