Over 50 attendees gathered in the “Cellar” at the Hecht Warehouse on the evening of May 18. The unique venue, complete with pinball machines, pool tables, SkeeBall, a bridge, fancy bar, canoe, comfy couches and chairs and many other eclectic elements, is one of the common spaces available to tenants of the 340 unit Hecht Warehouse. The development also includes 250,000 square feet of retail and restaurant space and a 1,250 space parking garage.
The warehouse was built between 1937 and 1948; it was acquired by Douglas Development in 2011 and redevelopment began in 2013. In the first panel of the evening, Douglas Jemal, the patriarch of Douglas Development, said that he likes old cars, old buildings, and young women. This Hecht Warehouse building was of special interest to him because of its location on a major route between DC and I-95, and it was unique. Douglas views this building and development in and around Ivy City as the swan song of his career. He is a self-described visionary and buildings “talk to him” to express how they should be developed and utilized. In addition to having a vision about specific buildings, he has the “guts” and resources to commit to a project when he wants to achieve his vision. Douglas Development is developing additional projects in the area that will combine to create a larger residential and retail district in Ivy City.
Douglas subscribes to the Bugsy Siegel view of real estate: if you build it they will come. He has been proven right on the Hecht’s Warehouse, with leasing velocity in the 40 units per month range. The development he has created is authentic and eclectic, taking many elements of the warehouse, listed on the National Register of Historic Places, and incorporating them into the residential units and amenity space. Units range from studios to 3 bedroom units, some with large private terraces, and many with views of courts that were cut out of the building. A unifying element of the building in hallways and courts is the preservation of structural supports from the original warehouse building. One of the most important historic elements that needed to be preserved was the glass block on the exterior of the building. Parking is provided at a 1 to 1 ratio for the apartments and about 50% of tenants have cars. A shuttle bus to the nearest Metro station is offered for residents. One defining element of the hallways in the building are an extensive series of black and white photographs of places from around the world, and each apartment has a panel that allow the apartment numbers to be color customized by each tenant.
The financing of the original big audacious plan for the Warehouse was doable because Douglas is not constrained by the requirements of institutional capital for completing his projects. A relationship lender that has been part of previous development projects completed by Douglas Development provided the primary funding for the work. Douglas’ projects are long term holds, not built to provide investment returns in seven years but continuing to produce a revenue stream for 30, 50 or 100 years.
The first retail space to lease was the MOM’s Organic Food market. Others followed and Douglas Development is curating the leases to provide a shopping experience that will include both local and national operators. The area around the warehouse has character and soul, and many distilleries and other unique uses are attracted to the character and soul of the area.
Rents for the units have exceeded expectations, moving up from the expected $2.70 per square foot into the $3.10 range, and there were 1700 leads for the apartments before the doors opened to tenants. Tenants are buying into the unique experience of the building and its curated elements. The space and amenities provide extensive opportunities to experience the uniqueness of the place, right down to the four parakeets in cages around the main building lobby.
Case study attendees happily gathered at the end of the panels and tours to network, eat and drink, and talk about the building, continuing to experience the unique setting of the building.