Coming Soon to NoMa: Life

Gretchen M. Dudney stood one recent sunny afternoon on the roof of a four-story warehouse building she and her partners own at 1111 N. Capitol St. NE, looking at her surroundings as the wind whipped her shoulder-length red hair.

To the south, heading down North Capitol Street, she could clearly see the dome of the U.S. Capitol a few blocks away. To the east, empty patches of asphalt lay among warehouses, lots filled with parked cars and the Greyhound bus station. To the northeast, a crane moved beams to upper floors of an office building under construction without a tenant in place -- risky in a market that is still trying to prove itself, developers and real estate brokers say.

This is NoMa -- north of Massachusetts Avenue NE -- and Dudney, city planners and other developers say the crane is a sign of much more development to come. The city expects a dramatic transformation, with the potential for 17 million square feet of development in coming years. That vision includes a pedestrian-friendly mix of office, residential and first-floor retail space and outdoor cafes along tree-lined streets.

For the past few months, city planners have been working with landowners, residents, community leaders and $200,000 consultants to come up with a plan for how NoMa should look. They expect to release the report this spring.

"We want to create an area that has a mix of uses and doesn't die at 5 at night," said Patricia Zingsheim, associate director of revitalization and design for the city's Office of Planning.

Downtown is built out, Dudney said. "There has to be a place to build new buildings, and this is it."

Dudney, of J Street Development Co. in the District, is working to remake the building at 1111 North Capitol into a $100 million mixed-use complex of offices and retail. The Smithsonian Institution now uses the warehouse building on the block to build exhibits for its museums on the National Mall.

Some developers are partnering with out-of-town investors, flush with cash and eager to get a piece of the Washington real estate market, which is considered more stable than other major metropolitan areas because the federal government is one of the largest tenants.

Developer Charles "Sandy" Wilkes, who said he has been buying land in NoMa since the mid-1980s, thinks the market will now support residential and retail on land he owns at M and Third streets NE instead of just office buildings.

"It's a harbinger of things to come when you see institutional investors helping local developers acquire land and fund pre-development costs," said Wilkes, who is chairman of the Wilkes Co. "This is very different than a pension fund buying an office building in Tysons Corner. This is a powerful signal that NoMa is ready for major development."

NoMa is competing for that sort of development with Near Southeast, the area around the proposed baseball stadium, where developers have rushed to buy land to transform abandoned lots, taxi garages and nightclubs into a 24/7 environment of housing, retail and offices. Which area will develop faster remains to be seen. But some developers -- some of whom have money invested in both areas -- argue that NoMa is more established and has more amenities.

In addition to having the new New York Avenue Metro stop, they point out, NoMa is close to Union Station and has ready access to highways. It also has new large-scale tenants such as the Securities and Exchange Commission, near H and Second streets NE, and the headquarters of the Bureau of Alcohol, Tobacco & Firearms, under construction at New York and Florida Avenues NE.

Near J Street Development's project, a 292,000-square-foot office building is going up at First and M streets NE, on speculation. Stephen A. Goldberg Co. of the District, in partnership with Prudential Financial Inc., started construction last March.

"The timing was right," said Joseph Doran, vice president of development at Goldberg Co., who wanted to build before construction costs rose further. The building, called Capitol Plaza, is expected to be done this fall and there are plans for five more buildings on the site, which once held warehouses.

"It has terrific road access and it's one of the last islands of undeveloped land," Doran said of NoMa. "It's a no-brainer that it's going to develop successfully."

Others are a bit more cautious.

Sam Rose -- who has developed and managed 2 million square feet of office space in NoMa whose tenants include CNN, the Federal Energy Regulatory Commission, associations and other government agencies, said he is waiting for a tenant before he does anything with a parking lot he owns at K and First streets NE near Union Station.

"We've been waiting 15 years," Rose said. "I don't think the market is good enough. I take my hat off to [Goldberg] for going ahead."

Rose, who was one of the first to build offices in NoMa in the 1980s and is jokingly called the "grandfather" of the area remembers when land went for $10 per buildable square foot. Now it sells for about $50 per buildable square foot -- about the same price as in Near Southeast, but about half of the rate for land downtown.

Rose and other developers said they are worried that the recent pullback of several large-scale requests for space by the General Services Administration could be tough for developers in NoMa. The government is often the first to go into developing neighborhoods.

The area was first developed in the 1920s and 1930s, mostly with distribution centers and warehouses. Woodward & Lothrop, the department store chain, once had a distribution center at 131 M St. NE, now known as One NoMa Station, which is being turned into an office building.

In the late 1990s and early 2000, companies such as XM Satellite Radio Holdings Inc. began to move in. Some took warehouses like One NoMa Station, which had been retrofitted as a data center and offered proximity to the fiber-optic lines that run along the railroad tracks, according to Mark Mallus, a first vice president at CB Richard Ellis who has been making deals in the NoMa area for more than a decade. But some buildings, which had attracted telecommunications companies, were vacated after the technology bust, and developers hope to fill them with federal agencies, private companies and associations.

Now is the time to prepare a blueprint of how the area should look, said Ellen M. McCarthy, director of the D.C. Office of Planning.

"We want to get ahead of a lot of the development," she said.

At recent public meetings, neighbors complained about trash and dingy walkways along underpasses.

Some community leaders said they are worried about increased traffic with the proposed new development; preservationists fret that the proposed high-rises will dominate the landscape and overpower nearby row houses.

"We already have traffic problems now," Mark A. Dixon, an Advisory Neighborhood Commission member for the area, said at a recent meeting. "You've got to fix that problem before you talk about bringing in more prospects."

There are other disputes to resolve. Some argue for high ceilings in first-floor retail shops; developers contend that would cost them money and can lead to higher rental rates. They say they are confined by height restrictions and if they eat up too much space on the first floor, they will have fewer floors to lease.

Other developers say they are concerned that the first-floor retail that city planners and residents want could turn away federal agencies that need high security.

Even as the discussion goes on, change is coming.

Jon Han, who runs a banquet hall in Annandale, and a partner, Samantha Lee of Fairfax, plan to open a restaurant with a lounge this fall in a building under renovation at Patterson and First Streets NE. Downtown was too saturated, Han said, so he came here to open Ibiza, named after an island in Spain.

"There's no place around here for people to go and eat except for McDonald's and Wendy's," Han said. "By the time I open this place, some of the new office buildings will be open."

Developer Douglas Jemal said he hired Norman Foster, a London architect, to help design two high-rises totaling 600,000 square feet on the site he owns where the Uline Arena sits in the 200 block of M Street NE, close to the railroad tracks.

Jemal has not decided what they should be -- possibly office buildings because he is wondering if all of the residential coming on the market will be sold -- but he has no qualms about where they should be.

"This is an area where there was nothing going on," Jemal said, "and now there's plenty of things going on."