Is Hill East a “Weak Market?”

Over the years, Hill East residents have heard a lot of excuses from the city about why the Reservation 13/Hill East Waterfront development has stalled. But the excuse I heard from Victor Hoskins, the Deputy Mayor for Planning and Economic Development, during Mayor Gray’s April 25 Ward 6 Budget Town Hall meeting, was particularly absurd.

The set up: During the town hall, I asked Mayor Gray 1) why his FY14 budget does not include infrastructure funding for Reservation 13, and 2) why his Administration never talks about Reservation 13 when listing the city’s current economic development projects.

Mayor Gray responded that Reservation 13 is a priority for his Administration and turned the mic over to Deputy Mayor Hoskins, who said “its a weak market over there” referring to Hill East.

Here is a clip of the exchange. Note that a portion of my question was edited out. The exchange lasts roughly 4 minutes.

Now I may not be a real estate expert, but here are some facts for Deputy Mayor Hoskins:

  • According to a recent report by UrbanTurfDC, homes in Hill East (zip code 20003) are selling faster than in any other zip code in the city.
  • In the last few months, two development teams have announced plans to build large residential buildings (81 units at 1550 Penn Ave SE and 40 units at 1500 Penn Ave SE) in my Single Member District, which is adjacent to Reservation 13. That is on top of the 141-apartment Kennedy Row project across from Eastern High School on East Capitol Street and the new 10-unit condo building at 321 18th Street SE.
  • In addition to its advantageous location between Wards 6 & 7 and on the Anacostia waterfront, Reservation 13 is one of the last remaining undeveloped parcels of land that sits on a Metro stop.
  • Unlike other development projects in the city, Reservation 13 has had a master plan in place for 10 years and zoning in place for 4 years.

It is clear Reservation 13 does not suffer from “weak market demand.” The reality is it suffers from a lack of political will. While other worthy development projects across the city receive infrastructure funding in the Mayor’s FY14 budget (Walter Reed, Skyland, Poplar Point, etc.), Reservation 13 doesn’t receive a dime.

When you also consider:

1) DMPED’s  removal  of a key development incentive (right of first refusal) from the most recent Reservation 13 RFEI,

2) the city’s lack of a plan for the DC General shelter,

3) distractions such as the proposed Redskins training facility and

4) zero mentions of Reservation 13 at the Mayor’s town halls nor in any of DMPED’s economic development presentations,

it is easy to understand why plans to develop the entire site remain stalled.

However, we do have an opportunity to evaluate Donatelli/Blue Skye’s proposal for parcel’s F1 and G1.  I encourage you to join ANC 6B’s Hill East Task Force on Wed., May 22 from 6:30 pm - 8:00 pm at St. Coletta of Greater Washington (1901 Independence Ave SE) to hear a presentation from Donatelli/Blue Skye and to ask questions of the development team and DMPED.

If the community supports the Donatelli/Blue Skye proposal, let’s hope Mayor Gray and Deputy Mayor Hoskins allow the project to proceed. The last thing we need is more excuses.

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12 Responses to Is Hill East a “Weak Market?”

  1. Amy Caspari says:

    Brian: Any land, only 19 blocks from the United States Capitol, is valuable. The lack of leadership and marketing is the problem not “the market.”
    Amy

  2. […] Debunking the notion that Hill East is a "weak market." [Flahaven6B] […]

  3. […] Debunking the notion that Hill East is a "weak market." [Flahaven6B] […]

  4. Ryan says:

    “Deputy Mayor Hoskins, who said ‘its a weak market over there’ referring to Hill East.” This is comical. Houses are selling in 3 days for more than asking price.

  5. Alan says:

    If only one developer responded to the RFP, how is that anything other than weak market demand for that specific parcel? You note two large residential developments, but are there vacancies in other multi-unit developments in Hill East? How can “lack of political will” lead to a lack of responses to an RFP? If there was an RFP for city owned property on H St NE, for example, like the RL Christian Library site, I’m sure more than one developer would respond to the RFP. It seems like the problem is larger than just the Mayor’s office. I do think the Deputy Mayor should have been less dismissive in his response to you, however.

    I’d also like to note that there is a difference between demand for single family houses and demand for condos/apartments. The sales in Hill East appear to be predominantly sales of homes, not condos. Correct me if I’m wrong.

