Prime D.C. Business Site Might House Cars for Now

By Paul Schwartzman and Dana Hedgpeth
Washington Post Staff Writers
Friday, October 24, 2008

The corner of K Street and Connecticut Avenue is among downtown Washington's most prestigious, a crossroads District leaders believe is worthy of the glass, steel and stone tower that a developer envisions.

Anything, they say, but a parking lot.

Guess what might be on the way?

Citing the economic downturn, a developer has sought the District's permission to turn one of the city's prime parcels into an aboveground parking lot, at least temporarily.

The developer demolished two office buildings at the intersection's northwest corner this year after winning D.C. approval to replace them with a 12-story office complex designed by the architecture firm founded by I.M. Pei.

But in a letter to D.C. officials last month, the developer sought to alter the project to generate cash while the lot sits fallow until construction begins, perhaps at the end of 2009 or in early 2010.

"In the interim, and in light of the recent financial market turmoil, the Applicant seeks approval for the option to construct a temporary parking lot on the now vacant site in order to make productive use of its land," the developer's lawyers wrote to the zoning commission Sept. 23.

In the past, developers have turned vacant land into parking lots as they sought tenants to lease offices in proposed buildings. But during the frenzy of the building boom of the past five years, offices sprang up without developers having signed any leases.

Now the declining economy and frozen credit markets have hurt the real estate industry, forcing builders across the country to delay or halt plans. But developers, ever mindful that potential lenders can become squeamish even at the hint of a risky bet, are loath to acknowledge turbulence.

Bernard Gewirz, a partner in the project on K Street, at first said he didn't know anything about building a parking lot on the parcel, across from Farragut Park and one of the city's busiest Metro stations, and a block and a half from the White House. Later, his son, Steven, confirmed the plan.

But Steven Gewirz disputed their attorneys' assertion that the financial market's situation was a factor in the decision to build a parking lot.

He said that the development team's negotiations to obtain bank financing for the project are proceeding "swimmingly" and that he expects the loan to be finalized next month. The construction delay, he said, is necessary because the main tenant, a prestigious law firm, cannot move in until 2013.

"People make mistakes," he said when asked about the letter written by their attorneys, Whayne S. Quin and Mary Carolyn Brown. "Clearly, we didn't review it."

District officials are less than pleased that one of the city's best-known corners, one the developer advertises as the intersection of "Power and Influence," might be occupied by as many as 89 vehicles.

"It's ugly," said Harriet Tregoning, director of the city's Office of Planning, which has advised the Zoning Commission to reject the developer's application.

Concerned that more parcels might remain empty in future months because of the economy, Tregoning said she hopes to encourage developers to come up with creative alternatives, including outdoor retail and food markets. Along New York Avenue NW, the vacant land that once hosted the old convention center has been used for World Team Tennis matches and Cirque du Soleil performances as well as for parking.

"A surface parking lot is not a great use for a prominent space," Tregoning said. "It detracts from the experience of the street. No one wants to walk by a vacant lot."

Over the next two years, about 11 million square feet is scheduled for construction in Washington, according to Delta Associates, a research firm. Brokers and developers worry that demand for space might subside as the economy heads into a recession and companies put offices back on the market.

The development team, which also includes Albert Small and Edward Kaplan, had intended to start construction in time to finish the building in 2010, when the prospective tenant, the law firm of Mayer Brown, planned to move in.

But while they were demolishing the buildings, Mayer Brown decided on a different location, Steven Gewirz said. The developers then signed a deal with the law firm of Arent Fox, which can't move until 2013, after its current lease expires.

"So instead of sitting with an empty building for many years, we decided it's best to hold off on the construction," Steven Gewirz said. "You don't want to carry a full empty building."

The developers, he said, are "happy to discuss" how to use the site, and he planned to meet with D.C. officials yesterday.

"It would be great if the city came up with alternative uses," he said. "A driving range? I don't know."

Before the developers demolished the buildings, their tenants had to leave an address some considered the center of the Washington universe.

"We would certainly have stayed longer," Thomas Simeone, a personal injury lawyer, said when told of the parking lot proposal. "It was the best location in town," he added. He has since moved his office a block and a half away.

Staff researcher Julie Tate contributed to this report.

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