D.C. developer Douglas Jemal, known for buying rundown properties and renovating them, wants to sell 30 office and retail buildings around the Washington area and invest in development on the western bank of the Anacostia River.
Jemal put the buildings up for sale Thursday with brokerage firm Cassidy & Pinkard. Most of the office buildings in downtown Washington are leased to the federal or city government or established companies, making them attractive to investors.
Some of the more prominent buildings up for sale include the Union Labor Life building at 111 Massachusetts Ave. NW, which is fully leased to the federal government to house the Department of Homeland Security, and the Peoples Building at 77 P St. NE, where the District government has offices.
Prices for office buildings in the region have been climbing. "I can't buy, so I might as well sell," Jemal said. "The market is so crazy that I haven't bought anything in eight months. I want to get some money in my pocket and go to Anacostia. I want to build Baltimore's Inner Harbor there." The area he's focusing on is Buzzard Point and southward, in Southeast.
Jemal's broker at Cassidy & Pinkard, William Collins, said even after the sales, Jemal would still own more than 100 buildings around the region, including some of his better-known ones, such as the renovated Woodward & Lothrop building at 1025 F St. NW.
The city has been talking for years about waterfront redevelopment along both sides of the Anacostia River to make the area more attractive for offices, stores and housing.
"I know Doug's been really passionate about the waterfront," said Andrew Altman, the director of the city's Office of Planning. "His interest shows that it isn't just a plan for the waterfront, but that there's a real market for building there."
Jemal has been in the forefront of the redevelopment of some other city neighborhoods. He was an early investor in the area immediately around the MCI Center when plans for the arena were still under discussion. Now the area is booming with office and retail development. Similarly, he bought the old Peoples Drug warehouse on P Street NE, now the Peoples Building, at a time when there was little development in the area along New York Avenue. He fixed the building up and leased it to the city, although he ran into controversy over allegations that he was overcharging. The city and Jemal settled out of court in December.
Now, a few blocks away, the federal government is building a new headquarters for the Bureau of Alcohol, Tobacco, Firearms and Explosives. A new Metro station is to open soon, too.
"He's a visionary," said Brendan R. Owen, senior vice president of brokerage services CB Richard Ellis. "He does it by feel, gut and instinct. He's proven his instinct to go into areas five years before they're really going is better than scientific and formal modeling."
"If he's buying in Anacostia, you can be sure it's on the rise," Owen said. "He's the pioneer. Others will follow him."
John E. "Chip" Akridge III, chairman of Akridge, one of the largest developers in the city, said of Jemal: "He's invested just in front of the development wave and ridden the values up. Now he's looking to harvest some of that value. If he sees the Anacostia waterfront as the next front, he's probably right. He's an astute investor. I personally would not bet against him."
Jemal's attempt to sell his buildings comes as sale prices for Washington commercial buildings are reaching all-time highs. The average price for a building downtown last year was $344 a square foot, according to Cassidy & Pinkard, higher than in most other major U.S. cities. In Manhattan, prices fell 4 percent, to $335 per square foot. And the average sales price for office buildings in American downtowns fell to $196 per square foot last year from $200 the year before.
"Doug's timing is correct to sell," said Raymond A. Ritchey, executive vice president of developer Boston Properties Inc. "The capital markets are frothy. He should realize a tremendous appreciation in his assets."
The other properties Jemal is selling include retail space and offices in Laurel, Greenbelt, Columbia and Bethesda. Brokers said that to attract buyers, he mixed higher-end properties with others that aren't worth as much.
Douglas Jemal says he wants to build "Baltimore's Inner Harbor" in the area around Buzzard Point.Douglas Jemal is shown in 1997 overseeing building renovation near MCI Center. He took a chance on the area before plans for the center were firm.