Groundbreaking for Donatelli's Petworth Project

On Monday, July 31, Donatelli Development will break ground on Park Place, its latest project, to be built above the Petworth Metro Station at Georgia and New Hampshire Avenues. When completed in mid-2008, Park Place will offer 156 units in a 6-story building designed by Torti Gallas of Silver Spring. Donatelli Development - the builder formerly known as Donatelli & Klein - teamed up with Torti Gallas for the two anchor residential projects in the center of Columbia Heights, inviting speculation that Petworth is the leading edge of the boom that engulfed 14th St. Park place will offer underground parking and private rooftop terraces for prices starting at $320,000 for a 1- bedroom condo and $480,000 for 2 bedrooms. Reservation agreements are currently being taken, hard sales should start in October when final condo certification is issued by the DC government; the general contractor has not yet been selected.

Dare to Dream...of Organic Arugula

The on-again, off-again saga of the Gallery Place Balducci's has taken another turn, hopefully toward the future enjoyment of Penn Quarter residents eager for pricey yet oh-so-good produce and food. Part of the original plan for the ground-level retail space in The Jefferson on 7th Street NW between D and E Streets, statements by officials of the specialty grocery chain had thrown doubt on the store actually opening. However, Balducci's never lost hold of the lease for this 21,000-sf space, and reports now indicate that the chain is once again planning on opening store at this outpost, no doubt spurred by the District's offer to not only waive the store's real estate taxes for 10 years and the sales taxes on its construction materials (the original offer), but to also throw in some new (as yet unspecified) incentives. If Balducci's does decide to not open a store, it is believed it will sublease the space to another grocery chain, such as Magruder's or A&P Fresh Market. Stay tuned....

Historic Silver Spring Fire Department Building on Market

Continuing the march of development along the upper Georgia Avenue corridor in south Silver Spring, this week the Silver Spring Fire Department – which recently moved into its new modern space across the street - has put its old building at 8131 Georgia Avenue on the market for $2.5 million. The station, which the department bought in 1918 for $5,500, is on the Montgomery County’s Index of Historic Places. The two-level station is about 6,000 sf and the building sits on a 7,500 sf lot. The department is looking for a quick sale in order to pay for a new ladder truck. The department is also working with the Silver Spring Historical Society to ensure a proper buyer, adaptation, and preservation of this space, which is seen as perfect for retail, a restaurant, office, or entertainment use.

More Apartments Convert to Private Ownership

Despite the gloomy forecasts of various media declaring an oversaturated condo market, apartments still aren’t safe from conversions. The latest downtown DC conversions include a pair of historic buildings undergoing renovations by local developers for impending sales as condominium units. The newest converts are The Grant, a historic 40-unit building at 1314 Massachusetts Ave., NW, and the Chastleton, an 86 year-old building at 1701 16^th St., NW, with developer Keener-Squire converting its remaining apartments. Despite the supposed malaise of the market, condos in Metro-centered neighborhoods have been the least affected in the region; and with financing costs rising and construction costs, well, going through the roof, conversions offer developers relatively speedy, low-cost alternatives to developing increasingly scarce land. Condo conversions are dead; long live the condo conversion!

RFK Redevelopment Gets a Hearing

The National Capital Planning Commission (NCPC) held a forum last week on the potential redevelopment of the RFK stadium site. The stadium, which sits on a 190-acre site owned by the federal government, is likely to be nearly obsolete with the Nationals relocating to Southeast and D.C. United potentially moving to Poplar Point in Anacostia. With the National Mall filling up like a cheap yard sale, proposed uses include set-asides for future commemorations, as well as park space, commercial and residential development. The DC government retains jurisdiction over the site only for use as a stadium, so redevelopment would require federal cooperation - no word yet on whether a new stadium would be named after the current Attorney General.

Fabled Florida Avenue Grill Gets a New Neighbor – The Lacey

Though details are still forthcoming, it appears that the empty lot currently next to (and serving as a parking lot for) the fabled Florida Avenue Grill at 1100 Florida Avenue NW – serving the best grits and DC since 1944 and regularly patronized by every local and national politician – will soon become The Lacey, a 26-unit condominium building. Division1 Architects has been commissioned to come up with The Lacey’s cutting-edge, sleek European design. While pre-sales are now occurring for "family and friends," it is not known when public offerings will begin.

Montgomery County Approves More Subsidized Housing

County Executive Douglas Duncan signed into law Wednesday afternoon new legislation to require developers to provide "workforce" housing to benefit middle-class residents at new housing projects. The "workforce housing" program (WHP) will apply to all new residential developments of 35 units or more near Metro areas, requiring the developer to set aside at least 10% of their housing for households at or below 120% of the area median income - or $86,000 for a family of two - and will not receive incentives from the county for the additional subsidy. Developers are already required to set aside 12.5% of their units for MPDU's, a lower income threshold. The bill was passed unanimously by the County Council on July 11th, and is set to sunset in 2014. The DC government is currently working on a similar proposal for residential projects of 10 or more units.

