A rendering showing an aerial view of CityCenterDC's development.
A view of 11th Street NW circa 1935. Today, the CityCenterDC development stretches between Ninth and 11th Streets NW to the east and west.
Robin McBride and Evan Goldman of Federal Realty serve on the development team for the Pike & Rose project in Rockville, Maryland.
An early view of the Southwest quad from the waterfront.
The Wharf in this rendering aims to connect the milelong Southwest waterfront to the Mall.
Live-work-play projects such as Pike & Rose are replacing the traditional strip mall.
Howard Riker, managing director at Hines, the developer of CityCenterDC, stands at the site of the downtown project.
Monty Hoffman, CEO of PN Hoffman, is spearheading the revitalization project.
The archetypal strip mall that became ubiquitous on Rockville Pike (shown here a mid-century shot of J.C. Penney at Congressional Plaza).
Monty Hoffman came to Washington in 1984, fresh from the University of Pittsburgh with a van and $400—“a Grapes of Wrath kind of thing,” he muses. From a blue-collar family in Johnstown, Pennsylvania, Hoffman was looking for a new frontier. After working for a construction company for a decade, he found it, striking out with a partner to fix up, add onto, and convert an old 16th Street NW row house into six condo units that quickly sold.
More projects followed, and as the District recovered from the dark days of disinvestment, Hoffman rode the crest of the wave, constructing 35 residential or mixed-use properties in the city. Today, PN Hoffman, the company he founded and still heads, is on the cusp of a $2 billion redevelopment of the Southwest waterfront that promises to revitalize a dreary strip in a neighborhood that had come to symbolize the failures of urban renewal.
The Wharf, as it is to be called, symbolizes the rapid change that has come to the nation’s capital and its surrounding environs as once unimaginable real estate projects have breathed new life into Greater Washington—making the area a mecca for international investors, emptynesters, and urban hipsters. In just a few years, the iconic capital of the free world has become a world-class city to rival the storied urban centers of Paris, London, and Rome.
Neighborhoods devastated by the 1968 riots that followed the assassination of Dr. Martin Luther King Jr. have become sizzling-hot real estate markets for investors, developers, buyers, and renters looking for a more urban, foot-friendly lifestyle. An amazing transformation, which started in the ’90s and hit its stride after the millennium, continues from NoMa north of Union Station to 14th Street NW and Columbia Heights to H Street NE and the Navy Yard, and on out to Bethesda Row in Montgomery County and the Rosslyn-Ballston corridor in Arlington.
In the metropolitan core, square blocks around Verizon Center have blossomed as the neighborhood, now known as Penn Quarter, has become a bustling place to live, work, shop, and dine. Nearby, virtually every empty space is morphing into one of the largest urban mixeduse developments presently being built in the United States: CityCenterDC, a 10-acre, $950 million project occupying the former space of a 1982 convention center, itself an early effort at downtown turnaround.
And, in the suburbs, the multimillion-dollar Pike & Rose promises to transform the traffic-clogged Rockville Pike into a less auto-dependent and more walkable neighborhood.
Change has come despite the headwinds of the Great Recession and negative perceptions, as well as political, bureaucratic, and legal hurdles that have thwarted even the most ambitious plans in the past.
A Complicated History
It’s been a long road—and not a straight one, either. As the suburbs were just starting to push outward from the District in the 1950s, planning visionaries looked to remove blight from the inner city. Urban renewal under federal auspices began in Southwest Washington in 1945. Sparked by images of slums “in the shadow of the Capitol,” the District’s Redevelopment Land Agency sought to replace dilapidated dwellings with sleek new housing, federal offices, and amenities.
But the so-called “slum” was actually an established neighborhood, and the redevelopment displaced thousands of low- and moderate-income residents, many of them African American, stirring lingering resentment for decades. At the same time, an antiseptic row of mostly chain restaurants replaced most of the gritty working-class waterfront. The “new” Southwest, so close to monumental Washington yet so disconnected from it, proved to be a monumental mistake.
More than half a century later, the Wharf project envisioned by PN Hoffman and Madison Marquette has revived the dream. But this time, it is hoped, their ambitious plans will create a newly vibrant waterfront community that is also sensitive to history. “We’re living today with the scars of urban renewal,” says Hoffman. “What we’re doing now is more than a project; we’re developing a community.”
The cherished Maine Avenue Fish Market will remain, continuing a two-centuries-old tradition. So, too, the Capital Yacht Club and Gangplank Marina, with about a hundred live-aboard residents, will operate as before in new facilities.
