A Transformed Neighborhood Awaits Stadium

The stadium, which would take up an area that is now used mostly for sand and gravel hauling and other industrial uses, would sit three blocks south of the Chernoff property. It has created a magnetic field in the neighborhood bounded by Interstate 295 on the northern edge, the Anacostia River to the south, South Capitol Street SE to the west and as far east as 11th Street.

Just east of the stadium, the U.S. Department of Transportation is building a new headquarters near First and M streets SE, which will open next year. South of it, Forest City Enterprises Inc. of Cleveland plans to turn 40 acres into offices, residences, restaurants, shops and a waterfront park over the next decade.

Across from those two projects stands a gleaming new office building -- 1100 New Jersey Avenue SE -- with government contractors, a drugstore, burger joint and sub sandwich shop as tenants. A major developer -- Donohoe Companies -- owns an empty lot near the Navy Yard Metro stop and reportedly plans to put an office building there.

Behind the glassy office tower at M Street and New Jersey Avenue SE, New York-based developer Valhal Corp. is spending $110 million to put up the two 14-story buildings, a 344-unit luxury cooperative and hotel on a lot that once housed small, abandoned rowhouses and a warehouse that formerly stored tobacco. The open-air drug market, a prominent landmark until recently, has yielded to the traffic of no-nonsense construction workers, providing a remarkable transformation.

"I brought a banker over one day to see the site, and there was a dead guy laying on the sidewalk," said Sheldon Stein, chief executive of Valhal, recalling a dark day a few years ago.

"It was pretty dicey for a very long period of time," Stein said. "Needless to say, he didn't invest with us."

Valhal's co-op units are just being marketed. One-bedroom units will start in the high $200,000s, two-bedroom units as high as $400,000 on upper floors. Construction on the new complex, with a large indoor swimming pool and billiards room, started in spring 2004. It is scheduled to open next spring.

To the north and west are several auto mechanic shops, a few parking lots for trucks and a trash transfer station. On one side, the new complex overlooks a squat brick building that houses a program for at-risk kids. On the other sits a parking lot for school buses and rows of boarded-up public housing. The buses will give way to a new city park, and the public housing is being replaced by 1,500 apartments, condominiums and rowhouses with prices ranging from low-income to market rate.

The one spot Valhal couldn't get its hands on was a small brick rowhouse that once housed a market. The Star Market, as the red and blue sign above the boarded-up windows says, once sold "Cold Beer & Wine." Valhal offered the landowner a deal. "We tried to buy it, but the guy wanted $1 million for it," said Stein. "It's only worth $100,000. We settled on $400,000." But the deal fell apart. Stein was ready to move forward on the project, and the landowner, who could not be reached for comment, was reluctant to sell. The market closed last fall.

"He missed the boat," Stein said. "He decided to get serious after it was too late."

Stein designed his project around the little market, which now stands in the shadow of his hotel building -- exactly an inch away, says Stein's construction superintendent. But, Stein says, it all worked out for the best because daylight now brightens a courtyard that faces Second Street SE.

"If I had built right up to the corner, it would have cut out the light and view of the courtyard," he said. "It doesn't look so terrible with the market there. The actual project comes out better because it's there."