At the ballpark, a patch of the outfield gets left unmowed.

The transformation of Washington DC’s Navy Yard over the last fifteen years has been astonishing, and though I cannot account for it from firsthand experience, I don’t need to: a quick trip using the archive tool with Google Street View will show how much development has taken place since 2007, when Google first introduced the much-used but controversial photographic scoping capability. Even back then, much of the land surrounding the walled-in Washington Navy Yard consisted of parking lots, impound lots and underutilized or completely vacant old industrial buildings. And this was a few years into the widely planned redevelopment of the long-neglected area, a point in time when the two most prominent nodes of activity were either complete and fully occupied (in the case of the U.S. Department of Transportation headquarters) or under construction (in the case of the Washington Nationals Ballpark).

In 2018, the development frenzy continues at an unabated pace, to the point that, all on its own, the Navy Yard neighborhood boasts a larger number of construction than one can expect in all of greater Philadelphia, a metropolitan area of similar size. By some metrics, due to the high concentration of residential multifamily structures reaching the District of Columbia’s height limitations (usually around 13 stories), the Navy Yard has become the most densely populated neighborhood in the city. Its convenient location—within walking distance of the US Capitol, the expansive array of offices in L’Enfant Plaza of Southwest DC, the Navy Yard-Ballpark Metro Stop, Interstate 695, the two aforementioned activity nodes, and the Washington Navy Yard itself—have propelled land values to levels that would have seemed unthinkable as recently as 1995, when most of the land outside the walled Washington Navy Yard complex was desolate and dangerous.

Though never a cheap place to live, Washington DC has, in the last fifteen years, manifested some of the real estate conditions previously consigned to New York and San Francisco. Every parcel, no matter how tiny, gets developed to its highest and best use, within the constraints of zoning and height limitations. It’s clearly happening in Navy Yard. And yet, perhaps because land values are so high, it makes the attuned eye more prone to noticing some anomalies from the conventional maximization of FAR (floor-area ratio).

Here’s an example of one of these anomalies, which, at the ground level, reveals very little.

IMG_9955Looks like a little enclosed tailgating party, right? That’s more or less what it is; after all, Nationals Park is immediately across the street, and the first pitch for the Nats game would take place about an hour prior to snapping this pic. But check out those strange black walls on two sides.

IMG_9956

It’s essentially a sheath of some sort, but it covers a portion of the building’s façade that doesn’t fit in with the more ornamental configuration in those upper floors…the floors that actually feature windows. What’s going on?

Navy Yard corner parcel

Seeing the entire building, it looks like the façade got stripped away for this one corner where the tailgating is taking place on an otherwise unused parking lot. We’re looking at the Hampton Inn and Suites for the Navy Yard, which broke ground in 2014 and opened to the public in early 2015. Perhaps another shorter building used to stand there at the corner, and then the hotel got constructed around it, understandably forgoing windows for the first five floors, since they abutted the old building. Then, after the developer completed the Hampton Inn, the owner of the corner parcel demo’d the building.

It seems like a reasonable explanation. But it’s wrong.

A quick trip down memory lane (courtesy of the archived photos from Google Street View) reveals that, back in 2009, long before the construction for Hampton Inn had begun, the entire block was nothing more than a vacant lot. So if ever a building stood on this parcel, its demolition preceded the construction of the Hampton Inn by a considerable margin. So why exclude this corner? A quick view of the overhead map shows, somewhat subtly, that the northwest corner of First Street SE and N Street SE does historically qualify as a discrete parcel, and it seems to have hosted two buildings at some point in time.Navy Yard MapNow it features Aslin Beer Garden, which is a pop-up biergarten with food trucks that only claims the land during major ballgames. In other words, it’s the activity shown in the above photos.

So while it’s not clear that the developer of the Hampton Inn was constructing around another building, it still begs the question why, in a city with such high land values, would anyone want to avoid this corner parcel, which could easily host an even larger version of the Hampton Inn, pushed right out to the sidewalk? I have searched the web far and wide for some sort of explanation. Not finding anything, I can only make an honest guess. I think the corner parcel was originally part of the hotel development; somehow, the deal fell through. Take a look as this rendering from 2014:

Hotel rendering

(My apologies for the low image quality. I tried to save the image as in the past, but it wouldn’t let me, so I could only use this screen shot; my apologies if the resolution is bad.) As we can see, the architect’s original intent was that corner would host a nearly non-contiguous building, architecturally inconsistent with the rest of the hotel, with copious windows and, I suspect, a significant retail/restaurant presence along the first floor.