At the same time, the hope is to reconnect the milelong waterfront with the Washington that attracts nearly 20 million visitors a year. “Southwest is blocks from the Mall, but many don’t go in that direction; [they] don’t know about it,” says director of DC’s Office of Planning Harriet Tregoning. “The Wharf brings lots of great new places along the waterfront [and] connections to the larger urban context of the city.”
Today’s CityCenterDC and Pike & Rose are also rooted in the past. When the old convention center space that CityCenter occupies was built, it was seen as a bold step to revive a sagging downtown, but the space proved too small for demand. As a new, larger convention center rose above Mount Vernon Square, the District chose the development team led by Hines and Archstone in 2003 to undertake the huge mixed-use project. Similarly, Maryland’s Mid- Pike Plaza was an early shopping center at the once outer fringes of suburbia in an era when stores were set back from the highway to allow for acres of parking and little else. Recent county plans paved the way for Pike & Rose to redefine the property.
The Financing Factor
The development has helped reverse a decades-long population decline: About 1,100 new District residents are now moving in monthly, Tregoning says, with growth faster in the past few years than in the previous 30—and international business interest in the area is unprecedented.
CityCenter’s largest backer is the real estate arm of the state of Qatar, which is investing approximately $700 million for the first phase of the mixed-use development. Foreign interest in the Washington market has opened up a new source of financing for projects at a time when domestic lenders, still hedging their bets during the recovery, remain reluctant to commit.
People owning, managing assets here see them in context of a global capital asset. This opens the door to different investment possibilities for us that we haven’t had,” says Richard Bradley, executive director of the DowntownDC Business Improvement District (BID), a nonprofit that seeks to promote and improve the area from the White House to Union Station and from the Mall to Massachusetts Ave. NW. “This has emerged in the last five years, and it provides us with access to a larger pool of capital.”
Hoffman’s waterfront project will start late this fall with demolition of low-rise structures along the Washington Channel. And already rising from the wreckage of a mid-20th-century strip mall, on the notoriously gridlocked Rockville Pike, is the sublime Pike & Rose, a mixed-use development more urban than suburban in feel and intent. Uniquely, the developer is self-financing the project. “It’s all equity; it’s not a construction loan,” explains Evan Goldman, Federal Realty’s vice president of development. The firm, he says, is a publicly traded real estate investment trust that finances “the vast majority of our developments through shareholder equity. We have very low debt to value from a corporate perspective and a very high return to our shareholders.”
Transformation on Tap
These landmark projects will have huge impacts—on neighborhoods, on jobs, on the very fabric of the city. The Hoffman team was chosen from 17 bidders, and getting all the necessary approvals required three acts of Congress and seven years. But now the way is clear for what its website calls a “magnificent opportunity to transform an underutilized section of the District and recreate the Wharf as a new world-class destination.” The 3.2-million-square-foot project stretches 27 acres and will include four new public piers.
Hoffman says a number of retail tenants have indicated interest, and he and his partners are talking to investor groups about financing. The first phase is projected to open in late 2016.
A two-level, 2,500-space underground garage comes first. Eventually, there will be three hotels—the InterContinental chain is already on board—shops, restaurants, offices, and 1,800 residential units (two-third rental and one-third condo), with a range from $1,500 for a small rental unit to $2.5 million for a luxurious condominium. The mix is also to include affordable and workforce housing for households of $30,000 to $60,000 and $80,000 to $120,000, respectively. “We want firefighters, teachers, [and] police” to live there, says Hoffman, and not just those who can afford higher market prices. “A blend creates a real community,” he notes.
The 2.5-million-square-foot CityCenterDC, by contrast, is clearly aimed at the well-heeled for shopping and dining along with rental and condominium living. “We feel there is a demand in the marketplace for a slightly higher-end product,” explains Howard Riker, managing director at Hines’s DC office. “People are stepping up to higher-quality finishes.” The primary target market is people in their forties, but also younger singles and childless couples, emptynesters, tourists, and commuters who work in the city Monday through Friday.
Condo prices are listed from $500,000 to $3.2 million. With the first settlements scheduled for October, approximately 40 percent of the 216 condo units had been under contract as of mid-May. In addition, there will be 458 rental apartment units in two other buildings, with leasing expected to begin this summer. “This will be an urban oasis, with landscaped roof parks, sunbathing lounges with water foundations, and dining alfresco,” Riker says. It will also be a signature project for Houston-based Hines, whose first foray into the Washington market was Columbia Square, at 555 13th St. NW, designed by Harry Cobb of I.M. Pei + Partners. Altogether, seven buildings will comprise CityCenterDC, bounded by New York Avenue and Ninth, H, and 11th Streets NW.
