Should this long-vacant lot atop Waterfront Metro keep waiting for offices?

The future of one of the most transit-accessible development sites in the District is up for grabs. Two large vacant parcels right atop the Waterfront Metro entrance in Southwest could be developed soon with hundreds of apartments atop retail and small offices, or they could remain empty in hopes of a future large office complex.

Once upon a time, there was a mall

Ten years ago, the 30-acre superblock between 3rd, 6th, I, and M streets in Southwest Waterfront was largely filled with the Waterside Mall, one of DC's least memorable planning failures. This mall didn't just die, it was stillborn: even though it was built with two floors, no retailer ever opened on its second floor. By 1998, when an Urban Land Institute advisory panel visited the mall, even its first floor was half empty. The panel recommended cutting open the superblock, reconnecting 4th Street through to create a new town center for Southwest.

That helped to inspire a Planned Unit Development that was adopted for the superblock in 2002, allowing the mall to be redeveloped as the Waterfront Station we know today — with several phases of offices, shops, and residences bracketing a reopened 4th Street.

The final phase of Waterfront Station covers two now-vacant parcels along M Street, bracketing the Metro entrance. The east parcel was once the Safeway, which was demolished once it moved just to the north, and the west parcel was a parking lot that had fronted the grocer. The original PUD slated two 127 foot tall office buildings for these two lots, totaling 660,000 square feet of space. (That's about the size of the entire Gallery Place mixed-use complex, or the Metropolitan Square office building where GGWash has its offices.)

Last year, developer Forest City Washington asked to amend the PUD to permit buildings meeting the exact same size, height, and setbacks — only with 605 apartments as the primary use, rather than offices. There would still be 41,870 square feet of retail on the ground floor, 38,110 square feet of offices (aimed at local services, like doctors) on the second floor, and 1.15 acres of public open space, including a slightly widened plaza surrounding the Metro entrance and two existing east-west walkways than span the superblock.

The proposed apartment buildings would be slightly smaller than the earlier office proposal: the C-shaped apartment buildings would be set back by 45 feet from existing residential towers to the east and west. At 127 feet high, they would be a bit shorter than the 130 foot tall Lex and Leo apartment buildings next door. In keeping with DC's inclusionary housing laws, 48 (eight percent) of the units would be affordable, including some three-bedroom units.

Maybe it should be offices

The ANC opposes the rezoning, pointing to the original vision for Waterfront Station as an all-day mix of retail, residential, and office uses. Office workers come in when residents leave, helping to balance out the demand for restaurants, parking spaces, and Green Line seats.

The Waterfront Station PUD has already been amended multiple times to switch potential office uses to residential, as a a reuse of the twin office towers (formerly home to the EPA) that bracket the site and for the two parcels at the northwest and northeast corners.

The decision to include office within the PUD made some sense in 2002. Greater Washington's office market had been thriving — the amount of office space had quadrupled over the prior two decades, and a 2002 real estate forecast ranked DC's office market (then being buoyed by post-September 11 outlays) the nation's best bet for property investors. Local residential demand was soft; the census tracts immediately surrounding Waterside Mall lost 15 percent of their population between 1990 and 1998.

There was hope that the expanding Washington Navy Yard might draw associated contractors to nearby offices — which did indeed happen, after the 2008 Capitol Gateway rezoning surrounding the ballpark allowed those contractors to set up there.

Someone certainly thinks that there's demand for new office buildings. Several have been built in Southwest, including 800 Maine and 1000 Maine at the Wharf, L'Enfant Plaza South, and 500 D St. The opening of the Wharf has brought new attention to the area, says Britt Snider, an executive at JBG Smith (owner of the tough-to-love L'Enfant Plaza): “It was a tougher conversation before, when we didn't have the Wharf here… Now, we're going to be much more competitive.”

Or maybe not

On the other hand, 2017 is a very different era than 2002. The region's office market is so sluggish that dozens of office towers sit empty around the region, so choosy tenants have ample opportunities to locate in the liveliest areas.

Offices that need to be close to USDOT, the Navy Yard, or the House of Representatives can choose from many shiny new buildings in the Capitol Riverfront that weren't foreseen in 2002, and in a neighborhood where ballpark crowds help to sustain scores of restaurants. In the future, offices in Southwest could end up in the newly rezoned Southwest EcoDistrict, which has created ample opportunities for new buildings along L'Enfant Promenade — closer to the Mall, the Wharf, and suburban transit.

It's tough for less-prominent locations like Southwest to get noticed. Roughly 25 percent of the Wharf's existing office space remains vacant, even though the Wharf was built with less office space than originally planned. That 342,000 square foot office building at 500 D Street SW still sits empty two years after completion, even though it's within a block of L'Enfant Plaza's seven rail lines.

Like District office buildings on U Street, MLK Avenue, and Minnesota Avenue, little ancillary office demand has resulted from the decision to move offices for District agencies, like the Office of Planning and DCRA, to the two office buildings that did get built at Waterfront Station.

Meanwhile, the residential market in Southwest has skyrocketed. Condos could be had for about $100 per square foot back in 1998, far below the cost of new construction; prices have risen fivefold since then, doubling just since 2010. Just last year, thousands of new renters have moved into surrounding areas.

Older office buildings elsewhere in Southwest, like the old Coast Guard headquarters on Buzzard Point and the Reporters' Building next to L'Enfant Plaza Metro, sit vacant and are being converted to residential. Many planned office buildings have been scrapped in nearby areas, including 1399 Maryland Ave. SW, 1111 New Jersey Ave. SE, Congressional Square, West Half Street, 1000 S. Capitol St. SE, and 1333 M St. SE.

OP's recent Southwest Neighborhood Plan acknowledged this difficulty, stating that this particular site should “have the flexibility to request a modification to the approved PUD to incorporate residential uses.”

Forest City Enterprises, the developer of this site as well as the Yards in Capitol Riverfront, says that its brokers have reached out to dozens of large tenants about moving to the site to no avail. As with Waterfront Station, the Yards has steadily added new apartments over the years, but has not had much luck with landing an anchor office tenant for its its large office parcel above Metro.

DC's Zoning Commission will consider the rezoning at its April meeting.