Temporary Users Take Advantage Of D.C. Development Stall — But May Stay Longer Than Expected

With the pandemic-era construction boom in the rearview mirror, developers in the nation’s capital have hit the brakes. Construction starts in D.C. last year totaled 6.1M SF — the least since 2009.

The slow development environment has meant more sites are sitting vacant for longer. But rather than leaving parcels to languish, developers are increasingly activating these sites, installing bars, museums and sports facilities to draw traffic and provide community amenities.

“When the development cycle turns off and you have future phases of development, it's better to put something that's active on your site and create some additional energy for the existing property that's there,” MRP principal Zach Wade told Bisnow. 

MRP has done several deals for temporary activations on development sites, including a pickleball and roller-skating venue, outdoor bars and an art exhibition hub. 

These deals are structured differently than traditional leases. Instead of a predetermined rent, operators often pay a portion of their proceeds to landlords — Wade said he's seen between 8% and 15%. This gives landlords more control over the site so they can scrap the temporary concept and start their planned development when the opportunity arises. 

“Your rent is expected to be less, which is a big goal of a concept like this,” said John Groth, co-owner of the Metrobar venue that opened at MRP's Bryant Street development. “And in order to achieve that, the landlord is going to end up with more flexibility in some ways.”

While landlords have the ability to shutter the concepts and start development, some of the prominent temporary activations from the last decade have turned out to be not so temporary.

Concepts like The Bullpen near Nationals Park, Wunder Garten in NoMa and Continental Beer Garden in Rosslyn have all been operating on development sites for more than half a dozen years.

The site of The Bullpen, a popular pregame spot for Nationals fans since it opened in 2009, sold in 2022 from one developer to another, but new owner Skanska has yet to close it for construction. Wunder Garten was supposed to be a five-month pop-up in 2015 but is still open. Continental Beer Garden opened in 2017 under property owner JBG Cos. and is still open under its new owner, Penzance.  

If history is a clue, and given the challenges in the development landscape today, the latest additions to the market are likely to follow that trajectory. 

The partnership behind Metrobar renewed its lease with a five-year extension option in May, Groth told Bisnow. 

“We were not expecting it to be 10 years,” he said. 

Anna Valero, who opened the Kraken Kourts & Skates pickleball and roller-skating venue at Bryant Street, said the trend of temporary uses opening on development sites started before the pandemic. 

“But I think that the construction dilemmas have just exacerbated it, and we're definitely seeing more of those opportunities coming online, and I think more of a willingness from landlords to be creative about how spaces are used,” Valero said.

This summer, JBG Smith put in a beach volleyball facility on one of its multifamily development sites in National Landing. The REIT looked at a variety of activation options for its parcel at 223 23rd St., which it intends to develop into an apartment building, before it settled on a partnership with Volo Sports.

The social sports organization offered a “relatively low-cost execution,” JBG Senior Vice President of Real Estate Development Matt Ginivan said, adding “sand is pretty forgiving as a base.”

More importantly, he said, Volo had a “proven track record” and was able to lay out the demand and a business plan that the owner knew would work.

JBG's deal with Volo allows it to begin the development whenever market conditions allow, after giving “proper notice” to the operator. But given where economic conditions are today, that could take awhile. 

“We're currently in a market where the construction costs and interest rates remain really elevated, and that's making it really challenging to proceed with new construction,” Ginivan said.

Volo has done five other activations of development sites nationwide, and it has plans for another in the District, on a Buzzard Point site owned by Steuart Investment Co. 

The plan for that site near Audi Field is to open six pickleball and three beach volleyball courts and a shipping container bar. On game and concert days, Volo plans to shutter the sports activities and host a full-scale bar at the venue. 

The plan to use the site as a bar with a 5,000-person capacity drew ire from local advisory neighborhood commissioners at its presentation this month. Volo Sports Vice President of Strategic Growth Greg Sileo said the organization is working with the ANC and the final count will be adjusted down. 

“We've heard loud and clear from the community what their concerns are around what those activations look like, and that's what we're sort of talking through now with them, to figure out the best way to reconcile that and have something that's going to be great for the community,” he said.

Steuart didn't respond to Bisnow’s request for comment.

Temporary-use operator Suite Nation has its Sandlot entertainment and food concept coming to two more development sites, one next to the former Senator Theatre in Northeast and one in Shaw near the Howard University campus.

