In the 2013 Case real estate competition, an annual contest hosted by alumni from the Massachusetts Institute of Technology Center for Real Estate, graduate students in real estate and finance from across the country, and as far away as Hong Kong, made their own proposals for the Hoover Building site, which offers 6.66 acres near a booming neighborhood to the north (Penn Quarter) and a $200 million proposed luxury hotel project across the street to the south (by Donald Trump and daughter Ivanka).
In the competition, the teams were asked to answer the basic questions required to develop the site: What uses ought to replace the Hoover Building? How much is the site worth? How will new development integrate with the city that surrounds it?
Thirty-two teams, each with no more than four members, entered the competition. They were given just five days at the end of January and beginning of February to underwrite, design and propose a development with only information provided to them and what they could find on the Internet. (They did not consider where to relocate the FBI.) The field was narrowed to 12 in March and to three in April, with teams from Cornell University, MIT and Georgetown University emerging as finalists.
With industry professionals serving as judges — including some of the biggest names in Washington real estate — the finalists made their presentations in Boston April 5, with Cornell’s “Capitol Crossing” named winner.
The presentations offer blueprints not just for the development prize that the GSA’s eventual FBI partner will enjoy, but for the future of downtown Washington and its most famous avenue. Here’s a look at them, through their own words and those of two local professionals who served as judges: Raymond A. Ritchey, executive vice president of Boston Properties, and Elizabeth Miller, a senior planner with the National Capital Planning Committee.
Predicting whether office space, housing, hotel rooms or other uses will make the best financial sense five or 10 years down the line is difficult, even for top developers who are immersed in the Washington market. Will the office market have recovered? Will people interested in living downtown continue to favor renting or be looking for condominiums to buy?
Perhaps it’s an indication of the fluctuating fundamentals in Washington commercial real estate, but all three Case teams opted to anchor their projects with a different use. “They all took a very different approach to the programming of the site,” said Miller, senior urban planner-designer at the National Capital Planning Commission, the planning agency for the federal government.
The Cornell team invested heavily in office space — by far the dominant use downtown— by proposing three office buildings totaling 885,000 square feet. They added 160,000 square feet of retail, a 315-room hotel and 95 condominiums totaling just 132,500 square feet.
The other teams were more wary of the office conditions that have prompted concern among owners of existing buildings: shrinking space requirements for law firms and other big rent payers and government cutbacks among them. And they took greater interest in connecting with the vibrant new residential and retail districts in Penn Quarter and Chinatown.
Living in the area, members of the Georgetown team knew the area best and bet big on the rise of downtown living and a new focus on “micro-units” among residential builders. They proposed 359 micro-condos (135,000 square feet), plus 879 apartments (699,676 square feet) with 672,937 square feet of offices and a 225-room hotel.
“We had the advantage of being from D.C., and we had the advantage of having a sort of intuitive sense of if you lived in this environment, what would you want to live in?” Georgetown’s Damon Orobona said.
Ritchey is the local head of Boston Properties, one of Washington’s biggest office developers. But he built one of the city’s most successful recent mixed-use projects in Foggy Bottom, Square 54, largely because the apartments leased for some of the highest rates in the city. He is convinced of the market for residential at the Hoover site.
“I think the residential would work because you have projects like the Newseum and Market Square, which are already very successful and on [Pennsylvania Avenue.] So residential has already been validated along Pennsylvania Ave.”
The students from MIT proposed the most balanced mix, leading with 341,000 square feet of retail, 328,000 square feet of offices, 281,000 square feet of condos, 279,000 square feet of apartments and 30,000 square feet of museum space. They also proposed building micro-units.
“We really felt like there was an opportunity to capture that Gen Y demographic, that late 20s, early 30s young couple that want to live in this area and wants to be out and active on the street and going to restaurants and using their income in that way,” MIT student Bonnie Burgett said.
Design and engagement
Georgetown students proposed the most striking architectural feature of any team: a 160-foot-high “Hoover Tower” on the southern end of the site aimed at invoking the name of the controversial former FBI director and attracting tourists from the National Mall. Orobona said the tower was something that impressed judges. “We said that would sort of draw people to the site and then they could walk through our interior connections,” he said.
