By Leslie A. Braunstein
At a ULI Washington case study presentation on April 30, ULI members heard from the 77H development team and toured the innovative mixed-use development that includes a 75,000 SF urban Wal-Mart store, 10,000 square feet of inline retail space on H Street, and 303 Class A rental apartments. 77H won the Washington Business Journal’s Real Estate Deal of the Year for community impact.
77H was built on a former gravel parking lot located between Gonzaga College High School and the US Government Printing Office. As explained by Grant Ehat of JBGR, the project’s history goes back to when Marion Barry served as Mayor of Washington, DC, whenThe Bennett Group ground leased the site after agreeing to demolish a poorly constructed school on the site..
For the next 20 years, Bennett unsuccessfully pursued GSA leases in order to develop an office building. Finally, Bennett’s broker approached JBGR, which happened to be in discussions with Wal-Mart about building multiple new Wal-Mart stores in Washington’s underserved, “food desert” neighborhoods. Ultimately, Wal-Mart decided to build six stores, of which two – 77H Street and Georgia Avenue – are now open.
But it was not an easy task, noted JBG’s Rafael Muniz. JBG worked with the city government to bifurcate the site and its associated ground lease in order to allow for a phased development of the site.. This move also allowed JBG to open First Street to through traffic. JBG and The Bennett Group still control the ground lease for the undeveloped parcel west of First Street.
JBG and Wal-Mart moved forward with an innovative plan to combine a single-level urban format Wal-Mart store with inline retail space facing H Street and four levels of residential space above the store. Because delivery trucks had to be on the same level as the store – and Eye Street is about 13 feet higher than H Street – Wal-Mart was placed on the second floor, above the H Street shops and parking garage. Store customers entering on H Street ride escalators to reach the Wal-Mart.
The affordability of stick-built construction allowed the developer to spend more on the brick façade, explained Jim Voelzke of MV+A Architects. The design was inspired by the nearby historic buildings, including GPO and St. Aloysius Catholic Church of Gonzaga College High School. Just one part of the building above the podium was built with concrete, allowing for a rooftop pool and two-story fitness center.
With the building completed and ready for occupancy last year, Wal-Mart almost pulled out of the deal when the DC Council passed the Large Retailer Accountability Act. The bill was vetoed by Mayor Vincent Gray on September 12. In December, 2013, the entire project was sold to Clarion Partners for $127 million.
Currently, The Bozzuto Group is leasing the apartments at a steady pace. Bozzuto’s Julie Smith remarked that a majority of the tenants are single and slightly more than half are males. Tenants appreciate the convenience of Wal-Mart where they can buy just about anything – from food to flat-screens.