Developer Chosen for Southeast Federal Center

Forest City Enterprises Inc., a prominent developer based in Cleveland, won a competition yesterday to redevelop 42 acres of the Southeast Federal Center along the Anacostia River into offices, housing and stores.

The General Services Administration, the federal government's real estate agency, chose Forest City after a year-long search. The company will build 1.8 million square feet of offices plus apartments and condominiums, shops and a waterfront park. The site is next to the federal Navy Yard on M Street SE and is bounded by First Street on the west and Isaac Hull Avenue on the east.

"This is a piece of prime federal land that sits close to the Capitol and is on the river, and it was lying fallow," said Eleanor Holmes Norton, a Democrat who is the District's delegate to Congress. She advocated the legislation that created a public-private partnership and allowed developers to build on federal land.

"This way we get a development that not only serves the people with amenities from housing to recreation, but we are going to profit," she said.

The runner-up in the competition was a team called Capitol Harbor LLC, which included Mid-City Urban LLC of Silver Spring, Boston Properties Inc. and Related Cos. of New York. Mid-City Urban is working with Forest City and the D.C. Housing Authority on a federally funded project to turn a public housing complex just across from the Navy Yard into a mix of subsidized and market-rate houses and apartments.

The Forest City project is part of a larger effort to transform the blighted commercial areas on the Anacostia waterfront into vibrant neighborhoods and public parks. A large part of that is the new headquarters of the U.S. Department of Transportation. It will be built next door to the Forest City project on the Southeast Washington waterfront.

The agency will move its 7,000 employees from two rented buildings in Southwest Washington to the 11-acre waterfront site being developed by JBG Cos., a large Washington developer, and its financial partner, JER Partners Inc. of McLean.

Construction will start next month and is expected to be finished in late 2006. Since the Department of Transportation said last year it would move to the Southeast Washington waterfront and the Navy Yard has added space, the M Street corridor nearby has perked up as federal contractors moved into offices there.

The two projects at the Southeast Federal Center -- Forest City's and JBG's -- are expected to generate an estimated $30 million in tax revenue.