JBG bids to add to U St.-Florida Ave. stake

By Jonathan O'Connell
Monday, January 31, 2011

The JBG Cos. may soon control a wide swath of one of Washington's hottest neighborhoods, the U Street-Florida Avenue NW corridor, now that it has submitted what appears to be the highest bid to Metro for three parcels totaling about 28,000 square feet on the south side of Florida Avenue between Ninth and Seventh streets NW.

After a previous sale fell through, Metro began advertising a request for bidders last September and received three, with JBG's coming in on top, far ahead of the competition.

For the vacant properties, JBG, one of the biggest real estate firms in the region, offered $11.5 million, according to Metro. That more than doubled the offers of two smaller D.C.-based firms. LaKritz Adler, which had proposed developing the site into a conference center and hotel serving Howard University, bid $5.4 million. Jair Lynch Development Partners, whose offices are on U Street, bid $5.1 million. Bidders were also asked to provide offers to lease the property and JBG submitted the highest leasing price as well.

Metro, which has had to raise fares and cut costs due to budget shortfalls, plans to sell or lease to the highest bidder. Steven Goldin, head of real estate for Metro, said an analysis of the bids and appraisals of the property should be complete by March. Any sale or lease of the property would have to be approved by Metro's board of directors.

"We're in the process of reviewing the bids for compliance with the specifications," he said. "In addition, we are awaiting receipt of an outside appraisal as well as our internal review appraisal."

JBG executives declined to comment on the price or the company's plans for the properties. If the sale is consummated, however, it would cement the company's stake in the corridor, giving it more control over the future of U Street than any other property holder. JBG has already floated plans to build an upscale hotel for the 1300 block of U Street that would replace a string of street-level retail including a Rite Aid Pharmacy, BB&T bank and Pizza Hut. And last October, JBG purchased seven other properties along U Street and 14th Street NW for $9.5 million, according to CoStar Group, giving it control of most of the south side of the 1400 block of U Street. Many of the properties are presently leased to restaurants, including Simply Home Cuisine, Utopia and Coppi's Organic Restaurant.

This is not the first time Metro has attempted to dispose of the properties. Previously, Metro officials selected Banneker Ventures, a firm headed by Omar Karim, a friend of former mayor Adrian M. Fenty. Banneker had planned a 124-unit residential project called the Jazz at Florida Ave. But after negotiations with the company stalled multiple times, Metro's board declined to approve a deal with the company last March.

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