With Receiver at the Helm, Construction Resumes on $180M D.C. Office Project
- May 06, 2010
May 6, 2010
By Barbra Murray, Contributing Editor
Less than a year after Rockville, Md.-based developer Opus East L.L.C’s bankruptcy filing put the brakes on construction of the 400,000-square-foot office building at 1015 Half Street in Washington, D.C., San Diego-headquartered court-appointed receiver Douglas Wilson Companies (DWC) has gotten the approximately $180 million project million project back on track.
Just a stone’s throw from the new Washington Nationals baseball stadium and within close proximity of a Metro station, the 10-story structure at 1015 Half Street sits in the Southeast quadrant’s Capitol Riverfront neighborhood, an area that is currently undergoing a renaissance. In addition to Class A office space, the property will feature 21,000 square feet of street-level retail space and a three-story underground parking facility. WDG Architecture PLLC is behind the design of the project, which has been devised to meet LEED Silver certification requirements, as well as U.S. General Service Administration (GSA) standards for office building interiors.
DWC, a leading national distressed real estate problem resolution specialist, has awarded Skanska USA Building Inc. a $26 million contract to serve as the half-finished development’s general contractor and wrap up its construction. Skanska will conclude the interrupted task of building the glass and precast concrete structure’s core and shell. As for financing the completion of the project, the money is ready and waiting. “Opus East had existing financing in place with banks, so we’re drawing down the balance of the construction loans,” Douglas Wilson, Chairman and CEO of DWC, told CPE. “We’re very pleased that the banks supported the concept of allowing us to be funded.”
It’s been a long road to realization for 1015 Half Street. Potomac Investment Properties Inc. had originally planned to build the office structure on the site, home to a nightclub at the time, but sold the property in 2007 to Opus East for approximately $40 million. Opus East commenced construction in 2008 with plans of completing the project in April 2010. Now, with DWC in control of the property, the doors of 1015 Half Street are expected to open by the end of this year. “By nature of us completing the building, we’re actually adding value to the building and to the neighborhood, and that’s very positive,” Wilson said. “Not all workouts have to be train wrecks.”
In preparation for 1015 Half Street’s fast approaching debut, DWC has tapped real estate services firm Cassidy Turley to market the property, with a particular focus on government tenants. “Because it is being built to GSA standards and has large floor plates, the concept form the beginning was to have GSA tenants,” Wilson noted. “And haven’t you heard? The government is growing!”
But Wilson acknowledges that leasing up the property by its opening may not be the easiest of tasks. “The fact is the building has been vacant and partially built for some time, so there’s been a cloud over it and tenants have not been considering it–and rightly so.”
However, Washington, D.C., remains one of the strongest office markets in the country, and while it hardly escaped the ravages of the economic downturn, it appears to be on the upswing. According to a report by Cassidy Turley, the average vacancy rate in the city declined from 11.7 percent in the fourth quarter of 2009 to 11.5 percent in the first quarter of 2010.
Regardless of the current state of Washington, D.C.’s office market, DWC, which has provided problem resolution for over 600 projects involving assets valued at over $12 billion since its formation in 1989, does not anticipate putting 1015 Half Street up for sale anytime soon. “The idea is to further the process, to get some tenants and get it built, and then we’ll look at options,” Wilson said. “It makes sense to be patient. We have the makings of a recovery here so let’s see what happens. Time is going to be more of a friend than an enemy.”