Flats at Blagden Alley Cancels Condo Plan

Walnut Street Development confirmed today that they will halt sales for their most recent condo development in DC following disappointing interest. The project, a 45-unit condominium one block from the new Convention Center, named the Flats at Blagden Alley, was to house artist lofts and office condos in addition to the residential units. A WSD spokesman cited "a change in the market" and said that the developer, which has not yet received final condo certification from DC, will continue with the building and finalize condo approval but target the rental market, leaving open the possibility of condo sales closer to the Fall 2007 completion date - or thereafter. The project, designed by Eric Colbert, is still slated to break ground early this Fall. Sales began in late Spring, reportedly selling only 2 out of the 45 units. Numerous condo projects in the immediate area have recently completed, and Faison Development is in the final stages of building its 185-unit condo project directly across the street, where more than two-thirds of the units have sold.

Hertz Building on New York Ave. is Plowed Under

The Hertz building at 11th Street and New York Avenue in downtown Washington DC has finally yielded to development. The unsightly, 2-story building that housed the local Hertz car rental was for years about the only active business in the vicinity, but had recently become overwhelmed by the nearby development surrounding the old Convention Center. The property sold in 2004 to Tishman Speyer for $21m, but Hertz's lease continued until recently, and Hertz closed the office in May. Demolition began this month to make way for an 11-story, 173,000 s.f. office tower to match development underway on all sides of the project. Upon completion in Spring 2008 the building will offer about 10,000 s.f. of street-level retail and 10 stories of office space. No tenants have yet been announced for the project.

It's a Spa, Spa, Spa, Spa World

Don't spa vacations sound fabulous? Yoga in the morning, hot stone massage after the perfectly light & healthy lunch, followed by a bike ride and wonderful dinner. How about living the spa life every day? That, at least, is the pitch being made for a new condo development in Bethesda. Canyon Ranch Living, coming to Bethesda in 2008, is being marketed to those looking to balance home, spirit, body and mind. This 54 acre "village" is the latest entry in the quest for the ultimate luxury living experience in the DC area. The Ranch consists of 434 condos, a hotel, the "Wellness Center," its own medical team, 300,000 sq. ft. of retail, 6 "destination restaurants," and of course, a 6 acre conservation area for "passive recreation." Prices range from $850,000 to $2.8 million. If you're looking for something with just a tad more space while having your nutritionist, therapist and acupuncturist within walking distance, there are also penthouses around $7 million. The idea is not new; the chain idea has succeed in Tuscon, Chicago and Miami, and adding spas in condos worked well for the Ritz-Carlton here in DC. And don't worry, the $30,000 initiation fee for the spa & Wellness Center is included in the sales price.

Converting Chevrolets to Condos

As reported back in April, the retro-looking Bob Peck Chevrolet showroom in Ballston at the corner of Wilson Boulevard and Glebe Road was sold to JBG Development. Now we know what JBG has in mind for the lot (as well as for the space next to it now occupied by Staples). Plans call for JBG to build a 12-story office building on the Peck site, and an eight-story office building just to the north. JBG will also build 28 townhouses on N. Wakefield Street, behind the towers. Construction is expected to begin in early 2008. Residents are pleased with the plans, noting that the townhouses will face the homes on N. Wakefield Street, promoting a more neighborhood feel. However, opposition remains to the idea of building a new road connecting Glebe and Wakefield, to alleviate congestion on Wilson. Neighbors fear this will disrupt the quiet neighborhood.

Rockville Town Square to Grow

Duball (a joint venture between Reston - based Duball, LLC and LA-based CIM Group) recently purchased a 3.2 acre site from Akridge on Rockville Town Square, on which they plan to develop 485 homes, 40,000 s.f. of street-level retail and about 1,400 garage spaces. The new development, to be designed by Torti Gallas, is just 1 block West of the Rockville Metro and bounded by Monroe St., Maryland St., E. Middle, and Montgomery Ave. Duball will develop 2 mixed-use high-rise residential towers, with the lots bisected by a new North-South street to be called "Renaissance St." with the western building to be about 18 stories and the eastern building about 15 stories, to be developed and sold in 2 phases. The developer estimates that construction is likely to commence in '07. The developers, also now co-developing Lionsgate in Bethesda, anticipate marketing toward the more affluent buyers with average units to end up somewhere around 1200 square feet. The full plan has not yet received county approval.

The McEnd of McMansions?

One of the more interesting phenomena during the real estate boon years has been buyers purchasing small lots and homes in desirable neighborhoods, only to tear down the older house to replace it with a boundary-busting big dream home. Well, it seems that one of these locales has had enough. Last week, the Alexandria City Council approved an emergency amendment specifically aimed at this practice of building steroid homes on small lots. The legislation, which for now only extends through 2006, limits the height of homes as well as how a lot can be subdivided. In a released statement on the amendment, Alexandria Mayor William Euille stated that the legislation would "address the 'mansionization' that threatens to undermine the harmony of several Alexandria neighborhoods" such as Del Ray and Rosemont (Old Town Alexandria is already protected by historic preservation regulations). Interested parties are closely monitoring the effects of this move ... stay tuned.

