Gentrification in Overdrive on DC’s 14th Street


WASHINGTON (AP) — The Great Recession and its messy aftermath will go into the record books for many things: jobs lost, household wealth destroyed, foreclosure auctions held. But the epic downturn is also the reason it's so hard to score a table at Le Diplomate, the perpetually packed new French brasserie on 14th Street NW.

The recession has proved to be more of a catalyst than a cataclysm for much of the District of Columbia, and nowhere is that playing out more dramatically than the one-mile stretch of 14th Street from Thomas Circle to Florida Avenue.

The formerly riot-scarred corridor has gone into gentrification overdrive, a boom fueled by investors looking for a safe place to park hundreds of millions of dollars, the relative ease of obtaining a liquor license, and the arrival of thousands of new residents longing to live downtown.

The result: more than 1,200 condos and apartments and 100,000 square feet of retail are being built or have hit the market in just the past nine months. At the same time, at least 25 bars and restaurants have opened or are under construction along 14th Street, adding more than 2,000 seats to the city's dining scene at warp speed.

"This market from an investment perspective has exploded since the downturn," said Aaron Jodka, manager of U.S. market research for CoStar Group, which tracks commercial real estate.

The pace of change has become dizzying even for the likes of Kai Reynolds, a principal with JBG Cos., which is co-developing the massive Louis condo and retail complex rising at 14th and U streets, site of a future Trader Joe's that already has city foodies salivating.

Reynolds lived in the Logan Circle area a decade ago and watched the shift from streetwalkers and used car lots to luxury apartment dwellers and wine bars. But that still did not prepare him for a Tuesday night earlier this month when he found himself standing at 14th and Q, unable to get a seat at Le Diplomate, the huge French eatery built by Philadelphia restaurant mogul Stephen Starr on the former site of a decrepit dry cleaners.

"If you lived there in 2000, 2001, intuitively you knew things were moving in a certain direction," Reynolds, 43, said. "But I never would have guessed there would be 50 restaurants, and that you couldn't get into one on a Tuesday night."

In terms of population, the neighborhood recently surpassed Columbia Heights as the densest area in the city, district officials said. Apartment rents are now averaging about $2,700 a month, according to real estate data firm Delta Associates, making it harder for longtime tenants with less lofty incomes to remain. And the price to buy in the neighborhood keeps rising, with some two-bedroom condos selling for more than $900,000.

"What is going on on 14th Street is fascinating, anomalous and wonderful for the city," said Harriet Tregoning, director of the district's Office of Planning.

The community's new identity as a glittering canyon of glass, steel and $16 cocktails has come to symbolize what some are calling the district's Gilded Age, a milestone not lost on D.C. Council member Jack Evans (D-Ward 2), who chose Le Diplomate as the backdrop for his mayoral campaign kickoff last month.

The acceleration of development along the corridor "didn't happen by chance," Evans said.

During the 1990s, residents struggled to make 14th Street more inviting by pleading for increased police patrols, organizing trash cleanups and snapping photos of johns in an effort to reduce prostitution.

The street's renaissance began decades ago, with the establishment of Studio Theatre (founded in 1978 and expanded in 1987) and other performing arts venues. But the pace of change accelerated after a successful community lobbying effort to lure Whole Foods Market to P Street, between 14th and 15th streets. A steady progression of improvements followed, with carry outs, auto repair garages and pawnshops giving way to sit-down Thai restaurants, fitness studios and window displays of $5,000 sectional sofas.

All of it positioned 14th Street — and, to a lesser extent, H Street NE, Shaw, Navy Yard and other rapidly gentrifying parts of the city — to take advantage of a unique set of conditions created by the recession, according to real estate experts.

Washington, they said, was one of the only major cities in the country to add jobs during the downturn. Battered investors took note and were eager to park their money here.

Veteran commercial real estate broker Andrew McAllister, who has done $1 billion worth of business along 14th, likened the district's post-recession situation to last call on a Friday night.

Were we the "best-looking chick? We were the only chick at the bar," he said.

Washington quickly found itself at the center of a national apartment building boom, spurred by the transformation of millions of former homeowners and would-be home buyers into renters. Many of them experienced unemployment or had their credit ratings decimated by foreclosure. Others couldn't muster the bigger down payments required to obtain mortgage loans.

Washington's status as an oasis of job security, in particular, made it one of the nation's top destinations for the young, highly educated and affluent, putting the city on track to draw more newcomers between 2009 and 2011 than it had during the previous decade.

By the time developers caught on in 2010, a solid decade of gentrification had transformed 14th Street from a place someone would think twice about walking after midnight to a grade A investment opportunity, sought after by pension funds and insurance companies.

Since the recession ended in 2009, $524.2 million worth of apartment building sales have taken place along the 14th Street corridor south of Florida Avenue, said CoStar's Jodka.

In May, JBG sold the District, a luxury apartment complex at 14th and S that is not yet fully leased, to JPMorgan Chase for $76 million, one of the highest prices per unit in the city's history. It has already put the Louis, which won't be finished until next year, up for sale.

In another gentrification milestone, construction began last week on the conversion of the Central Union Mission, a 140-bed homeless shelter at 14th and R, into boutique condos and high-end retail.

Fourteenth Street has always supported bars and restaurants. But liquor license moratoriums in Dupont Circle, Georgetown and Adams Morgan have driven restaurateurs to other parts of the city where it is easier to get permission to serve alcohol, including H Street NE and Barracks Row.

On 14th, the deluge of restaurants opening their doors over the past three months includes Belgian (B Too), Italian (Etto and Ghibellina), Greek (Kapnos) and Mexican (Taqueria Nacional and Diego). Coming soon: American (Ted's Bulletin), Thai/Vietnamese (Doi Moi) and more Italian (M Cafe).

So far, the parade of new places to eat has enjoyed the fervent support of residents such as Tim Christensen, president of the Logan Circle Community Association. He still remembers what it was like for residents to look out their windows and see prostitutes in action.

But even Christensen is starting to worry that the influx of restaurants will drive out other businesses that serve residents. Soaring rents have already forced a couple of galleries to decamp for Northeast Washington.

Emanuel Silberstein, who grew up in Georgetown and moved to Logan Circle 11 years ago, is not sure he likes what he sees.

"I knew I wasn't moving to Hagerstown. I didn't expect it to be the suburbs," he said after a community meeting where he raised concerns about a boutique hotel expansion near his home. "But I fear the balance has really shifted to the commercial interests."

Other residents are starting to chafe at the daily invasion that begins at happy hour and have proposed a liquor license moratorium. That proposal has received a mixed reception, with the three affected advisory neighborhood commissions giving it a thumbs-down.

But Jodka, the commercial real estate analyst, said the angst means that 14th Street is thriving.

"When you start getting complaints from residents about parking, about all the activity impeding their lifestyle, in a way," he said, "it is a good sign."
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Information from: The Washington Post, http://www.washingtonpost.com

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Gentrification in Overdrive on DC's 14th Street

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