Douglas Jemal On Developing New York Avenue, Leasing To WeWork And His Next Move
The neighborhood along New York Avenue in Northeast D.C. has experienced a renaissance since Douglas Development completed its conversion of the Hecht Warehouse building into apartments and retail in 2015. Douglas' properties in the neighborhood, many of them former industrial buildings, have welcomed a host of new retailers such as breweries, distilleries, an urban winery, several restaurants, a Planet Fitness, a Nike store, Mom's Organic Market and, most recently, a Target.
Jemal, the founder and president of Douglas Development, is now setting his sights on the next major project he has planned for the New York Avenue corridor: New City DC. The site, a 16-acre triangle bounded by New York Avenue, Montana Avenue and Bladensburg Road, has sat vacant for over a decade as multiple developers have eyed potential projects.
Douglas completed its acquisition of the site in 2017, and now Jemal tells Bisnow he is preparing to break ground within the next 12 months.
The project is ultimately planned to include 2,380 residential units, 178K SF of office and 338K SF of retail, built in multiple phases, according to Douglas Development's website. The developer hasn't signed any pre-leases with retail anchors, but Jemal said he is not waiting for tenants before moving forward.
"It all starts from something," Jemal told Bisnow. "First you’ve got to build it, and then they will come. I believe in the Bugsy Siegel model of Las Vegas, build it and they will come. I don’t believe in selling a piece of paper."
Jemal, who will speak Dec. 5 at Bisnow's Welcome to New York Avenue event, sat down with Bisnow Monday in his Chinatown office. The office displays Jemal's distinct style, lined with historical pictures, various collector's items and the hardest attraction to miss: a parrot in Jemal's office, named Eagle, who he has trained to say "F**k you" to his guests. Below is Jemal's interview with Bisnow, lightly edited for clarity.
Bisnow: You have a large concentration of properties along New York Avenue. When did you begin acquiring these properties?
Jemal: I started with the People’s Drug Store site at 64 New York Ave., which is New York and Florida that intersection, probably 25 years ago.
Bisnow: What did New York Avenue look like 25 years ago?
Jemal: It was an abandoned industrial area. It was a gateway to the city and it was just disregarded. There was nothing there. Everybody was coming into the city, it was your first impression of what you get of Washington, D.C., and it wasn’t a good one.
Bisnow: Did you make most of your New York Avenue acquisitions around that time 25 years ago or have many of them been more recently?
Jemal: No, there have been intervals. That was probably 25 years ago and then the Hecht Co., which was a big one, was probably seven or eight years ago.
Bisnow: Right, I saw you acquired that in 2011. It was a huge warehouse building and you adapted it into apartments. When you first saw that building, what appealed to you?
Jemal: Challenges. I like challenges.
Bisnow: What about the building was challenging?
Jemal: First you’ve got to understand it. I had no rhyme nor reason when I first bought it what I was going to do with it other than I knew I was going to do something with it. It took me about two years to figure out what I wanted to do and we finally figured it out. We cut out the doughnut in the center of the building because they were huge floor plates and we created a sense of a city.
Bisnow: You have all of these other properties in Ivy City around it that you have leased to breweries and distilleries and restaurants, Planet Fitness, Target and a wide variety of retail. How did you go about leasing up that retail space? What was your strategy?
Jemal: You know, the strategy is to create a sense of place, and it was large enough to do that. The Hecht District, which I like to call it, was large enough to fill in all the in-betweens to create your own environment. If you just bought one little building over there you couldn’t make that difference, but when you had one big building like the Hecht property you could make that difference. From there we went on to New City DC, which will probably start in the next 12 months, residential and retail there as well, creating a new part of the city.
Bisnow: That was actually going to be one of my next questions to ask about the latest on New City DC.
Jemal: I jumped the gun on you.
Bisnow: It’s OK. So you said within the next 12 months you plan to begin construction?
Bisnow: What will that first phase look like?
