Housing Complex

Hecht’s Appeal

Photo Slideshow: Hecht Company Warehouse

Hecht Company Warehouse

At a time of when cranes are proliferating across the city, Ivy City can feel like the kid who didn’t get picked.

The diminutive Northeast neighborhood is hemmed in by New York Avenue and the railroad tracks to the north, Mount Olivet Cemetery to the southeast, and Gallaudet University to the southwest. Retail is scarce; the only new businesses generating buzz are a marijuana cultivation center and a gin distillery. Any bustle is largely confined to the crowds spilling out of Love Nightclub on weekends and people lining up outside the homeless shelter at New York Avenue and Fenwick Street. The D.C. government has a large presence in Ivy City, in the form of lots for garbage trucks and school buses—which have led some residents to complain the area has become the city’s “dumping ground.” According to a 2011 survey by the National Community Reinvestment Coalition, the median household income among the neighborhood’s 860 residents is $23,700.

But there’s one development that could change the face of the neighborhood, bringing a huge commercial and retail presence to an area that has neither. If Douglas Development has its way, an Ivy City lot that’s long sat fallow will soon have 500,000 square feet of office space, a grocery store, and a big-box retailer or two—growth that could bring bikers, pedestrians, and, most ambitiously, a streetcar into the neighborhood.

The site in question is the old Hecht Company distribution center at 1401 New York Ave. NE, a six-story Art Deco warehouse alongside a large empty lot and two smaller vacant buildings. The warehouse was built in 1937 to serve Hecht’s department stores but has stood vacant since Macy’s took over the chain in 2006. The only bidder in a 2011 auction, Douglas bought the property for $20 million. The developer’s founder and president, Doug Jemal, says he thinks the property is soon “gonna be worth $200 million,” and that the neighborhood will change with it.

“This could be the Meatpacking District,” Jemal says, standing in the middle of the Hecht’s lot. “This could be the coolest part of town. But this”—he sweeps his arm back toward a city-owned lot full of parked garbage trucks across Okie Street to the south—“is a mistake.”

Jemal and his head of construction, Paul Millstein, think they can help reverse the years of neglect from the city and private developers by bringing people, jobs, and attractions to the Hecht’s site. Millstein compares it to the People’s Building that Douglas bought in NoMa back when the neighborhood was itself a “dumping ground,” an acquisition he says helped jump-start the area’s evolution into the hot office market it is today.

“All ships rise when the tide comes up,” says Jemal.

The promise of the project is such that neighbors are speaking in unusually positive terms about a developer breaking ground in their midst. “The neighborhood is thrilled with it,” says Peta-Gay Lewis, the Advisory Neighborhood Commissioner for Ivy City. “Douglas Development has been working with the community,” says Ivy City resident Andria Swanson, who was a plaintiff in a recent lawsuit to prevent the city from creating more bus parking in the neighborhood.

If the Hecht Warehouse District, as it’s billed, meets Douglas’ lofty ambitions, it could truly have a transformative effect on Ivy City. But only if Douglas can find tenants willing to fill it.

***

The Hecht’s site doesn’t look like much. During a recent visit, the only activity at the center of the site is an excavator that repeatedly picks up and drops I-beams to shake loose dirt. On the margins, the demolition of a historic wall facing New York Avenue is in its final stages, opening up views of the long-hidden lot to the streams of cars passing by. Inside the old warehouse is nothing but rows of support columns in a spectrum of bright colors.

But Douglas has a big vision for the property. Renderings show a new “Hecht Avenue” running from New York to Okie, featuring a plaza with a fountain and lined with retail that includes a supermarket and a cafe. Farther east is a small surface parking lot and a big-box retail space whose name (“Sunnymart”) and logo (a yellow star nearly identical to Walmart’s) in the renderings make clear the kind of retailer Douglas is looking to attract. Another big retail space will be topped with a 1,000-car garage that’s convertible to housing if residential demand or transportation options improve in the future. Jemal says the huge roof of the office building will have a running track, basketball court, dog park, and swimming pool to go along with views of the Capitol and Washington Monument—and foreground views of the railyards, bus parking lots, and traffic jams on New York Avenue.

For the New York Avenue corridor, the big-box component isn’t new: The District’s first Costco recently opened two miles to the northeast, and a Walmart is planned just a few blocks away. The Hecht Warehouse retail could likewise serve shoppers as they commute home to Maryland. But Millstein says he wants to make Hecht’s a “dual-threat site” that caters to both the commuter corridor and the adjacent neighborhood.

The latter “threat” could deliver some of the most intriguing developments, particularly on the transportation front. Millstein says Douglas plans to help bring an off-street bike trail to New York Avenue and hopes the office or retail tenants might chip in to provide a shuttle from the NoMa Metro station. He also says he’s in talks with the Office of Planning and the District Department of Transportation to bring a streetcar spur up from the H Street line along West Virginia Avenue to the Hecht’s site. (Office of Planning Director Harriet Tregoning and a DDOT official familiar with the Hecht’s project both say they haven’t heard anything about a streetcar spur; Millstein says the project may be in too early a stage to allow discussion by city officials.)

