'Can't Just Rely On Baseball': Developers Near Nats Park Look To Add Wider Range Of Retail
Since 2020, nearly a third of all housing in Washington, D.C., has been built in the 460-acre Capitol Riverfront area, according to the local business improvement district, bringing an ever-growing pool of residents to the District's southeast waterfront.
But as new units lease up, developers are itching to find new types of retail beyond the bars that have proliferated the Ballpark District, ensuring that millennials and incoming residents will stay and invest in the area over the long term.
"You can't just rely on the baseball," Andrew Poncher, senior vice president at Colliers, said at Bisnow's Buzzard Point, Ballpark and Capitol Riverfront CRE Opportunities event on Tuesday. “There's only so many games a year. There's only so many Lady Gaga and Elton John concerts.”
Jason Berry, founder and principal of Knead Hospitality + Design, said the Lady Gaga concert at Nationals Park last week brought his nearby restaurant, The Gatsby, the “busiest Monday we’ve ever had.”
But considering the Nationals are in last place again — and just traded away young superstar Juan Soto — the neighborhood has to diversify its offerings to bring more regular users, Berry said on stage at the event, held at Pearl Street Warehouse on The Wharf.
“The more that we activate that area, the better shape we’re all going to be in,” Berry said. “It’s very drinking-heavy, it’s very bar-centric, so finding opportunities to continue to bring guests to that area throughout the day and throughout the week is going to be where the neighborhood needs to go.”
The Capitol Riverfront area, and in particular Navy Yard, is maturing. At roughly 71% built out, the BID is staying strong through its second economic downturn, noting in its annual report that for every restaurant that’s closed, three have opened, and more than a dozen have opened or plan to open in 2022.
That’s thanks in part to property owners like Brookfield Properties, which Senior Vice President Toby Millman said helped along its retail tenants through the pandemic in the hopes of keeping momentum alive.
Those efforts appear to have paid off, as Brookfield has moved forward with plans at The Yards West and elsewhere to add new retail and residential to the neighborhood. That includes "soft goods" that will supplement the Lululemon and home goods store already included in The Yards' first phase.
Millman said that at The Yards — a 48-acre megaproject where Brookfield expects to add 1,200 residential units in its second phase — the developer is identifying "loss leaders," where the developer can't max out rent, but can bring in a business that generates a new type of customer.
“One of the many values of owning a huge, master-planned development like The Yards is that you have the opportunity to curate,” Millman said. “People like to come to a shopping district, not just the one store, so that is a goal is to create some critical mass with soft goods going forward.”
At The Kelvin, a mixed-use project across N Street from Nationals Park, developer Jair Lynch Real Estate Partners is awaiting the opening of two signature retail tenants: a dual-concept restaurant from Silver Diner and Swingers, a mini-golf concept from Knead.
But Jair Lynch sees a need for reliable daytime foot traffic drivers, and it is pushing to close Half Street to car traffic and operate a farmers market year-round, Director of Investments Anthony Startt said.
Startt said the area has "all of the major food groups" of real estate, with residential, office, hotel and restaurants all in the mix. But he said he wants to see more diversity within those food groups.
"Diversifying the tenant base ... is a huge opportunity," Startt said. "More diversity, more affordable housing, more homeownership are key opportunities."
Developers are learning from the challenges of Navy Yard, as many of the same players have launched projects in a less-developed neighborhood, Buzzard Point.
There, Audi Field provided a "massive shot in the arm" for the neighborhood, Akridge Senior Vice President Adam Gooch said, leading to the developer's partnership with National Real Estate Advisors, Blue Coast Capital and Bridge Investment Group on The Stacks, a 2M SF mixed-use development.
The development is slated to include more than 2,000 residential units and about 80K SF of retail space, much of it oriented toward an internal, pedestrian-only road dubbed The Corso.
"Our expectation is it's going to be a quieter neighborhood that's going to have easy access to these neighborhoods on either side," Gooch said. "It's a very comfortable residential neighborhood, and that's what we're expecting."
Adjacent to Audi Field, Hoffman & Associates is also moving forward with plans on Parcel B, which includes roughly 450 residential units over retail.
The developer is searching retail tenants for the area, Hoffman Senior Vice President of Development Mathew Steenhoek said, adding that it is in negotiations with a 40K SF entertainment user.
"That two-sided retail street is really going to be very important," Steenhoek said. "It was great to see how this can be more than just a stadium."
Steenhoek is also project director for The Wharf, the megaproject being developed by Hoffman and Madison Marquette. Steenhoek said The Channel apartment building, with 501 rental units directly above The Anthem, a 6,000-seat concert venue has attracted tenants eager to live close to the action, much like apartment projects near Nats Park have found success with baseball fans.
“When you're a certain kind of fan, a certain kind of person, a certain age, you're going to really get energy from what the stadium is bringing," Steenhoek said. "I don't want to live there, that's not me, but you should want to live there."
Hoffman's Parcel B, which recently received funding from the District's Housing Production Trust Fund to create 110 affordable senior housing units, will have a slightly different vibe. Developers speaking at the event said that’s preferable, since offering a range of product types and neighborhood feels across the Capitol Riverfront will create a diverse, vibrant community.
Startt said executives at Jair Lynch sometimes joke internally about the number of SEC and Big 10 college flags they can see when stepping out of The Kelvin or eNvy condominiums and looking down the street, but those flags represent a sign that Capitol Riverfront is becoming a destination.
“Just walking around the Yards, I see tons of strollers there,” Startt said. “You are seeing people stay in the neighborhood when you originally might have thought they'd move out.”
Going forward, developers said they hope to see more condominiums or other opportunities for homeownership in the area, especially as it becomes increasingly important to millennials, who have been the primary customers in the neighborhood's thousands of new apartments.
"We don't focus a lot on the demographics we're trying to attract,” Millman said. “We're trying to create the best place possible that's attractive to the most number of people possible across all demographics, and if you get that right you’re going to attract a lot of people to the neighborhood.”