And after years of planning, the most ambitious of the downtown projects is finally under way. Construction began in March on CityCenterDC, a $700 million complex envisioned as a modern-day Rockefeller Center, with 2.5 million square feet of office, residential and retail space as well as a public plaza and park. Completion of the bulk of the project is expected in late 2013, according to the two real estate companies, Hines Interests of Houston and Archstone of Englewood, Colo., that won development rights in 2003.
One of the largest downtown projects in the nation, CityCenterDC will fill 10 acres, all city-owned except for the land beneath two condo buildings. Bounded by New York Avenue and 9th, H and 11th Streets NW, the site was once occupied by a convention center that was demolished in 2004 (a year after the larger Walter E. Washington Convention Center was built nearby), leaving a giant parking lot in one of the city’s most desirable locations, only two blocks from two of the busiest Metrorail stations.
“This really is the hole in the doughnut,” said William M. Collins, a senior managing director of Cassidy Turley, a national brokerage, which is not involved in CityCenterDC.
CityCenterDC is one of several major projects around the country that were stalled by the recession. But while construction has yet to begin developments like Grand Avenue in Los Angeles and Atlantic Yards in Brooklyn (except for the Nets basketball arena, where work is under way), CityCenterDC was able to move forward because of a recent $620 million equity investment by the real estate arm of the Persian Gulf state of Qatar. The Qatari Diar Real Estate Investment Company is now the project’s principal owner.
The complex will be made up of six buildings, 10 and 11 stories in height in keeping with the District of Columbia’s 130-foot height restriction. At their base will be 185,000 square feet of retail stores facing the street. An additional 110,000 square feet of retail space is planned for the project’s second phase, which will also include a luxury hotel.
To integrate the site with its surroundings, the sections of I and 10th Streets that were cut off to make way for the old convention center will be restored. Alleyways, largely restricted to pedestrians, will run between buildings and provide space for smaller stores.
The two office buildings, with a total of 520,000 square feet, and two condominium buildings, with 216 units, were designed by the prominent London architect Norman Foster’s firm, Foster Partners, whose other projects have included the reconstruction of the Reichstag in Berlin. The two rental apartment buildings, with 458 units, were designed by Shalom Baranes, a local firm that worked on the redevelopment of the Homer building in downtown Washington at 13th and F Streets NW.
Even though nearly 7,000 new rental units are scheduled to be completed in Washington in the next few years, prospects are good for the apartments because of their central location, said Gregory H. Leisch, the chief executive of Delta Associates, a real estate consulting firm that advises Hines and Archstone. Condo prices in the city center have risen 1.8 percent in the past year, to an average of $710 a square foot.
The demand for office space from law firms and other private tenants — the space will be too costly for government tenants, said Bill Alsup, a senior vice president of Hines — is improving, according to Cassidy Turley. But Hines suffered a setback last July, when the national law firm Skadden, Arps, Slate, Meagher Flom renewed its lease at 1440 New York Avenue NW, rather than fulfilling an earlier plan to lease 350,000 square feet at CityCenterDC. “It would have been very nice to have had a major tenant commitment prior to the start of construction, but it wasn’t critical,” said Mr. Alsup.
Tom Fulcher, an executive vice president at Studley, a brokerage that represents tenants, said most large Washington law firms with leases expiring in 2015 and 2016 had made their real estate decisions because large blocks of space can be scarce in a city without skyscrapers. One exception pursued by the developers is Arnold Porter, which is searching for about 335,000 square feet. But the project’s biggest challenge, said Jason Jacobson, a group vice president at Archstone, will be getting the retail mix right. Downtown has a lot of “fast fashion, geared toward younger people,” he said. “Our goal is to bring it up a notch.”
Gerry Widdicombe, the director of economic development for the Downtown D.C. Business Improvement District, a group that helps to market the neighborhood, estimated that Washington residents spent as much as $1 billion a year in suburban shopping centers because of a dearth of stores within the District of Columbia.
The developers are seeking a mix of stores, including apparel, home furnishings and electronic goods, said Mr. Alsup, whose company developed and manages Galleria malls in Houston and Dallas. About one-third of the space will be limited to stores new to downtown, he said. Mr. Jacobson said some space along the alleys would be made available to local fledgling retailers.
Not surprisingly, the developers are trying to persuade the retailer highest on everyone’s list — Apple, which has one store within the District of Columbia, on Wisconsin Avenue in Georgetown — to open a much bigger store of 15,000 square feet or more.
John Asadoorian, a regional retail broker, said CityCenterDC’s leasing goals demonstrated how downtown had matured. “Ten years ago, you probably could not have talked about the type of retail they are trying to attract,” he said.
Even before the Qatari investors became involved, Hines and Archstone determined that leasing to banks would not help them create lively shopping streets, Mr. Alsup said. But as it happened, their hesitancy on bank branches meshed with the policies of their financial partners, who adhere to the restrictions of Shariah, or Islamic law, including the ban on collecting interest. Restaurants will be able to serve liquor, but retailers whose primary business involves selling alcohol will not be allowed, Mr. Alsup said.
In their marketing materials, Hines and Archstone say they intend to provide “an authentic place for urban residents to socialize outside their homes.”
But some planning specialists have wondered if people in downtown Washington will view the plaza, which will be situated between the condo and rental buildings, as public space for them to enjoy. “Putting the plaza in the middle of a large development just feels more private,” said David Dixon, who is in charge of planning and urban design at Goody Clancy Associates, a design firm in Boston.
Mr. Jacobson said the developers planned to offer programs in the plaza and would make it welcoming with public art and landscaping. “People will find it to be inviting,” he said. “I realize we have to convince some people. Hopefully, we’ll do a better job over the next year or so.”
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