So what happened? I chalk it up to a few possibilities:

  1. Hesitation from the original landowner. The owner of this corner parcel that formerly hosted two structures (many years ago) balked at the deal and began asking for too much money. The developer then pulled away after completing the rest of the main hotel.
  2. Underground obstacles. This corner could conceal a tangle of utility lines that are either essential to the area or are too expensive to remove. Or it could be environmental considerations: water table, bedrock, the possibility of sinkholes. Something prevented that developer from building on this corner.
  3. Reneged leases for possible tenants. Optimally, the hotel developer had already locked in some key retailers during the conception stage. But retail is no longer a surefire way to enliven storefront space, especially since—amidst our current retail apocalypse—relatively few retailers are expanding new locations. And the restaurant market is more competitive than ever. Though a nationally known brewpub would likely prove lucrative at this site, if a name brand pulled out of the deal, it could certainly stall the development, if not kill it altogether.
  4. Financing snags. Potentially piggybacking on the previous explanation, some of the loans could depend upon locking in a good tenant. If the building at this corner parcel had few or no identifiable tenants, the odds that it would remain vacant for a time (and thus generate no revenue) are much greater, making banks far more hesitant to lend.
  5. Developer retreat. The developer may have stumbled somewhere between the conception and execution stages. It’s possible that the company folded after completing the hotel (or even before completing it, and another company took over), leaving this corner parcel in limbo.

Any combination of these conditions could have taken place, and if one of my readers has an explanation for exactly what happened at the Hampton Inn and Suites, I’m all ears. In the meantime, a little slice of prime real estate sits fallow, made all the more difficult to use because of the hotel’s fenestration along two sides. If anyone ultimately decides to build here, the presence of those windows will forcibly constrain him or her from building beyond five floors, precluding a maximization of profit. Such a phenomenon nearly took place in Midtown Manhattan, where the orientation of the neighboring buildings similarly constrained a lucrative corner parcel.

Land values and demand to build anew in the Navy Yard are great enough that something should happen. Then again, another desirable little downtown (Asheville, North Carolina) seems to be stuck with an unusable patch of land, carved out of a hotel on its main commercial corridor. Does the hotel industry know something about blank façades that the rest of us don’t?

 

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8 thoughts on “At the ballpark, a patch of the outfield gets left unmowed.

  1. AvatarChris B

    Perhaps a reader familiar with DC’s requirements for light and air would comment on the practicality of a “tall skinny” that steps back on its interior sides rather than on the corner faces.

    An apartment tower could be built with fenestration that would minimize views from the hotel into the corner building’s units. Such a building there would have commanding water and ballpark views from its outward-facing sides south and east, so perhaps kitchens and baths could be on the interior side?

    Reply
    1. AmericanDirtAmericanDirt

      A “tall skinny” might be supportable in DC…good point. It would be one of the few cities in the country (there probably about 5-6) where the anticipated cap rate for a parcel this size would be great enough. Bearing in mind the core material needed on each floor (elevator shaft, plumbing, common area), I’d guess you could get 1-2 units per floor. The only negatives would be 1) the height limitation of DC (which could kill the possibility of a good IRR) and the need for parking (though DC has good mass transit, it ain’t NYC and many people still like having cars–and they Navy Yard is too dense to allow much on-street parking). But you’ve come up with a clever, credible potential workaround.

      Beyond that, looking at that initial rendering, I can’t help but wonder if there would be a retail mix that could work. The street level should almost definitely host restaurants/bars, which would likely do great business. And if there were an upper 2-3 floors, I do see a possible solution. It kills be to say this–because everyone seems to suggest this 9 times out of 10–but a Target would seem like a terrific possibility here…

      Reply
  2. AvatarNathan

    So here’s what happened: http://www.jdland.com/dc/index.cfm/3766/Grosvenor-and-Skanska-Finally-Close-Square-701-Deal/

    Basically, a developer bought most of the block including the F1rst development, the Residence Inn, and the little lot in question. They tried to buy the L shaped lot assemblage that the Hampton Inn is on, but to no avail. So because of zoning restrictions, they can only build the small building on that lot.

    They were supposed to build it at the same time as the rest of the block, but my guess is they weren’t able to find the right tenant for the building and are still waiting.

    Reply
    1. AmericanDirtAmericanDirt

      Thanks for the clarifications, Nathan. Someone had previously pointed out this site to me a few months ago, and I had forgotten about it. Too bad it never showed up in any of my searches.

      It looks like the real situation is a combination of a few of my five explanations. It’s bizarre to me that the owner of this corner parcel didn’t seek a variance to build taller, since it does seem like it could be hemmed in at this point. And unless the owner can secure a very lucrative tenant–something that’s particularly hard to achieve at a time when even the average citizen is becoming aware of how over-retailed we are–it could be hard to get much off the ground at this site.

      Reply

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