Vision + 10 Years of Work = Vibrant New Destination in Washington, DC

[ By Mary Margaret Hiller ]

Gallery place consists of more than one million square feet of office, retail, residential and entertainment space. Shown above is the three-story, all glass public pavilion, featuring 14-screen Regal Cinemas.

In metropolitan Washington, DC, where job growth is one of the highest in the nation -- at about 75,000 new jobs per year -- development strategies have shifted, to cater to the rapidly growing city population. The professional and business services sector has been driving quality job growth and office absorption with continuing strength in recent years. The many new jobs, as well as new residents moving to the area, are keeping demand for housing and office space strong.

With strictly defined jurisdictional lines and height restrictions, how can Washington, DC, grow? Developing projects with a mix of uses, in a walkable community atmosphere, maximizes density and takes advantage of mass transit opportunities. In this vein, Gallery Place is the quintessential urban mixed-use destination. It sits atop the Gallery Place/Chinatown Metro station, where three rail lines intersect and give direct access to hubs like Union Station and Reagan National Airport. The access and location - equidistant to the White House and the U.S. Capitol - are superb, but the mix of uses has been the reason for its positive community impact. Gallery Place consists of more than one million square feet of office, retail, residential and entertainment space. Combined with neighboring MCI Center, it forms one of the largest retail/entertainment venues on the East Coast.

Mixed-use development in an urban setting is complicated, and the lengthy development of Gallery Place was no exception. In a process that began in 1996, Washington, DC-based developers Akridge and Western Development acquired the 2.3 acre site, through a joint venture. With hopes of a major renaissance for the Chinatown neighborhood, Akridge and Western Development promoted its new project as Washington's next great destination. In previous years, however, this area of Washington had been a place of which it was said, "You didn't want to be there at night."

The project met more than its share of challenges, but has emerged as an economic home run for the District of Columbia. It is increasingly a center of activity and commerce in what was once a disparaged downtown neighborhood.

Return to Downtown

First retailer moved into Gallery Place in Summer 2004. Urban Outfitters, among others, joined restaurant and fashion retailers. Still to come: a Bed, Bath & Beyond and a bowling alley/club concept, Lucky Strike Lanes.

Washington, DC, had slowly begun an upturn in 1976, when the Washington Metropolitan Area Transit Authority (WMATA) opened the Metrorail system. Nearly 20 years later, another boon to downtown revitalization came with the announcement of plans for the MCI Center. It was to be a world-class sports and entertainment venue; today it is home to three professional sports teams and used for multiple special events. This was the spark that ignited the "Return to Downtown" trend.

Pundits said the location was wrong for such a prominent venue, but DC developers were right about the area's future success. Construction began in 1995, paving the way for further downtown development. In the wake of the excitement surrounding the MCI Center, the District formed an Interactive Downtown Task Force, chaired by Western Development's Herb Miller, to focus on revitalization of the area.

In 1997, Akridge and Western Development were selected by WMATA as the developers for what would be the anchor project for the Chinatown neighborhood. Site assemblage was difficult and funding challenging.

To help move the process forward, the development team, thick into the planning process but still without the requisite funding, had a groundbreaking party in 1999, an impressive display of confidence in the project. As plans continued on the Gallery Place development, and construction drawings were drafted, another challenge befell the team. Costs had escalated beyond budget. Further disappointment came just two months later when the pre-lease for a 24-screen movie theater, one of the driving forces for the development, was terminated due to changes in the movie theater industry.

Public/Private Partnership
Fortunately, the District of Columbia continued to support the project and offered a $9 million subsidy in December 2000; this was in addition to a commitment of $50 million in tax increment financing (TIF). The project was then redesigned to include the addition of office space and more apartments. The major excavation effort began shortly after Akridge and Western closed on the land purchase from WMATA, with the developers working only on a construction loan. With public support, the promised subsidy from the District came through in Spring 2002. For the first time in DC's history, the sale of TIF bonds was used to finance the revitalization project. Finally, in Summer 2002, institutional partners joined the venture to provide the remaining project financing.

Construction proceeded, but just as Gallery Place found itself comfortably funded, the project's general contractor stumbled into some financial trouble of its own. The construction company filed for Chapter 11 bankruptcy protection in 2003, but a well-prepared development team ensured that construction continued and the project remained on schedule. Supplemental contracting teams joined the development.

Putting the Pieces Together
In addition to the nationally-known destination retailers, Gallery Place includes residential condominiums, an office tower, a parking garage and various carefully considered public spaces - both indoors and outdoors. The residential units, 192 in total, were sold within the first six weeks of offer. There are more than 25 different floor plan variations on seven stories, with luxurious finishes, amenities and common areas. Because there had been so few residential deliveries in the District in the years before The Residences at Gallery Place were offered, it was difficult to project the investment return.

Originally designed as rental apartments, the product was converted to condominiums as housing interest rates dipped and market trends saw more purchasers than renters. Throughout the metropolitan area, but in downtown DC specifically, the residential market has been booming in recent years. Suburbanites are returning to downtown. For Gallery Place developers and the ownership interests, the residential component greatly exceeded expectations.

Office space is more than 50 percent leased, with the majority of that square footage taken by public sector office users, including the DC Courts and some offices of the FBI.

The office tower offers a double core for access throughout the public areas of the retail complex as well as a private office entrance. Rare high ceilings and large floor plates surround a dramatic, light-filled atrium. Nestled between the office tower, the residential units and two stories of retail, are 14 column-free, soundproof movie theatres. The design is complex, with multiple transportation cores and various column lines, requiring sophisticated support systems, all atop a major Metrorail station. Gallery Place also plays an important role in connecting to the neighborhood around it, including the traditional Chinatown shops and restaurants, while still creating its own contained community. Sixth and Seventh Streets to the east and west, respectively, are connected by a grand, all glass, three-story public pavilion. A throughway for pedestrians, called Chinawalk, connects H Street on the north side of the project to the MCI Center, which adjoins the structure on the south side. The interconnectedness flows naturally and makes for an architectural experience not often found in a downtown area and least expected in the center of the Federal City.

Open for Business
Gallery Place's retail leasing, as initially conceived, was focused on urban entertainment. Venues like Disney Quest, Warner Brothers, Niketown, Virgin, Viacom, Jillian's and Planet Hollywood were target retailers until the market began to shift in 2000. By the time Gallery Place opened, the bulk of the retailers turned out to be more classic venues - movies, restaurants and fashion.

The first retailer moved into Gallery Place in Summer 2004. The hip urban sports store, City Sports, opened its doors to eager customers and higher-than-expected sales. Haagen Dazs, Urban Outfitters, and BB&T Bank followed shortly, and all enjoyed their first holiday shopping season at Gallery Place. The Aveda Institute, one of only five of its kind throughout the country, opened some months later, along with three new restaurants and a 50,000-square-foot office tenant.

As anchors, the local favorite and classic American eatery, Clyde's, along with Regal Cinemas - the stadium-seated 14-screen theater - joined Benetton, Ann Taylor Loft, a 20,000-square-foot Washington Sports Club and the much-anticipated restaurant Zengo, owned by Maestro Placido Domingo and popular chef Richard Sandoval. Other retailers still under construction include the District's first Bed, Bath & Beyond and the California-born bowling alley and club concept, Lucky Strike Lanes.