Capitals, Wizards To Move To Virginia, Anchor Massive New Entertainment District

D.C.’s NHL and NBA teams have reached a deal to move from the District to Virginia — just a 6-mile trip southwest, but one that has historic implications.

Ted Leonsis, owner of the Washington Wizards and Capitals, announced Wednesday morning the teams plan to vacate the 26-year-old Capital One Arena in downtown D.C. in favor of a $2B mixed-use entertainment district planned in Alexandria’s Potomac Yard neighborhood.

The plan, still pending final approval by the Virginia General Assembly, would have the teams move into the new arena in 2028, according to a release from Monumental Sports & Entertainment, the entity that owns the teams.  

The agreement would be a public-private partnership between Monumental, the commonwealth of Virginia, the city of Alexandria and the developer that controls the Potomac Yard property, JBG Smith. The Capitals and Wizards would be the first franchises in the four major North American pro sports leagues in Virginia's history. It is the most populous state in the U.S. without one.

Leonsis — speaking at a press conference in Potomac Yard Wednesday morning along with Virginia Gov. Glenn Youngkin, JBG Smith CEO Matt Kelly, Sen. Mark Warner and local officials — said he was drawn to the neighborhood’s “iconic” real estate.

“I got goosebumps when I came here a week ago looking out at all the expansion capabilities on water, with the airport across the street and a brand-new Metro stop,” Leonsis said. “That primordial set of ingredients can really create what we think we can build — really the exemplar new experience — and we’ll be very on trend because this is what we’ll have to do in professional sports.”

The planned 9M SF development is set to include an arena for the Capitals and Wizards, Monumental’s global corporate headquarters, a Monumental Sports Network studio, a Wizards practice facility and an esports facility, along with surrounding retail, restaurants, and conference and community gathering spaces.

The project will include an investment from Monumental of over $400M, Youngkin told reporters after the event. He said Virginia isn’t spending taxpayer money upfront but is providing financing through bonds issued by a new Virginia Sports and Entertainment Authority — approved by a group of lawmakers Monday evening — that will be paid back in revenues generated by the project.

Alexandria also plans to invest $56M, matched by a $56M investment from Monumental, to build a 6,000-seat concert venue and parking on the site.

“Companies are coming, businesses are coming, and with the opening of this new sports and entertainment district, we will christen the next chapter of groundbreaking innovation in the commonwealth,” Youngkin, who served as co-CEO of the Carlyle Group before running for governor in 2021, said at the press conference. 

Monumental also said it aims to update D.C.’s Capital One Arena in downtown D.C., creating a multipurpose facility that could hold 10,000 to 20,000 people. It would host entertainment events including concerts and comedy shows, along with college sports such as NCAA tournament games — but not a major professional sports franchise. 

“We can be an economic engine. We can employ all of the people who work at the arena in Washington, D.C.,” Leonsis said at the press conference. “We can create new jobs and a new tax base out here and really work to make the promise of Virginia and what our governor spoke about, but also we have a responsibility to do a great job and continue to invest in Washington, D.C. Hold me accountable. I feel that that is not just words.”

The relocation would be to a rapidly developing section of Northern Virginia: Virginia Tech is in the process of building a $1B innovation campus in Potomac Yard, and a new Inova Health System facility is projected to open in 2024. A new infill Metro station opened in the area in May, one stop south of Ronald Reagan Washington National Airport.

The neighborhood also benefits from its proximity 2 miles south of Amazon HQ2, which this year delivered its four-building Phase 1, amounting to 1.2M SF of new office and retail in the area, which was rebranded as National Landing upon the e-commerce giant's arrival.

“A stadium and concert venue in Potomac Yard surrounded by new mixed-use development that leverages the Metro station is a major win for the National Landing area, delivering long-sought after cultural and entertainment anchors while strengthening an already fast-transforming innovation corridor and community,” National Landing Business Improvement District President Tracy Sayegh Gabriel said in a statement. 