Jemal: It will be residential and retail. It will be an extension of what the Target is right now, that basically established it, solidified that it’s an area for business. Target is doing very well. It all starts from something. First you’ve got to build it and then they will come. I believe in the Bugsy Siegel model of Las Vegas, build it and they will come. I don’t believe in selling a piece of paper.
Bisnow: Have you signed any leases for the retail space yet? Do you have any anchor tenants lined up?
Jemal: None whatsoever. Like I said, build it and they will come. First you have to establish the beachhead.
Bisnow: What do you envision the retail mix will look like? Do you think it will be similar to what you’ve done in Ivy City?
Jemal: It will be hip retail, entertainment-related retail.
Bisnow: Are you working on the finance for that project? Do you have any loans you’re setting up?
Bisnow: Can you give any details on that?
Jemal: Of course not.
Bisnow: Didn’t think so. So one of the things that’s interesting about this area is it’s sort of bucking the trend of everything going up right next to the Metro stations. You don’t have a Metro station in Ivy City but you’ve done very well about bringing in retailers and residents and making a hip place. How have you managed to do that without needing the Metro station as a draw?
Jemal: First of all, we have a bus that leaves there every 15 minutes that takes you to the Metro. That’s one. And No. 2 is Uber. People don’t want a car, and they’d rather take Uber than take Metro. I’m sure you’re an Uber customer.
Bisnow: I am.
Jemal: So am I.
Bisnow: So you expect that model with Uber is going to help you with New City DC as well?
Jemal: Absolutely. New City DC is close enough to the Maryland line where you’re going to draw from Bowie and College Park and people that live in the suburbs that want to live in the city. I think it’s perfect. It’s in a good spot.
Bisnow: You’ve also got quite a bit of vehicular traffic, it’s a pretty busy intersection, right?
Jemal: Seventy-five thousand cars a day going east. 75,000 cars a day going west. It’s pretty busy. It’s a major intersection. You have 25,000 cars a day on Bladensburg Road. You have 13,000 cars a day on Montana Avenue. So it’s heavily trafficked. And it really is a center point.
Bisnow: You described New York Avenue as a gateway to the city. So people coming in from the north, that’s the first thing they see when they enter D.C. is what’s along New York Avenue. What do you want them to see?
Jemal: I think it should be a beautiful entranceway, no different than what they’re doing in Southeast with the Frederick Douglass Bridge coming from Andrews Air Force Base. These are gateways into the city. It’s only the capital of the free world.
Bisnow: So do you see your development as part of that gateway?
Jemal: It’s going to enhance the streetscapes. Absolutely.
Bisnow: Are there improvements planned for the streetscape and the sidewalks and bike lanes and those types of things?
Jemal: There are master plans for bike lanes and streetscapes on New York Avenue. That’s been in the works for quite a while, and I think eventually it’s going to happen.
Bisnow: You own some other New York Avenue properties closer to Maryland that appear to be warehouses. Do you have any other developments planned in the pipeline beyond New City DC on any of those sites?
Jemal: That’s probably as far east as we’re going to go. We do have the premium building, we call it, which has the bus guy in there and it’s industrial warehouse space. It’s a stabilized asset. It has that road in between it when you’re coming down New York Avenue so it doesn’t really have great access. It is what it is.
Bisnow: So you’re not planning any development there at all?
Jemal: No. New City is big enough.
Bisnow: Do you have anything else beyond New City you’re looking at, whether in Northeast or other parts of the city?
Jemal: I’m always looking.
Bisnow: Do you consider yourself an active buyer? Are you going around looking at sites you can buy? I know you obviously did that in the past and amassed quite a portfolio of properties. Are you still doing that?
Jemal: Trust me, I’m not sleeping.
Bisnow: You keep busy?
Jemal: I keep busy.
Bisnow: I know you recently completed 655 New York Ave. NW in partnership with Brookfield. That was a pretty big project.
Jemal: It’s a small building. It’s 1M gross SF. It’s not big.
Bisnow: That building has delivered now, right?
Jemal: Yes, it has.
