Grosvenor, Skanska Team on 650 KSF M-U Project in D.C.
- Oct 11, 2012
Grosvenor Americas will build a few buildings, Skanska USA Commercial Development Inc. will erect another, and together the companies will create a 650,000-square-foot mixed-use destination in a Washington, D.C. neighborhood with a bright future. The developers will build the project just north of the new 1.1 million-square-foot Nationals Park, the four-year-old stadium that Major League Baseball’s Washington Nationals team calls home.
The Class A project has location on its side. “We are focused on vibrant and authentic urban markets where truly mixed-use projects can thrive,” Jonathan Carr, development manager with Grosvenor, told Commercial Property Executive. “This location has many of the key characteristics that we look for, especially its proximity to public transportation, enjoyable and safe public space [like] Yards Park, Canal Park, Anacostia Riverfront, employment centers and retail and entertainment venues.”
The Class A 24/7 destination will sprout up in the southeast quadrant of the city on a portion of the site known as Square 701 in the Capitol Riverfront district. Skanska will develop a 224,000-square-foot office building and Grosvenor will handle the rest. The real estate company will erect a hotel featuring 170 guestrooms and two multi-family towers offering 286 units, including 23 residences that will be designated as affordable housing. Together, the collection of buildings, along with an independent, two-story structure to be built by Grosvenor, will provide an aggregate 43,000 square feet of retail space.
It looks like the locals are on board. Advisory Neighborhood Commission 6D gave the project the green light last month.
Washington, D.C., could certainly use the apartments. The vacancy rate continues its steady decline and is expected to drop to 4.4 percent by year’s end, per Marcus & Millichap Real Estate Investment Services’ forecast. And the city’s hotel sector posted the highest occupancy in the Northeast at 76.4 percent. The office market in the Capitol Riverfront submarket, however, is not presently thirsty for square footage, as evidenced by what turned out to be a 17.3 percent vacancy rate in the third quarter, according to a report by commercial real estate services firm Cassidy Turley.
But the mix of demand numbers for this mixed-use project is of little concern to Grosvenor and Skanska. “We feel confident in the long-term potential of the Washington D.C., metro area in general and this neighborhood in particular as a very attractive place for people to live and work,” Carr said.
Grosvenor has had success in the past in identifying neighborhoods with potential. In 2010, the developer and partner JBG Cos. are nearing completion of The District, a 125-unit boutique hotel property at 1401 S St. N.W. in the blossoming Logan Circle area. “At the time we broke ground, the neighborhood was at the early stages of its ascent. Now, a new restaurant or residential project opens every other week.”
In the Capitol Riverfront district, Grosvenor and Skanska are not alone in their plan to tap into what is anticipated to be a steadily increasing demand for live-work-play accommodations near the ballpark. As is the case with the market statistics, potential competition does not weigh on the developers’ mind. “We are well aware of the potential supply that may come to market in the short term, but we feel that those projects will only increase the vibrancy and attractiveness of the neighborhood,” Carr added.
Grosvenor and Skanska obtained the thumbs up for the project, with a few tweaks, from the Washington, D.C. Zoning Commission on the first of the month, and the developers expect final approval within the next couple of weeks. If all goes as planned, construction could commence on the Square 701 endeavor during the third quarter of 2013.