High-End Condos for the Luzon Building

By Chris Kirkham and Dana Hedgpeth
Washington Post Staff Writers
Monday, September 25, 2006

The weathered, off-yellow Luzon apartment building on Pennsylvania Avenue has been vacant for more than a decade.

Condominiums and a Trader Joe's grocery store have sprung up steps away in the Foggy Bottom neighborhood, but the lot at 2501 Pennsylvania Ave. NW is overgrown. Rickety fire escapes and rusted balconies mar one of the last examples of late-19th-century middle-class apartment buildings in the District.

Owners have come and gone, none able to please the neighborhood or District preservation officials with their plans.

Early next month, District-based Intrepid Real Estate LLC will break ground on a condominium project that will incorporate the Luzon building and fill in the lots surrounding it -- some of the last vacant property along Pennsylvania Avenue.

Unlike many District condominium buildings with smaller units on the bottom floors and a few penthouses on top, Intrepid President John B. Mason plans to build a 16-unit, eight-story building filled with large units. He envisions a Fifth Avenue-style boutique building, with concierge service and elevators that open directly into the condos.

"This is America's main street; it's a monumental location," Mason said. "We wanted to design a building of monumental status."

Getting to this point wasn't easy. The Luzon building was designated a historic landmark in 1990, making demolition of the building nearly impossible. Previous owners had proposed more dense development or time shares, none of which would have brought the long-term residents that neighbors want.

But the crumbling building was becoming more of an eyesore every year.

"Many people had become impatient for some kind of development," said Richard J. Price, who served on the advisory neighborhood commission in Foggy Bottom.

After months of back-and-forth with the District's Historic Preservation Review Board and neighborhood activists, Mason settled on a plan that would preserve the facade at the corner of 25th Street and Pennsylvania Avenue.

"It had been a long-standing controversy in the neighborhood," said Tersh Boasberg, chairman of the review board. "It finally worked out, with a lot of pulling and tugging and hemming and hawing."

Mason will renovate the brick exterior of the Luzon, demolish the back side and add additions on both sides. After Mason found old photographs that showed a bell tower at the top of the Luzon building, the preservation board asked him to install one.

Empty nesters looking to downsize but not live in a building above "a bunch of yuppies just out of college" are the target market, Mason said. Units will range from 2,600 square feet to more than 4,000 square feet.

Mason said neighborhood activists were mostly pleased to hear that his building's units, at $1.8 million to $4.5 million, would not cater to George Washington University students. The kitchen interiors, built in Milan, cost more than $100,000 per unit.

Although the idea of a condominium building with fewer, more spacious units is unusual in Washington, Mason's is not the first. Developer James J. Abdo of Abdo Development built the Emerson at 12th and N streets NW in 2001, a 12-unit project that also has direct elevator access to condos.

"For the longest time in the District, a lot of developers were nervous about bringing very large units to market," Abdo said. "Is it riskier? Yeah, it is."

No Rest for Carr

Oliver T. Carr Jr., 81, isn't interested in reflecting much on the recent $5.6 billion sale of the company he founded, CarrAmerica Realty Corp.

"I don't want to talk about that; I want to talk about this," Carr said as he moved into a pitch for his current venture: renting executive office suites.

Carr said Preferred Offices LLC, will open locations in Bethesda, Alexandria and the District this fall. There are already three in the District, one in Alexandria and one in Tysons Corner.

The veteran developer faces competition from major players such as Regus Group PLC of Britain, which has been in the business for more than two decades and has about 700 centers around the world.

But Carr has broad ambitions. Starting next year, he said, he plans to open a new property every 90 days, expanding to such markets as New York and San Francisco.

Carr started the privately owned Preferred Offices six years ago and opened the first offices in 2003. He is spending about $1 million to open each of the properties in space he leases.

Preferred Offices' temporary tenants include entrepreneurs, nonprofit organizations, lobbyists, and even the Embassy of Palau. Microsoft Corp. rents office space in the Alexandria center.

Most of the space is rented for six to 12 months, but it is also available for $15 to $25 an hour for anyone who needs a temporary office.

Clients are provided with chairs, desks, phones, high-speed Internet connections and receptionists. Equipment such as photocopiers, fax machines and printers is available, and the company will help set up catering and accounting services. It can save those who rent the space 25 to 50 percent of the costs of setting up their own offices, according to Angie O'Grady, president and chief operating officer.

One of the new locations is at 1701 Pennsylvania Ave. NW., where Carr leases 35,000 square feet to 12 tenants. Tenants have the use of a common room with a flat-screen TV, hip-looking red chairs, a blue couch and a full kitchen.

"It's flexible, short-term space compared with conventional long-term space," Carr said. "People who work at home need to get out not just because the dog is barking but they need human interaction and the availability of service."

CarrAmerica, which until its sale was a publicly traded real estate investment trust, once was in the executive-suite business but sold that division in 2000.

Carr said his new venture isn't exempt from the cycles of the commercial real estate business, so if vacancy rates rise for traditional office space his business could falter.

Another Hotel Near Dulles

Starwood Hotels & Resorts will open one of its Aloft Hotels in Chantilly in 2008. Aloft is the urban offshoot of the W Hotel brand that features exposed beams and a structural steel design.

The hotel, which will have 131 rooms, will be at the intersection of Route 28 and Highway 50, near Washington Dulles International Airport. It will be one of the first Aloft Hotels.

Starwood officials said they chose the Chantilly location because the new hotel will stand out from "bland" ones nearby.


· The Anacostia Waterfront Corp. selected Skidmore, Owings & Merrill LLP to create a design for Poplar Point, a 110-acre park owned by the federal government. The land is expected to be transferred to the District this fall. Poplar Point, on the east side of the Anacostia River across from the Washington Navy Yard, is expected to have public parks and memorials and could be the site of a soccer stadium proposed for the D.C. United.

The Anacostia Waterfront group will hold a public hearing on the Poplar Point development on Oct. 10 from 6:30 p.m. to 8:30 p.m. at Matthews Memorial Baptist Church, 2616 Martin Luther King Jr. Ave. SE.

· Cassidy & Pinkard Colliers will handle leasing of 77 K Street NE, an 11-story, 322,000-square-foot office building scheduled for completion in 2008. The developers are Brookfield Properties Corp. and ING Clarion.

Dana Hedgpeth covers commercial real estate and economic development. Her e-mail ishedgpethd@washpost.com.

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