Bisnow: I know there were some complications with The Advisory Board spinning off EAB and all of that. Did that affect the occupancy of the building?
Jemal: Not really. Advisory Board is the one that signed the leases, and Advisory Board is the one that if they need less space, they’re subleasing it.
Bisnow: I know you have WeWork as a tenant in a couple other D.C. buildings. What’s your take on everything that’s happened with WeWork in the last few months?
Jemal: My take on the whole thing is it’s amazing. I don’t know the answer. It’s too complicated for me. But we’ll see how the dust settles.
Bisnow: But you’re still confident with WeWork as a tenant?
Jemal: They’re a tenant at the present time. They’ve always paid the rent. They’ve done everything they said they were going to do. So I really have nothing bad to say about them.
Bisnow: You have obviously watched quite a transformation in D.C. over the span of your career. What do you see in terms of New York Avenue’s future when you look 10 to 20 years out? What do you think this gateway to the city is going to look and feel like for future generations?
Jemal: I think it’s going to be a great gateway. I think it’s going to be occupied with a lot of different venues. Retail, office and housing. I see it becoming a very viable neighborhood. It’s an offshoot of Union Market, which you turn off of New York Avenue to Florida and you’re right at Union Market, and you can see what’s going on over there. So I think that New York Avenue corridor has that same potential.
Bisnow: So you see those neighborhoods meshing and connecting together going from Union Market to Ivy City?
Jemal: Absolutely. It’s a part of town that there was nothing going on for a long, long time, for 50 years that I remember. So it’s good to see people moving there, living there, spending money there and creating a tax base there, and a population.
Bisnow: Mayor Bowser is pushing to develop more housing across the city with a goal of 36,000 units. They’re really trying to add residential development where the city can support it. Do you see New York Avenue playing a significant role in that?
Jemal: I see everything playing a role in that. Not just New York Avenue. It’s everywhere.
Bisnow: But given that New York Avenue is such a busy corridor with undeveloped sites, there’s a lot of opportunity to add housing there, right?
Jemal: That’s why I bought it.
Jemal: Shit man, you know my portfolio.
Bisnow: I do. I also live in Northeast in Brookland, so I know the area well.
Jemal: That’s a perfect example of everything you’re asking me, Brookland and Northeast. That’s good to see.
Bisnow: You’re pretty heavily invested in Northeast as a quadrant. Do you see that as where D.C.'s development is moving, in that direction?
Jemal: You’re just limited to what you can have in this part of town, which is Chinatown, and then you have the West End. It’s got to go out. It’s got to go someplace. If it’s growing, it’s going some place. It’s no different than what happened at The Wharf and Southeast. I don’t even recognize where I go when I go there. Every day there’s something else going on. And the same thing in Northeast. You drive down H Street, K Street, you see all these buildings you just don’t recognize. So it’s changed.
Bisnow: Do you see the development pushing East of the River anytime soon? Have you looked at anything in Ward 7 and Ward 8?
Jemal: I have some property in Ward 7 and Ward 8, not much, but I do have some. It’s going to go there.
Bisnow: But is it going to take time?
Jemal: It’s going to take a developer that wants to put a shovel in the ground and start developing it. That’s what makes it happen.
Bisnow: I mean, you took that risk with Ivy City, you were really the lead developer in that area.
Jemal: Hey man, I took risks on everything I did. When I bought Uline Arena, it was a trash station. When I bought Woody’s there wasn’t a dead pigeon on the street. When I did the Spy Museum, all there was was broken windows around there. I’ve taken risks on everything I’ve done. You put it back together again, fix it, develop it properly and you’ll do well with it. That’s the development business. That’s what we do. Time again, time again, time again, that’s what we do. I feel like a Humpty Dumpty doctor.
Bisnow: You’ve been very successful at that, obviously.
Jemal: Because I work hard at it. I understand it. And if you think you’re successful you’re going to get your ass kicked. So never get high on your own supply.
Bisnow: So you’re never satisfied with what you’ve done?
Jemal: You earn your stripes every day. You’re as good as the last check you wrote.