Property Group Partners has acquired the air rights above a three-block long recessed portion of the Center Leg Freeway from the District.
Formerly the Louis Dreyfus Property Group, New York City-based Property Group Partners announced Tuesday that it has closed a deal with the D.C. government for the fee interest of the three blocks between Massachusetts Avenue NW to the north and E Street to the south.
Terms of the arrangement were not disclosed.
Update: Property Group Partners paid $11 million at closing and will make additional payments totaling as much as $109 million, the Washington Business Journal has learned.
“We’re closed. We own the air and land and we’re moving forward,” said Jeffrey Sussman, PGP president.
The 2.2 million-square-foot Capitol Crossing will feature five buildings — one 150-unit residential building and four 130-foot office towers, plus more than 1,100 parking spaces and 63,000 square feet of ground floor retail — on a new deck atop the freeway.
Work on the platform is expected to kick off in the third quarter of 2013. The project will be constructed in phases, with the north pad, all office, to be built first.
The 247,000-square-foot, 7-acre footprint is the “largest contiguous undeveloped site remaining in Downtown Washington,” according to Property Group Partners. The project is expected to reconnect the eastern edge of downtown Washington as it extends F and G streets NW over the freeway.
Few planned projects in the District have generated as much skepticism as Capitol Crossing, not only because D.C. and PGP needed five-plus years to complete their negotiations, but also because it’s difficult to wrap your head around the decking concept. Sussman said people “really get the hang of it” when they visit PGP’s Capitol Crossing marketing room at its D.C. office, 1101 New York Ave. NW.
“I think we’ve established ourselves as credible,” Sussman said. “And when they come and look, they understand we’re not just building a bridge and stacking buildings on top of it.”
The Washington Business Journal reported in March that PGP was in early talks with Georgetown University to establish a school presence at Capitol Crossing. Sussman said Tuesday that those talks are “constant,” but they have “not progressed to any point.” Cassidy Turley is Property Group Partners’ broker.
The developer lined up an equity investor in October 2011 to finance a large portion of the platform. The Federal Highway Administration and the D.C. Zoning Commission also have OK’d the project.
The idea of decking over Interstate 395 dates to 1989, when then-Mayor Marion Barry awarded rights to develop on top of the highway to Conrad Monts and his Washington Development Group. That deal ended in litigation and a healthy payout to Monts, who died in 2009. Louis Dreyfus resurrected the project in 2007.
Capitol Crossing’s planned buildings:
– 250 Massachusetts Ave. (office): 546,740 square feet
– 200 Massachusetts Ave. (office): 406,996 square feet
– 600 Second St. (residential): 180,384 square feet
– 201 F St.: (office): 297,311 square feet
– 200 F St.: (office): 685,430 square feet