Progress at District Condos

The demolition at the soon-to-be District Condos site is nearing completion, which means that the actual construction phase should be commencing shortly.

In other words, enjoy the views of Swann and S streets while you can...

Behind $345,000 in Rent, Reeves Center Deli Facing Eviction

It seems a local business owner has stumbled across a way to overcome DC's high commercial lease rates: just don't pay your rent.

That, at least, is what the District's Department of Real Estate Services says Reeves Center Deli owner Fitwi "John" Tekeste has been doing (or not doing) since 2000. According to the City Paper's Lydia DePillis, Tekeste is $345,044.88 in arrears on rent payments dating back to 2000. And this on rent that, at about 412 per square foot, is about a third of market rate in the area. Tekeste is being evicted from the space on February 21, after which time the city will put the space back up for lease.

For his part, Tekeste says he has an explanation. He cites a verbal agreement he supposedly struck with the Williams Administration to not pay rent while he was removating the space, and a 2009 agreement he supposedly had with the Fenty administration to not pay rent while he was redoing the electrical system in the space.

Tekeste is claiming something a bit more sinister too: that DRES, in the dying days of the Fenty administration, issued the eviction notice as payback for Tekeste's support of Vince Gray in the 2010 mayoral race.

But these protests seem spurious, to say the least. Absent any documentation or evidence of Tekeste's supposed agreements with city officials, and considering the unlikelihood that the city would make any agreements that amounted to charging no rent to a business owner for an entire decade due to renovation work, DRES is moving forward with the February 21 eviction.

So, memo to other area small businesses who are leasing from the government: if your lease deal seems too good to be true, it probably is.

And while we're at it, a second memo to District officials: why the **** is the rent so cheap at the Reeves Center to begin with? I can understand cutting business owners a bit of a break for leasing in a government building (a pretty crummy one at that) and all of the red tape involved, but a 66% cut seems unnecessarily steep. Particularly when the city is staring at a mountainous budget deficit.

2011: A Look Ahead

By now, hopefully you have shaken off your post-New Year's hangover, you've cleaned out the remnants of the holiday feast from your fridge (and no, I don't mean Thanksgiving) and you haven't yet broken any of you new year's resolutions.



As we move into the new year, I thought we'd take a brief look at what's to come in our neighborhood during 2011. Call them predictions, prognostications or wishful thinking, here's what's on my list for 2011:

• District Condos will finally break ground.  I know, it seems like JBG is simply teasing us recently with talks of an "imminent" groundbreaking for their new mixed-use development at 14th and S streets.  But, sooner or later, the demolition of the site's current buildings will commence, and earth really will start getting pushed around, and we'll finally start to see real progress after years of discussions.  And once that happens, the real fun can commence; by which I mean, the hemming and hawing over who the project retailers will be.  Who wants an IHOP?



• 14th Street north of U Street will go gangbusters.  With both Perseus Realty's 14W development and the long-awaited Nehemiah Shopping Center development breaking ground, and Jemal's project across the street, it's shaping up to be a busy couple of years north of U Street for new development.



• O Street Market will/will not break ground.  This long-anticipated project remains frustratingly in a state of suspended animation.  In spite of a pronouncement in September 2010 that the project was set to commence, there's been little activity at the site in the four months since.  We keep looking out for signs of earth-moving equipment and an official announcement from the Giant at 9th and P that it is closing, but nothing yet.  At least nearby Progression Place finally broke ground:  it, along with the O Street Market, Howard Theater restoration and Marriott Convention Center hotel threaten to dramatically remake the Shaw neighborhood in the coming years.



• The Hiltons will continue adding to their DC restaurant/nightlife empire.  Marvin, The Gibson, ESL, U Street Music Hall, Patty Boom Boom, American Ice Co....brothers Ian and Eric Hilton have, seemingly overnight, turned into the kings of the DC lounge and nightlife scene.  Expect that to continue into 2011 with the soon-to-open Blackbyrd Warehouse near 14th and U, along with a new restaurant/lounge on Georgia Avenue in Petworth at the former Billy Simpson's House of Seafood and Steaks.  The Hilton's aren't the only ones with expanding ambitions along 14th and U Street, however.  Expect to see a new steakhouse and lounge from the Local 16 crew at the currently vacant building at 14th and U streets, and--perhaps--the opening of Local 14 along 14th Street between T and U.
  
  A little farther south along 14th Street, look for the opening of burger-and-fries eatery Standard at the former Garden District location at 14th and S, a new taqueria from the Masa 14 team next to the Black Cat on 14th between S and T, and maybe the new location of hamburger purveyors Rogue States near 14th and U (assuming there are no lawyers in the building).



