The way was cleared this week for demolition of the North Building of Woodward & Lothrop's downtown store when a preservationist group decided not to challenge last week's decision by D.C. officials to allow Quadrangle Development Corp. to tear down the historic building.

The structure at 1013 G St. NW, which also is known as the Palais Royal, is Washington's oldest surviving department store building and an example of the 19th century Chicago School style of commercial architecture.

D.C. officials made their decision despite the building's status as a protected landmark and despite a recommendation from the D.C. Historic Preservation Review Board that it be saved.

The D.C. Preservation League, a private group of preservationists organized to protect downtown historic buildings, decided not to appeal to the courts "because we don't think we would win," said Robert Peck, president of the league.

The mayor's designated agent "failed to carry out the balancing test required by law -- in terms of balancing the special merit of this project against the historic value of the building -- but we feel that it would be too costly to challenge it and that we probably wouldn't win anyway," Peck said.

Quadrangle Development Corp., which developed the National Place office and retail complex on E Street between 13th and 14th streets NW, is working in partnership with Woodies to build a mixed-use project on the block where the Palais Royal sits. The complex will include a 900-room hotel, offices, stores and a 500-car underground parking garage.

As part of the complex, Quadrangle has agreed to rehabilitate into office space the smaller McLachlen Building at 1001 G St., which also has historic merit but is not a designated landmark.

During a hearing on the proposed demolition held last fall, city officials said that the Quadrangle project -- particularly the large hotel that would sit across from the Convention Center -- was "a key land-use objective" for the city.

Under D.C. preservation law, the mayor or his designated agent can grant permission to destroy or alter a historic landmark if the project has special merit, if it meets special aspects of land planning or if its retention would be an economic hardship.

City Planning Office Director Fred L. Greene recommended approval of the demolition permit on the basis that the project was "probably the strongest special-merit case we have had yet." He said the project would provide "significant benefits" to the city by fulfilling specific land-planning objectives, including providing a large parking garage adjacent to the convention center, and by providing a "bridge" between the convention center and the G Street retail core.

In an effort to compromise with Quadrangle, the D.C. Preservation League said it would support demolition of the interior of the old department store if the facade could be saved. The league testified at the hearing that the department store is architecturally and historically significant because it represents the transition between early masonry commercial buildings and the modern skyscrapers of famed Chicago architect Louis Sullivan.

The league also said that the building is important as part of the unbroken streetscape of historic buildings along G Street between 10th and 11th streets.

Robert Gladstone, president of Quadrangle, said at the hearing that his company had tried to find a way to preserve the facade but that because of the building's high and varying room heights, it was "infeasible for viable contemporary use."

"Occupants, to the extent they would have windows, would have to lie down on the floor or stand on ladders to see out the windows," Gladstone said. He added that, because of the need to build the parking garage under the Palais Royal site, his company would have to "reconsider" the hotel in favor of constructing an office building if it were not allowed to demolish the old department store.

"Quadrangle believes in the importance of historic preservation in redeveloping the downtown and in retaining the special character of the downtown area through preservation of historic buildings," Gladstone said, pointing out that his company had preserved the old National Theatre on E Street as part of the National Place complex.

"We believe that our renovation and restoration of the main store building at 11th and F streets NW and now our commitment to the preservation of the McLachlen Building more than amply demonstrate our willingness to do our part to further historic preservation goals in the downtown," said Edwin K. Hoffman, chairman and chief executive officer of Woodies.

"We hope that our downtown store will remain our flagship for another 100 years, but to help assure that, funds needed for the . . . restoration of this landmark, as well as the McLachlen Building, can only be assured with the city's assistance in granting the necessary approvals to redevelop the block as planned," Hoffman said. He said the restoration of the main Woodies store was expected to cost $6 million.

Artis G. Hampshire, director of the office of compliance in the D.C. Department of Consumer and Regulatory Affairs, acted as the mayor's agent on the case. She agreed with Greene and other city officials, saying that the application to demolish the Palais Royal building was "necessary in the public interest." She said the project had special merit as defined by the preservation law and that the developer had demonstrated that reuse of the historic building was impossible.

Peck, of the D.C. Preservation League, said his organization was "disappointed and angered" over Hampshire's decision, and that directors of the league were considering nominating each of the 100 or more historic buildings in the old commercial downtown as individual landmarks. He said such designation would make it harder to obtain permission to tear down the buildings and that a flood of nominations would tie up the historic review process so that proposals such as the demolition of the Palais Royal could not be approved without delay.

"We are in danger of seeing a cloning of K Street all through the old downtown," Peck said. "There are a lot of buildings under development pressure, and while we realize you win some and lose some, we are just not prepared to lose them all."