Suite Nation owner Ian Callender has been using the development site activation model for years.

He has opened six Sandlot concepts on development sites across the D.C. area and has three more planned, including its first that isn't on a development site. 

Callender, who was named Washingtonian of the Year in 2022, sets up the locations with very little build-out, with picnic tables and storage containers. Entertainment and food truck operators then come to activate the site.

He said that as more temporary activations have emerged across the city, he has seen owners increasingly giving credence to the option as they await development.

“I think a part of that is the development industry realizing that there are groups and organizations that are willing to make investments on their real estate ahead of their initial intent,” he said.

MRP’s Bryant Street development in Northeast has three different activations at the sites of its future phases, all of which opened over the last few years. 

While the remainder of the site is in limbo — the developer is awaiting a market turn — the Kraken Kourts and Metrobar venues as well as an exhibition site are drawing customers from around the city.

The opportunity to activate a phased development site like MRP’s was exactly what the owners of what would become Metrobar were looking for in 2019 when they had the idea to open an outdoor bar anchored by a Metro car. 

Partners Groth and Jesse Rauch met with business improvement districts and main street organizations in the city to compile a list of all the potential lots with proximity to Metro stations across the city for their potential site.

“Our proposal was to go to multisite developments, multiparcel developments and say, ‘Which one is going to be last?’ And we will open our bar in that location,” Groth said. “So as you have existing buildings with existing residents moving in and you have other retail that's being built and opened, we can help draw people, create a sense of place there.” 

He found MRP’s site fit that vision. The burgeoning neighborhood had two new apartment buildings’ worth of residents along with a brand-new food hall and Alamo Drafthouse. 

The partners purchased a decommissioned 5000-series Metro car from WMATA, installed an outdoor bar and seating, and opened the space in the summer of 2021.

At the site's former Forman Mills department store, Kraken Kourts & Skates has opened 14 pickleball courts, a roller rink, cabanas and a bar.

Kraken's Valero said she had been looking to test the market with a social pickleball concept in the District, but that kind of space is cost-prohibitive in a dense urban landscape like D.C. 

MRP approached her with the 70K SF former Forman Mills space with the need for a temporary use but wasn’t sure what it could be. 

“This was a really unique opportunity for us to partner with [MRP] to take what became a really hot topic during Covid and a way for people to gather and socialize and build community, and really be able to utilize a space that large in a unique way,” Valero said.

The income from the operations isn’t the driving factor behind these activations, MRP's Wade said. They make some money, but their value extends far beyond the four corners of the site. 

They serve to draw the community to neighborhoods where the owners of the development sites often have other properties, providing amenities for those residents or office tenants and drawing in new traffic.

“We are trying to kind of generate the vibrancy on these sites next to the properties that we own and the residents that we have. We are trying to bring an additional amenity to them and also draw different customers that haven't experienced the area,” Wade said. 

These activations have several parameters. They need to be cheap to build, and the developer has to know the site will be vacant for a certain period. 

Ginivan said if JBG Smith knew it was going to start construction in nine months, it wouldn’t have built out Volo. 

Volo’s Sileo said if it was a year and a half, it wouldn’t have been worth it, but the company’s “sweet spot” for an activation is three to five years. 

Metrobar’s Groth said the company was looking for at least three years, but preferably more than that.  

Even though these activations are temporary, their usefulness could extend beyond just the predevelopment time frame, operators and developers said. The temporary uses could provide signals as to what the market is looking for. 

“You're able to bring visibility to the site, but also you're really able to work with people who might want to be a future tenant in your building,” said Mark Carroll, Skanska USA's executive vice president of commercial development in the D.C. region.

Since purchasing the Bullpen site in 2022, Skanska has been exploring the best uses for it and evaluating market conditions to decide when moving forward with a development would make sense, Carroll said. 

“We probably won't do anything with that for at least another year or two,” he said. “We would want to pull together what our vision is for the site and then start working on design concepts.”

In whatever Skanska ends up building at the Bullpen site, there will be retail, he said, and the interim use has provided a testing ground for what could be located there. 

Both owners of Metrobar and Kraken said they would hope to be part of the longer-term vision at Bryant Street, even after their parcels are developed.

“I see a lot of these as really great ways to create almost like little labs of retail innovation over short term, but that really have long-term implications,” Valero said.