• Transit:  A temporary reprieve from the streetscapes.  Don't expect too many headaches transit-wise throughout the mid-city area.  Although DDOT is nearing completion of its design for the 14th Street Streetscape project, actual construction remains years away.  And with the recently completed 17th Street Streetscape project, and the soon-to-be-completed 18th Street project (the Dupont portion, at least), the jackhammers and paving machines should be relatively quiet throughout our neighborhood.
  
  However, beginning soon (January or February) look out for major headaches in Adams-Morgan, as a reconstruction project for 18th Street between Florida Avenue and Columbia Road commences.  In addition, look for an announcement at some point in the first quarter of 2011 regarding the completion of the U Street Streetscape design.



• Housing prices will continue to rise.  Oh yes they will.  And in other shocking news, Ward Three residents remain unconvinced of Vince Gray's mayoral capacities.



• Hank's Oyster Bar will finally expand into their adjacent space.  Prepare your fallout shelters now, because I have it on good authority that this development will most certainly lead to a cessation of all human life within a four block radius of Hank's.  Oh the humanity.



• The 14th Street arts corridor will look a little less artsy.  Never mind the recent branding campaign to raise awareness of the so-called "Arts District,"the single greatest issue facing arts organizations and related businesses--spiraling commercial lease rates--remains unresolved by the city.  And with the District facing a mounting budget deficit and a continuing soft economy, don't look for the road to get any smoother for neighborhood arts institutions.  Longtime jazz club HR-57 has already packed up its Steinway and headed east to H Street, where the commercial tax rate is lower.  Who's next?



• 14th Street will get a decent sandwich shop.  Actually, that already happened.

Happy 2011 everyone.

News Flash: DC is Expensive

A little fodder for a Sunday afternoon conversation...

This past week, the Center for Housing Policy released a report that showed DC to be the nation's sixth most expensive rental market (although, interestingly, only its 25th most expensive home buying market). The housing market numbers actually surprised me a bit--I had assumed they would be higher--but still represent on of the highest markets in the nation.



The CHP's study examined the question from a perspective of affordability: are American cities becoming increasingly unaffordable to American workers? Some quick number crunching shows the difficulty that many face when buying a home in a market such as DC. Consider a family with a household income of $75k a year. The average 2BR apartment in DC goes for around $1500 a month. Looking at rent as a proportion of a household's monthly take-home pay, that $1500 a month slots right into the recommended 30-35% of income that should be spent on housing in order for the housing to be considered "affordable". Unfortunately, the median household income in DC--$58,500--is substantially lower than the $75,000 figure. And for that family making $75,000, purchasing a home becomes an even tougher proposition, when associated costs such as real estate taxes, condo fees, insurance and other expenses are factored in. Neighborhoods such as Logan are essentially completely out of reach.

In short, it is increasingly difficult to comfortably afford housing in DC unless your household income exceeds the median by a not-insubstantial amount. Those wishing to peruse the CHP study can do so here.

But my question is one whose answer is grounded less in facts than in terms of perception: has the recent spike in real estate values caused DC to become an overpriced market? There are some whose immediate answer to that question is a simple 'no': the market is what it is, since people are willing to pay the prices offered here, the market cannot be overpriced. There's a basic reasoning behind that argument that seems sound, but there's another perspective on this question that warrants consideration that relates to the general affluency of the DC area.

It's no secret that DC is one of the nation's most affluent regions. Six of the ten U.S. counties with the highest median income are in the DC area, and generally wherever incomes are higher, housing costs will rise. But they do not always rise in direct proportion to a city's livability factor, nor in proportion to the amenities it offers its citizens. And that's where the question of the appropriateness of DC's housing costs comes into play. DC is now in a position where it plays with the big boys--the New Yorks, the San Franciscos, the Los Angeleses--in terms of housing costs. But do we stack up with the nation's most expensive and populous cities in terms of amenities?

In certain neighborhoods, unequivocally so. DC's commercial centers--particularly in many NW neighborhoods--are truly outstanding neighborhoods by any comparison. Unfortunately, the housing market isn't applicable only to Dupont, Georgetown and Capitol Hill. Housing prices in neighborhoods like Brightwood, Brookland and Takoma have risen commensurately as well, as more desirable neighborhoods far exceed the realm of affordability for many buyers and renters. But is a 3 BR townhome in Petworth truly a good value at $485,000? Is a brick colonial in Brightwood a reasonable investment at $735,000? I can't say for certain--perhaps they are (after all, as I alluded to above, if people are willing to pay...) But I do feel that these are questions worth asking, particularly in such a competitive and volatile market.

And this doesn't begin to address the even larger and more perplexing issue of affordable housing in DC--what qualifies, who qualifies, how it is implemented, and so on. Another topic for another day, I suppose.

So, I'll leave you with a question: do you find DC's real estate market to be essentially appropriately priced for the kind of city one is buying into, or do you feel that the last decade's worth of rising housing costs has led to the market becoming overinflated? Please share your thoughts in the comments below.