  6. Alan says:

    sales of houses* not condos (obviously a condo can and is considered home for many people…lol)

    • bflahaven says:

      Thanks for your comments, Alan. I didn’t have time to go through the entire history of Res. 13 in this post, but this is essentially the third RFP the city has issued on this project and each time DMPED has changed the terms. Back in 2008, when the country was in worse economic shape, the city received four responses to an RFP to develop the entire site. Unfortunately, the city, under both Mayors Fenty and Gray, continued to scale back the project, leading ultimately to the current RFP that received one response. Since the initial RFP, the city has also exacerbated the issues with this site by expanding the homeless shelter and other clinics at DC General – and there is no concrete plan on how to close what was supposed to be a temporary facility. Take a look at my post on why the city only received one response – http://flahaven6b.com/2013/01/25/reservation-13-update-dmped-receives-only-one-response-to-rfei/.

      Re: the market – I’m not surprised you are finding lots of single family home sales in Hill East – it is primarily a neighborhood of single family homes. There are few options for condo or apartment living, though there is huge demand for that type of living in the neighborhood. Developers wouldn’t be building these large residential developments if they didn’t feel there was demand.

      Thanks again.

  7. rg says:

    That comment from Hoskins boggles my mind. I hope it was a throwaway comment and he really does not believe what he said. If he does, then he really needs to get out more. (Perhaps fewer trips to China and more time on the ground here in DC?)

    Hill East is far from a weak market. Indeed, it is the extreme opposite of a weak market. Home prices held steady or even increased throughout the national housing crisis and are now increasing significantly. The neighborhood is experiencing a mini real estate boom, with dozens of houses and apartment buildings being renovated and selling immediately after the “for sale” sign goes up. And, as you point out, the few parcels of privately owned vacant land in the neighborhood are being developed or soon will be. Indeed, the only property owner in Hill East who seems unaware of and/or incapable of capitalizing on these strong basic fundamentals is the District government. What makes Hoskins’ comment all the more maddening is that Reservation 13 would be valuable even if the Hill East real estate market was only average.

    It gets tiresome, but let’s review.

    Reservation 13 sits right on top of a transit station served by two, soon to be three, high-frequency, heavy rail rapid transit lines that provide a one-seat ride to SW DC, Downtown DC, Rosslyn, Crystal City, Tysons Corner (later this year) and other employment centers. They also provide a one-seat ride to National Airport, and, by the end of this decade, Dulles Airport.
    The federal and District governments invested tens of billions of dollars in Metrorail. I don’ think that many rational observers would argue that a weedy, litter-strewn surface parking lot that provides free parking for DC government employees and fronts dilapidated, crumbling and largely vacant institutional buildings is a good return on this investment.

    In addition, Reservation 13 is one of the few remaining large parcels available for development within the boundaries of the L’Enfant city and in such close proximity to the US Capitol and downtown DC. And, it is waterfront property, with great views!!!

    Remember, when the DC government originally put out an RFP for reservation 13, there were multiple responses, including one from Trammell Crow. Say what you will about Trammell Crow, but it would be hard to argue that they do not know real estate fundamentals and what constitutes a strong or a weak market. They obviously thought Hill East was a strong market back when it was not as strong as it is now. Clearly, the lack of response to the latest RFP is due to the District government’s lack of commitment to the project. When the Mayor himself says something is not a priority, it sends a strong message.

    What makes this all the more frustrating is that Hoskins generally seems to get that the District’s strengths versus its regional competitors is dense, walkable, mixed-use neighborhoods served by transit. I understand that Reservation 13 presents a lot of challenges in terms of building the street grid, realigning utilities and otherwise preparing the site. But come one! The Stadium-Armory Metro Station has been open for almost 40 years!!! Imagine what Arlington County or one of the District’s other regional competitors for residents and jobs would have done with a similar parcel land right on top of that Metro Station in that time period.

    The bottom line here is that the District government either does not have the political will, the resources or both to deal with relocating the social service functions that are housed in Reservation 13′s crumbling buildings nor, perhaps, to stand up to the District government employees who get free parking on that weedy, litter-strewn eyesore of a surface parking lot.

    If Mayor Gray runs for reelection, he should not be too surprised if he fares poorly in the precincts adjacent to Hill East.

  8. Tom A. says:

    This would be hysterically funny- if it weren’t so horribly pathetic. Yes it would take a lot of work to actually move city services elsewhere. It’s just easier to be lazy about it.

  9. anon says:

    I wonder how much of this is a political response to the prospective primary challenge Hizoner will face from the Ward 6 Councilman. Someone should remind the Mayor’s office that most of Res 13 was redistricted out of Ward 6

  10. Erinn says:

    I appreciate all the continued dialogue about Reservation 13, but perhaps it is better to just hold out for a new administration that is able to recognize and support the appropriate development there. It seems rather clear that Mayor Gray has slim to no chance to be reelected. Better to wait a bit for development and have someone in place that will allow development all at once instead of parcel by parcel.

  11. […] Hill East weak?: Deputy Mayor Victor Hoskins says Hill East is a “weak market,” yet residents disagree; there are private buildings going adult in a area, yet a open land […]

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