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From The Ground Up

With Fannie Mae Out, Waterside Needs Ideas

By Dana Hedgpeth
Washington Post Staff Writer
Monday, January 31, 2005; Page E03

Mitchell N. Schear, one of the District's major developers, met with his partners Friday to talk about what to do after mortgage giant Fannie Mae scrapped its plan to build about 2 million square feet of office space at his Waterside Mall project in Southwest.

A few days earlier, Schear talked with City Administrator Robert C. Bobb, who, aides said, encouraged him to keep the project going -- even without Fannie Mae as the major office tenant.

Waterside Mall is a project without a plan now that Fannie Mae has decided not to move there. (Dennis Brack -- The Washington Post)

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Fannie Mae, which has been accused by regulators of accounting irregularities, said on Jan. 19 that it was reversing its plan to build the offices because it needed to save money and raise capital. Fannie Mae's decision left a void in the redevelopment project that Schear plans for Waterside Mall, and now he and his partners in the deal are trying to regroup.

"We're looking forward to continuing with the development of our project," said Deborah Ratner Salzberg, a director of Cleveland-based Forest City Enterprises Inc., one of the developers on the Waterside project.

What will be the major anchor of the project?

"We're looking at small, large, government and nongovernment tenants," Schear said.

There is no shortage of opinions on what the Waterside development team should do with the site at Fourth and M streets SW.

At a real estate industry party last week at a downtown hotel, developers, real estate brokers and investors sipped cocktails and whispered in small groups about how Schear should proceed. Smiling and shaking hands, Schear was offered words of encouragement.

Many observers agree that Schear's project should have a mix of residential, retail and office. How much of each is open to debate.

Some of the District's biggest brokers and developers said Schear should not hold his breath for another office tenant to take as much space as Fannie Mae had planned.

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