Goodbye, China Doll

After almost 40 years, China Doll, located in Chinatown at 627 H Street NW, has decided to exchange chow mein for cold hard cash. The Lee family, owners of the two-story restaurant, sold the building to a developer late last year, though the official acknowledgment of this sale wasn't made until the business served its final meals last week. While the Lee family is keeping the purchasing developer a secret, it appears the building will be part of a residential, retail and office project.

Level 14 Project to Break Ground This Week

The Petrovitch Auto Repair Garage has seen its last jalopy. The four-story building, long a fixture at the corner of 14^th Street and Florida Avenue, NW, is finally scheduled to be demolished this week to make way for Level 2’s new $80 million View 14 condominium project. View 14 will contain 180 condo units (starting in the mid-$200s up to $1 million), as well as a 20,000-square-foot gym and 16,000 square feet for retail, and is scheduled to be completed by summer 2008. One troublesome issue with the lot are the Comcast satellite dishes on the south corner, though Level 2 has indicated it will move the dishes and put an antenna on top of its building when completed. In addition, over $1 million needs to be spent cleaning up the motor-oil contaminated soil under the site.

Last Piece of Ballpark District Puzzle Bought

Big things come in small packages, at least if you're a major developer with dreams for the new Southeast DC Ballpark District. Last week, after a year of negotiations, Monument Realty purchased a tiny, 1,344-sqaure foot lot holding a dilapidated house for the seemingly lofty price of $1.1 million. But its value far exceeds the purchase price for Monument, as this parcel – located at the corner of N and Half Streets, SE and at the north entrance of the new ballpark location – is the last piece the developer needed for its planned 2 million square feet of office, residential and retail space. Having already spent $50 million over the past year buying up this land, not having this final lot would have spelled trouble. Monument Realty plans to start building this project next spring, and have it completed in 2009.

Petworth Project Gets Nod

A Washington DC Council committee this week gave an approval to a project in the 4100 block of Georgia Avenue by allowing closure of the alley between Georgia Ave., Kansas Ave., and Taylor St. The local ANC has already given its approval for the Neighborhood Development Corp (NDC) to construct a mixed-use rental development just north of the Petworth Metro, expected to contain 72 affordable apartments, with construction to start this Fall (artist's rendering of building is pictured). Included will be 10,500 square feet of retail and 57 underground parking spaces. The Petworth construction boom comes as nearby condo projects Park Place (completion in 2008) prepares to start sales shortly, and as Georgia Avenue readies for a new rapid transit bus running from Silver Spring to the National Archives. The novel rapid transit will operate new 40- foot buses beginning the end of September, reducing the number of stops from 54 to 14, and will be equipped with an emitter that lengthens the timing of green lights to allow the bus to pass through.

Sold Out! Now Selling, Please....

Envy the marketers that sold 100-unit condo projects almost overnight, able to walk away with quick profits...and then start over. While many condo projects sold out quickly during the boom, the changing market has led many hesitant or remorseful buyers to renege, leaving developers to remarket the property post-marketing blitz and sales centers. The Crescent in Silver Spring saw 11 of its 143 units come back on the market when buyers became wary of the condo market, and Jenkins Row on Capitol Hill saw numerous contracts rescinded as sales slowed in 2005. Often foregoing their 5% security deposit and security for upgrades, anxious buyers sometimes see breaking their contract as less costly than paying taxes and closing costs on units that may have declined in value, and in some cases have purchased in another building where better incentives justify losing $20,000 or $30,000. The Rhapsody on Florida Avenue (pictured), sold out last Summer and now fully built, is offering units that failed to close, and now has to compete with several nearby projects offering incentives and the opportunity to select builders’ options. While having a defaulting buyer is not new, several developers say the rate has risen as home buyers now have more opportunities and the market and time to shop.

DC Passes Rent Control Reform

DC Mayor Williams signed into law on Tuesday a revised rent control law, updating one of the more arcane systems of rent control in the nation. The law caps rent increases for covered properties at 2% plus CPI for occupied units and up to 5% for elderly and disabled tenants; rent increases for vacant units will be capped at 10% or to the price of a "substantially identical rental unit," not to exceed a 30% rise. The new system abolishes the complicated rent ceiling / rent ceiling adjustment factor that left many landlords and tenants unsure of the permissible rent. Councilmember Jim Graham, who sponsored the bill, estimated that the change will affect 100,000 apartments in the city. Bill 16-109, which goes into effect in 30 days, limits rent increases to once per year. View the full text of the bill.

Interest Rate Hits Five-Year High

On Thursday, the Federal Reserve raised the federal funds rate (the interest that banks charge each other) by a quarter-point to 5.25 percent, the highest level in more than five years. This rate raise, the 17th consecutive increase, was done in order to help "limit inflations pressures," according to a statement released by the Fed. Only two years ago, the fund rate stood at a 46-year low of 1 percent. Banks responded to the Fed increase by quickly raising the prime rate (to which most consumer lending is tied) to 8.25 percent, the highest since 2001. Before the Fed’s move Thursday, the average rate on a 30-year mortgage was 6.78 percent.