The sentiment wasn’t what some Northern Virginia residents wanted to hear, as a group of protesters gathered outside the tented venue where the announcement was held. Exclamations from the protesters — including shouts of “We don’t want it” — could be heard throughout the event. 

Sonia Herman, a Del Ray resident sporting a sign that read “Houses Not Hockey,” said she would rather see mixed-use development with residential and commercial uses surrounding the Metro. 

Herman said she didn’t agree with all of the “NIMBY” protesters who she gathered with outside, saying she identifies as a “YIMBY,” but she said she isn't in favor of the type of development Leonsis and JBG Smith are planning to bring. 

“I think that this is a very poorly thought out plan that is not meeting the neighborhood’s needs,” she told Bisnow after the event. “It is creating a billionaire's playground, and [Leonsis will] use it up and leave in a couple of years anyway. He's done it to D.C.; he'll do it to us.”

JBG Smith, which developed Amazon's offices and is the dominant landowner in the area, would be the one to build the arena-anchored development. The developer received approval to develop over 1M SF across 19 acres in October 2020, though it has yet to break ground.

A site plan released along with the announcement shows the sports arena being built on an unoccupied 12-acre site next to the Metro station, with future-mixed use development planned on the site of a Target-anchored shopping center. 

“We’ll finally have the demand drivers in place to fuel the development of desperately needed new housing, new street retail, new office space, new hotels and the tens of thousands of jobs and tax revenues that will come with them,” JBG Smith CEO Matt Kelly said at the press conference. “This is not just about sports and entertainment. It is about technology, media, communications, academia and much, much more. It is about growth for decades into the future.”

Though the site is next to the newly opened Metro station, officials said there is still work to do on transportation infrastructure in an area of Northern Virginia that is heavily car-dependent.

“We need some additional plans on transportation,” said Warner, pointing to Bipartisan Infrastructure Law funds the state plans to use on improvements to the Virginia Railway Express, Metro and roads.

“There will also be bike paths, walking, rapid bus,” he said. “All of this will have to come together in a way that makes sense.”

Meanwhile, the move marks a major blow for D.C.'s economy, taking away a primary economic driver of its downtown area. 

Mayor Muriel Bowser made an eleventh-hour effort to keep the teams in the District Tuesday evening. She and D.C. Council Chair Phil Mendelson released a bill, which they said was fully backed by the council, to put up $500M over three years to overhaul the arena. Leonsis had reportedly requested $600M from the city for a $800M renovation. 

“This proposal represents our best and final offer and is the next step in partnering with Monumental Sports to breathe new life and vibrancy into the neighborhood and to keep the Washington Wizards and the Washington Capitals where they belong — in Washington, DC,” Bowser said in a release Tuesday evening. 

Local real estate industry leaders Bisnow spoke with Tuesday before the news was officially announced said losing the teams would be devastating for the economic health of the area.

The 20,000-seat arena has been the economic driver for D.C.’s Chinatown and Gallery Place neighborhood — bringing restaurants, bars, cultural attractions and foot traffic to the downtown neighborhood since it opened its doors in 1997. 

The downtown area has already struggled this year with record-high office vacancies, a string of retail closures and concerns about rising crime in the neighborhood. Real estate executives said they expect the departure of the Wizards and Capitals would lead some restaurants and retailers to go out of business, reduce hotel demand and further depress commercial property values. 

“Any commercial use will be in serious trouble without the traffic from the sports facilities,” said Western Development Chairman Herb Miller, who developed the Gallery Place mixed-use complex connected to the arena.

The Wizards and Capitals aren't the only major D.C.-area pro sports teams looking to move. The Washington Commanders, under new owner Joshua Harris, have been engaged in talks to relocate from FedEx field in Landover, Maryland, and Bowser has been active in recruiting the NFL franchise to return to the District, where it played from 1937 to 1997.

UPDATE, DEC. 13, 12:50 P.M. ET: This story has been updated with additional information and comments from Wednesday's press conference.