Riverfront’s residential projects have scored, but offices have had some misses

March 10, 2013

While players attend spring training to prepare for a season of high expectations in Washington, the Nationals aren’t the only ones attracting attention.

The Capitol Riverfront area around the Nationals’ ballpark has been the scene of intense redevelopment that is transforming the neighborhood into a city destination.

Not unlike the Nationals, there were many hits as well as a few misses among the development projects down by the river.

While the Capitol Riverfront neighborhood accounts for about 10 percent of the District’s total land area, it has attracted a disproportionately larger share of development projects in D.C. since the site for the new ballpark was selected in 2005.

The area has proven to be particularly popular with residents who have flocked to the new apartment communities that have sprung up, such as the Foundry Lofts in The Yards and 909 and Axiom at Capitol Yards, which are currently close to full occupancy. Rents for the relatively upscale apartments tend to be 10 percent less than similar properties in the north quadrants of the city.

The performance of new office buildings in the neighborhood has been a bit more mixed, even as they, too, offer a 10 percent discount to high-end Class A office rents in other areas of the District. Monument Realty’s 55 M St. SE is a healthy 88 percent occupied. On the other hand, Opus’s 243,200-square-foot office building at 100 M St. SE, which was completed five years ago, continues to struggle at the plate, with a vacancy rate of 37 percent. Perhaps the biggest leasing challenge has been faced by Douglas Development’s 1015 Half St. SE, which still sits empty two years after construction was completed.

Despite some bumps along the road, developers are expected to remain quite active in the area.

Major new projects in the pipeline include The Yards, which is just in the early stages of its 42-acre multimillion-square-foot project, and District-based Akridge has ambitious plans for residential and office development on parcels adjacent to the stadium.

Given these and other development projects in the works, it looks like we are still in the early innings of this neighborhood’s transformation.

Erica Champion is a senior real
estate economist with CoStar in Washington.

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