An article in the Sept. 20 Washington Business section located the Navy Yard incorrectly. It is in Southeast Washington, not Southwest. (Published 9/21/04)

A handful of developers within the past six months has started to build along the District's Southwest and Southeast waterfronts, confounding skepticism about the prospects for these once unfashionable neighborhoods. The developers' buildings will open in two to five years.

At least nine major projects are either approved or under construction in the roughly two-square-mile area bounded by Independence Avenue to the north; Pennsylvania Avenue to the east; 12th Street SW to the west; and as far south as the eastern side of the Anacostia River, to St. Elizabeth's Hospital near Malcolm X Avenue.

They include:

* The Southeast Federal Center next to the federal Navy Yard on M Street SE and bounded by First Street on the west and Isaac Hull Avenue on the east. JBG Cos. of Chevy Chase is building the U.S. Department of Transportation a new headquarters for its 5,000 employees. Next to that will be a 1.8-million-square-foot project with housing, retail, offices and a park built by developer Forest City Enterprises Inc. of Cleveland. Construction on the Transportation Department headquarters has started, and it is slated to open as early as 2006. The rest of the buildings await approval from the federal government and are expected to be built during the next 15 years.

* Hope VI, a former low-income housing complex on 26 acres across M Street from the Department of Transportation site. Mid-City Urban of Silver Spring and Forest City are converting it into market-rate and some lower-income residential units, 1,700 in total. Parts will be finished as early as 2005 and the whole project in 2010.

* Waterside Mall at M and Fourth streets SW, where mortgage giant Fannie Mae has said it will move 4,000 employees into a 1.25-million-square-foot project including retail and offices. Kaempfer Co. of the District, Forest City and Rockville's Bresler & Reiner will build the project, which is slated to be completed in 2008.

* Two office buildings, a hotel and a residential building at Potomac Avenue and First Street SE on the waterfront. Florida Rock Industries Inc. of Sparks, Md., is expected to get approval for the project; construction would start in 2006.

* Arena Stage at Maine Avenue and Sixth Street SW. The theater is undergoing a $100 million renovation and expansion.

* Capital Towers at New Jersey Avenue and L Street SE. A New York developer is building a 100-room hotel and 340 apartments, according to city planners. It is scheduled to open in two years.

* The National Children's Museum at L'Enfant Plaza in Southwest. It is scheduled to open in June 2008. JBG plans a redevelopment project nearby, which is to include housing, retail and offices. It is still in the planning stages, but construction is likely to begin early next year.

These, plus a few other projects in the planning stages, mean an investment of up to $600 million along the waterfront areas over the next decade, according to city planners and developers.

"It's a real opportunity for an old section of the city to blossom," said Whayne S. Quin, a lawyer and head of the mid-Atlantic land-use division at Holland & Knight LLP. The firm has worked on some of the large deals along the waterfront. "This area is ripe now for development.

The city has a long-term, comprehensive plan to redevelop the east and west shores of the Anacostia River from Maine Avenue north as far as the Arboretum with housing, retail, restaurants and offices.

Much of the development has been spurred by the Naval Sea Systems Command's move from Crystal City to the Navy Yard on the Southwest waterfront as part of a 2001 round of military base closings. Once the command was there, government contractors who worked for it and wanted to be near its headquarters encouraged office development along the M Street SE corridor, which runs from the Navy Yard west to South Capitol Street.

Development is also picking up because developers have capital from well-heeled pension funds and other institutions and because interest rates are still relatively low. Also, tenants are looking for space in places outside the crowded downtown, according to real estate brokers and developers.

"This is where the private market is going," said Andrew Altman, director of the city's Office of Planning. "When the Navy went there and the contractors came along M Street, that started to signal that this is a new growth area for the city.

"Now you've got Fannie Mae that wants to relocate to the waterfront; DOT will be down there and the Navy Yard," he said. "These are all AAA employers. They will give a strong employment and economic foundation to the area. It means people are seeing the opportunity."

However, the area still has blocks of public housing, abandoned lots and industrial sites controlled by different land owners, making them harder to assemble and develop. Some developers said the city will need to offer tax credits or other financial incentives before they start building there.

Akridge, one of the largest developers in the city, planned to build 1,800 residential units -- some market-priced and some for lower-income residents -- on land the company bought. But the Army said last month it wanted the land, saying it needed the space beside its Fort McNair base on the Washington Channel.

Chairman John E. "Chip" Akridge III said that's the end of the developer's project there. "If you don't own the dirt, you can't do much." The company said it is working out a deal to sell the 15 acres to the Army.

"Some of the waterfront areas that are near Waterside Mall, where Fannie Mae is moving, or near M Street, where DOT is going, are happening places," Akridge said. But parts of the waterfront, like the area near the Pepco electricity-generating plant between the South Capital Street bridge and Fort McNair, are "a virtual wasteland," Akridge said. "There's nothing but heavy industrial uses, trash recycling, junk yards and low-income housing that hasn't been well-maintained. Without some type of major catalyst in that area, it's still pretty tough."

On the east side of the Anacostia River -- with numerous historic residential neighborhoods but few large office buildings -- Metro has requested ideas on how to develop a mixed-use project at the Anacostia Station near Martin Luther King Jr. and Howard avenues.

Just north, at Martin Luther King Jr. Avenue and Good Hope Road and at Minnesota Avenue and Benning Road SE, the District plans to build government buildings, according to Uwe Steven Brandes, project manager of the Anacostia Waterfront Initiative in the District's Office of Planning, which could be another spur to growth.

Dana Hedgpeth writes about commercial real estate and economic development. Her e-mail address is hedgpethd@washpost.com.

The Southeast Federal Center will include the Transportation Department's headquarters, as well as housing, retail and a park.