But it’s not just about buildings, Riker notes. It’s also about the spaces between them: public walkways, elevated setbacks, a park, and a halfacre, restaurant-lined plaza.
Limited by the District’s Congressionally imposed height limit of 130 feet, CityCenter planners nonetheless forsook the usual development strategy of maximizing density by creating shoe-box buildings. The two 11-story office buildings, for example, are all set back above the second floor, a feature designed to allow more light to reach the public spaces below.
Even with spatial constraints, the designers exceeded the minimum height needed for the two retail levels. “We were able to size the project in a way that met our economic requirements,” Riker says. “But it was a challenge to make [it] work.”
New upscale retail is another critical element. “We don’t have what most healthy downtowns have: a wide selection of retail,” notes Tregoning. “All our luxury [shopping] is in Tysons and Friendship Heights.” CityCenterDC promises to change that.
CityCenter also restores streets that had been closed for the old convention center, which was imploded in 2004. One east-west street has been named Palmer Alley, after a 19th-century doctor who lived there. Above the pedestrian “alley,” two office buildings will be connected by five bridges. The 515,000 square feet of office space is already 95 percent committed, including major leases by Covington & Burling, the blueshoe law firm moving up from Pennsylvania Avenue, and the American Hospital Association.
“Where before CityCenter was seen as a catalyst, now it’s seen as a capstone, a reflection of where the city is going,” says Bradley. CityCenterDC, which the New York Times likened to a “modernday Rockefeller Center,” has another appealing feature: It is just a short walk to Gallery Place and four Metro stations, including Metro Center, with options available for transit from DC into Maryland and Virginia.
Pike & Rose is also well located to serve the mass-transit-minded, with the White Flint Metro station nearby. It also sits squarely within the county’s White Flint Sector Plan, which calls for denser, vertical development along Rockville Pike, a classically clogged suburban artery lined with aging shopping centers. “We think we are the catalyst for transforming what Rockville Pike is known as,” says Robin McBride, Federal Realty vice president and chief operating officer for the mid-Atlantic. Federal Realty, whose portfolio includes Santana Row in San Jose, is well-known locally for its very successful Bethesda Row, which shifted the locus of downtown Bethesda’s commercial district. It plans a similar mix of homegrown and national eateries and stores at its 24-acre Rockville Pike project.
Pike & Rose, a word play on the intersection of Rockville Pike and Montrose Parkway, replaces acres of parking that fronted 1960sera strip-mall shopping with a livable, walkable community boasting a public plaza, a street grid with sidewalks, and apartments above groundfloor restaurants and shops.
The first phase, now under construction and wholly financed by its developer, Rockville-based Federal Realty, consists of three buildings with 150,000 square feet of retail, 80,000 for offices, and nearly 500 residences. “Pallas,” named for Pallas Athena, the Greek goddess, will include 319 residential units. A second building, Per Sei, will feature 174 residential units. Anchoring the third office building will be iPic Theaters, a street-level state-of-the-art movie theater with reclining leather seats and full-service table dining. Tanzy, a Mediterranean-style restaurant, will open on the ground floor of the building as well. Strathmore, located further down the road, will open an additional 250-seat music venue at Pike & Rose.
According to McBride, Pike & Rose is targeting a “large, diverse demographic,” people who are “well-read, well-traveled, foodies,” as well as empty-nesters, “folks looking to sell their home and rent because they like the convenience of dining, shopping, and [having a] Metro at their doorstep.” The recession “has permanently changed how consumers spend their money,” McBride adds. “They are a higher-income demographic, but they are value-conscious consumers. Value and quality are equally important. The new lifestyle shifts that the economy brought are not changing anytime soon. People are more sensitive about their higher-end product purchases.”
As neighborhoods rise and fall and rise again, hopes and expectations do so as well. But this time there is a sense of unstoppable momentum, from the older suburbs getting a makeover to the heart of downtown. “Increasingly, DC is a place where you can attract the best and brightest, and the amenities keep those people here,” Tregoning says. Adds Riker: “Who would’ve thought that east of Union Station or H Street there would be growth in residential, hospitality, and even business?”
photography by Doggett Enterprises, Inc , greg powers (riker, mcbride, goldman); library of congress (historical)
September 20, 2018
September 19, 2018
September 17, 2018