“The tower was at least kind of a creative nod to the importance of Pennsylvania Avenue as being a civic place, a public place,” Miller said, though she noted that at 160 feet, it would not likely win approval without being set back from the street further.
Miller was less impressed with a proposal from MIT, whose project, “The Bureau on Penn,” was depicted with an Apple Store and Anthroplogie facing Pennsylvania Ave. “Facing Pennsylvania Avenue? Probably not,” she said. The MIT team, however, proposed maybe most accessible project, with wide pedestrian entrances to the site on all sides. “It’s more about placemaking than really design. It’s about creating a place in the city that is iconic and changes the trajectory of the Pennsylvania corridor,” Burgett said.
All the teams, however, made an effort to connect the neighborhoods north of the site with a more tourism-oriented focus on the southern end. The MIT team proposed the most shopping opportunities as well as a 30,000-square-foot museum on FBI history, though it may have to compete with the likes of the International Spy Museum and the Crime Museum.
The Georgetown team proposed reopening D Street, which was cut off in 1974 when the Hoover Building was erected, to pedestrians. “We’re kind of envisioning our pedestrian street after Bethesda Row,” Orobona said.
The Cornell team envisioned retailers such as a Trader Joe’s grocery store and Equinox Gym, with office workers increasing daytime foot traffic and a hotel with rooftop pool and bar to attract the nighttime crowd. “The project was designed to appeal to pedestrians throughout each part of the day,” Cornell’s Tim Hosmer said.
Density and parking
In another sign of the varying responses Tangherlini and the GSA may receive — or perhaps of the changing expectations of 20-somethings, the Case teams proposed highly variable total development proposals and parking proposals.
Tangherlini may not see anything as radical, however, as Georgetown’s proposal to build 1.8 million square feet but zero — zero! — parking spaces.
Orobona, who works full-time as a land use attorney at the Rockville firm Miller, Miller & Canby in addition to his studies, said he originally considered maintaining the building’s structure but adding new interior and exteriors. But the floor plates were so large, he joked about proposing it as an indoor practice facility for the Washington Redskins.
“The floor plates are so large, they’re bigger than a football field … there would be no access to light or air,” he said.
The District government been moving away from minimum parking requirements and toward parking maximums in certain areas, but it’s unlikely the District would approve a project that includes 1,238 new homes to be built without adding some parking. Compare that to CityCenter DC, the mixed-use project under construction downtown, which will include 1,570 new parking spaces when it opens.
MIT proposed only slightly more parking: 352 spaces for a 1.4 million-square-foot project. Ryan Butler, of the MIT team, said maximizing density on their project would have put its design principles at risk even if the opportunity for greater revenues was tempting. “We wanted to make sure that we’re adding the most value from a design perspective as well,” he said.
On the other end of the spectrum, the Cornell team proposed 1.3 million square feet of development plus 1,588 spaces, about 675,000-square-feet worth. Still, the Cornell team said its plan allowed more than one-quarter of the site to remain publicly accessible.
Value of Hoover sites
Here is where Tangherlini might take greatest notice, as he is hoping to swap the Hoover building straight-up for a new FBI campus for as many as 11,000 employees.
It’s unlikely the federal administrator would be impressed by the results. The finalists offered widely varying prices for the property, with perhaps none high enough to likely to generate the funds needed to build a 40- to 55-acre campus for the FBI, even without land costs.
The Cornell students said it would be possible to earn an acceptable return even if they offered the cash-strapped GSA $600 million for the site — the highest of any of the teams.
After looking for comparable sales data, the MIT team only offered half that, $300 million, for the property. That may not say much about the future of real estate values in Washington. “We make reasonable assumptions on the market and there is really a maximum amount you can pay and make a reasonable return on that commitment,” MIT student Jakob Von Trapp said.
Lowest of all, however, was the Georgetown team, which offered the government only $110 million for the site, something Orobona said hurt his team’s chances of coming out on top. The same result would probably have occurred had Tangherlini and the GSA actually been evaluating his proposal. “In reality we wouldn’t have won the [Request for Proposal] because the other developers were offering a lot more for the site,” Orobona said.