Construction is set to begin soon on an H Street project that was delayed for two years by an appeal and then sold to a new developer.

Grubb Properties acquired the site of a planned 180-unit development at 1701 H St. NE in October 2019 from Capital City Real Estate. A Grubb Properties spokesperson tells Bisnow it plans to begin construction in the coming months.

The spokesperson said it plans to begin construction in late Q1 or early Q2, and the project would deliver its first residential units in Q3 2022. The plan also calls for 15K SF of retail, which the spokesperson said would deliver in early 2023.

The project will be consistent with Capital City's planned-unit development that the Zoning Commission approved in March 2017, the spokesperson said. The PUD called for 8% of the 180 apartments to be set aside as affordable. WDG Architecture designed the project.

Grubb Properties in December applied for a modification to the PUD, seeking to reduce the number of units with balconies from 98 to 87, explaining that some of the planned balconies created privacy issues. The Zoning Commission voted to approve the modification on Feb. 11.

The site, at the intersection of 17th Street NE and Benning Road, sits on the D.C. Streetcar line and is across the street from the Hechinger Mall, a low-rise retail property that has long been eyed for redevelopment.

The property is in an opportunity zone, and Grubb Properties plans to utilize the program to invest in the project with its own Qualified Opportunity Fund. The company raised $200M across two QOFs in 2019 and 2020, and it told the Charlotte Business Journal on Feb. 5 it plans to launch a third fund this year.

"With our Qualified Opportunity Fund, we were looking for sites in Opportunity Zones to pursue our essential housing strategy," the Grubb Properties spokesperson wrote in an email to Bisnow. "We like to pursue sites that provide alternate transportation options, walkability and amenities, so we were attracted to this area and the energy surrounding H Street NE."

One month after Capital City received its approval, a group filed suit in the D.C. Court of Appeals, making it one of more than a dozen projects that have been appealed over the last four years. The court affirmed the Zoning Commission's approval in June 2019, more than 26 months after the appeal was filed.

Capital City principal Scott Zimmerman told Bisnow in January 2020 that the two-year delay disrupted its timing and played a role in its decision to sell the property.

Charlotte-based Grubb Properties, founded in 1963, made its first D.C.-area investment in May 2018, with the $38.8M acquisition of a Fairfax office building. It paid $11.4M for the H Street site.