Developers here are preparing to spend more than $400 million to build at least two dozen hotels and office and commerical buildings within six blocks of the new downtown Washington Convention Center, now scheduled for ground breaking in April.
The vast construction effort, along with the $98.7 million convention center itself, is expected by 1984 to alter drastically the face of Washington's old downtown, transforming a decaying, all-but-ignored section of the city into an extension of the already flourishing business district west of 15th Street NW.
Eight new hotels with more than 3,600 rooms are planned within a six-block radius of the center, as well as at least 14 new office buildings with a combind space of more than 5.5 million square feet, three times the size of Tysons Corners shopping center.
The financilly hard-pressed city government expects these new hotels and office and commercial buildings to yield about $26 million in new tax revenues by 1984, but the figure could go even higher.
The 3,600 new hotel rooms would represent a 22 percent increase above the 16,400 hotel rooms in the city now.
Ever since Congress approve construction of the convention center last year, land values in the immediate vicinity of the site have jumped markedly -- sometimes doubling from $50 a square foot to $100 for prime commercial property. Real estate investors in the area say that as construction on the center actually starts, and as the projected mid-1982 opening nears, land values will continue to increase.
Much of the new hotel, office and commericial construction undoubtedly would have occurred eventually without the building of the long-debated, much-delayed convention center. But numerous developers say that the imminent construction of the center, along with other factors, leads them to believe that multimillion-dollar construction projects in the old downtown sector make good economic sense.
While some of these developers say they hired architects to draw plans for their buldings most are still cautious, wating just a a bit longer to make absolutely certain that the convention center will become a reality.
"Have they broken ground yet?" asked real estate investor and developer Richard S. Cohen, who plans a 500-room hotel and commercial complex directly to the east of the center, in the block bounded by Eighth, Ninth, H and I streets NW. "As soon as they break ground, I'm going to start. I'm only waiting for them. Lenders are skeptical [about the covention center] until Congress approves and ground is broken.
Congress, after years of discussing a variety of convention center proposals, gave its final approval for the center 13 months ago. Surprisingly, in a city where construction delays are the rule rather than the exception, the District government is precisely on schedule with its pregroundbreaking operations.
Ninety of the 102 families living on the site of the prospective convention center, 9.7 acres bounded by Ninth, H and 11th streets and New York Avenue NW, have been relocated to other housing and the rest are expected to be gone in the next two weeks. Forty-eight of the 71 stores or commerical enterprises in the area have moved or gone out of business and the city expects the remainder to be moved out by Feb. 1.
"We have a lot of bars who want to stay in business over New Year's," to ring in the new decade, explained the city's relocation chief, Jim Woolfork.
The city expects demolition work on part of the land to start Jan. 4 and be completed by March 1. The District government has owned the land for nearly a year, since it exercised its powers of eminent domain and filed suits to condemn the land.
Owners of 36 of the 70 parcels have agreed to the amount of money the District offered them for their propertis. A jury settled another case and five juries are expected to make condemnation awards on the other parcels early next year, according to city officials.
Under the $98.7-million convention center financing plan approved by Congress, the city is paying $21.4 million to buy the land and is financing that purchase through two existing taxes. A total of $8.8 million has already been collected from the city's hotel room tax -- 80 cents per occupied room per night -- and from half the proceeds of the city's franchise tax surcharge on corporations and unincorporated businesses.
The city is borrowing the remaining $77.3 million from the federal government and will have $6.6 million in annual mortgage payments for 30 years to repay the debt, as well as an estimated $500.000 in annual convention center operating costs, fomr the new tax revenues generated by the extra development near the center.
If the relocations and demolition continue according to schedule, city officials hope to start construction April 1.
While there are almost certain to be earlier tenants in the building, the National Solid Waste Management Association is the first group to book a convention, for May 1985.
The seeming inevitability of the convention center, along with access to nearby Metro subway stations and the lack of developable land west of 15th Street, has also helped to boost sharply the value of property in the old downtown.
Commercial land that sold just a year ago for $50 to $60 a square foot may go today for $100 or more, according to several developers and investors in the area.
Joseph Tashof, a real estate investor, said he bought 11,000 square foot of land at 10th Street and Massachusetts Avenue a year ago at $55 a square foot and sold it three months later for $65, thus turning a quick $100,000 profit after subtracting his expenses.
Tashof recently advertised another parcel, a 16,350-square-foot tract a block form the convention center, for sale at $80 a square foot and said three people are "actively bidding" on it.
Tashof said he is not worried about getting rid of the property. "If I don't sell it for $80 (a square foot) this month," he said. "I'll probaby sell it for $100 two or three months later It's like sitting on gold.
"When the first 50,000 people start going into the center, prices will be $250 to $300" for a square foot of land, he predicted.
Several developers said the heightened interest in land in the old downtown is partly related to the fact that there is little land left on which to construct office buildings in the K Street and Connecticut Avenue corridors.
Though many small businessmen say the proposed convention center development will price small business --and many customers -- out of the area, several developers and real estate investors said they have a feeling downtown Washington is returning to life. The convention center they say, is one tangible example of that.
"The convention center gives everyone more confidence, the lenders, the developers, the (commercial) tenants," said S. Jon Gerstenfeld, who plans to start construction late next year on a $25 million commercial and retail complex on the west side of 14th Street, between New York Avenue and H Street.
"People 2 1/2 years ago hadn't built east of 16th Street," said Robert L. Cohen, part-owner of a new office building under construction on Vermont Avenue, south of Thomas Circle.
"Now the whole area is cleaning up . . . the Pennsylvania Avenue development, the convention center . . . they've given people much more confidence. It's not as speculative anymore," Cohen said.
Even with the new faith in old downtown, several developers are maintaining the skepticism that developer Richard Cohen voiced about his plans for a 500-room hotel adjacent to the convention center.
"I want to make sure the shovel is dug," said real estate investor Jerome Golub, who with various relatives owns six tracts near the convention center. But he is waiting to see some evidence of construction on the center before starting development on his own land.