A streetcar may be a longshot, and Lewis and Swanson are both skeptical that it’d help Ivy City residents. But up to now, the neighborhood has been taunted by transit it doesn’t benefit from: the Amtrak tracks that box in a neighborhood that lacks easy access to any Metro or intercity rail stations, and the whizzing cars along New York Avenue that rarely have occasion to pull off in Ivy City. Adding destination retail, a community-serving supermarket, greater transportation options, and jobs in the office building—Jemal says there could be up to 5,000 people working there—could change all that. Tregoning says the kind of retail the Hecht’s project might be able to attract would “allow that community to punch above its weight.” And Millstein hopes that it could motivate the city to find other locations for bus and truck parking as those Ivy City lots become more valuable as potential retail or housing development sites.

“With the developers moving into the neighborhood,” says Lewis, “the government is realizing that the area does have some value to it.”

***

But before any of that can happen, Douglas needs to find tenants. “We have no tenants today,” Millstein says. “We are completely spec. That’s how much we believe in this site.”

Behind that confidence, there’s sure to be some unease, given the history of the place. The previous owner, Patriot Equities, likewise hoped to bring a big-box store and other retailers to the site but got nowhere, and eventually the property fell into foreclosure.

Douglas has a few advantages: It spent considerably less on the site than Patriot’s $78.5 million purchase in 2007, Patriot already put some work into the property, and as far as anyone knows, we’re not about to enter a deep recession. Likewise, Millstein says, the arrival of the Costco just off New York Avenue makes the Hecht’s site easier to market. “We’re now an infill site,” he says.

Still, Douglas has a reputation for sitting on properties if the right retail tenants don’t come along—a prospect that could consign the neighborhood to years of purgatory.

The Douglas brass is heading to Las Vegas this weekend to pitch the site to retailers at the annual International Council of Shopping Centers conference. But it’s the office space that could be a tougher sell, as employers increasingly seek spaces near public transit.

Millstein says he’s hoping for a federal government tenant through the General Services Administration—after all, it’s hard to fill 500,000 square feet of office space without a big lead occupant—and that Douglas has hired a consultant with experience in GSA leasing. The consultant advised them that because GSA is “becoming more value-conscious,” the Hecht’s space (at around $25 per square foot, compared to double that downtown) could be attractive, and that in order to compete for a government agency, the transit-starved site would need lots of parking—hence the 1,000-car garage. But even with all the parking, the site could be a tough sell: GSA generally requires leases in the D.C. region to be within half a mile of a Metro station; otherwise, shuttle service must be provided.

Millstein says he would need a tenant to sign up for at least 50,000 square feet to get things started; Douglas would then open up another floor to smaller office users. “We need a 50 to open, and I think we’ll get it,” he says.

As Millstein and I drive back to Douglas’ downtown offices in his monstrous red Ford F-250 truck, he looks around at the pricier but easier-to-market office buildings around us. “You have to work very hard to explain the vision,” he says of the Hecht’s project. “You don’t have to do that here.”

  • DC Guy

    Exciting and potentially catalytic project!

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  • dave b

    the residents are skeptical that a street car will help them? i guess they want just the right amount of development to bring a couple of jobs and a grocery store, but not enough to drive up property values. god forbid am ivy city resident might want to leave icy city for a day

  • PWJ

    "And Millstein hopes that it could motivate the city to find other locations for bus and truck parking as those Ivy City lots become more valuable as potential retail or housing development sites."

    Here lies a huge problem. Where are the "other sites" for things like buses and the city's heavy equipment? It's easy to oppose industrial facilities and uses in neighborhoods, but it's proven nearly impossible to identify solutions and alternatives. Will all of DC's industrial land be outsourced to PG County?

  • Captain Obvious

    I don't recall seeing a SunnyMart in the Meatpacking District...or ANY big box/national retailers for that matter, until well after it became a hellhole of b&t traffic.

  • Typical DC BS

    Great point in the article about Douglas having a reputation for "sitting" on properties. It's only been over a decade since he started assembling the properties across from the convention center and is FINALLY starting to build.

    Don't hold your breath on this one.

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  • http://peachesodell.com Peaches

    I have worried about the old Hecht's warehouse for a while. It is a tenacious, stylish behemouth.
    But then, I worried about the Yale Steam Laundry on New York Ave. for a while too. Though it would have made a swell nightclub, its incarnation as a residence seems to be doing just fine.
    I hope Hecht's becomes another city phoenix, rising up from the old parking lots and ancient concrete. Good luck to them.

  • anonymous

    A MOM's Organic Market is coming to this site.

  • http://www.artomatic.org George Koch

    When renovations are complete lets have an Artomatic their and be out in and out in 8 weeks and bring 100,000 visitors to help market the site.

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