For more than a year, Lynch has been buying apartment development sites backed by a $120 million investment fund of MacFarlane Partners, of which California State Teachers’ Retirement System, one of the nation’s largest pension plans, is an investor.
In 2010, the Lynch-MacFarlane team made its first foray outside of the District when it bought the 82-unit, seven-story Abingdon House near Crystal City. In July, Lynch closed on a $43.3 million refinancing of a 171-unit U Street apartment complex.
The three H Street properties, at 601-645 H Street, include some of the only office space along the corridor and — with no retail on the ground floor — represent one of the most lifeless parts of an area that is otherwise teeming with restaurants, bars and nightclubs.
Currently the site has two five-story brick buildings whose tenants include the D.C. Department of Human Services. They bookend a one-story former grocery store that has been converted into offices. Built in the 1980s, the properties comprise more than 250,000 square feet in all.
Lynch plans to tear down the one-story center building and replace it with a mixed-use apartment and retail project that he said would enliven the area. He said he does not need zoning adjustments and would like to begin construction next year.
“There are a lot of positive factors on H Street, in which it’s trending in the right direction,” Lynch said. “It’s still quirky, it’s still fun and when you cement that with streetcars in 2013, it’s going to take another step.”
Lynch is not the only apartment builder eyeing H Street. In July, Chevy Chase-based Steuart Investment broke ground on a 215-unit residential project above a new Giant grocery store three blocks down. The Rappaport Cos. of McLean also plan a residential and retail project. With property prices rising, Lynch said he expected the window on H Street for apartment builders was “going to close in the next couple years.”