The Wharf Phase 2 Cements Southwest As New Center Of Gravity For D.C. Hospitality

The hospitality industry is still returning to full strength, but you wouldn't know it judging by the performance of The Wharf.

The 3.3M SF mixed-use megadevelopment already features three hotels with revenue per available room 30% higher than comparable properties in D.C.'s central business district, according to data from STR shared by The Wharf's developer, Hoffman-Madison Waterfront.

And on Wednesday, The Wharf's 1.25M SF second phase will debut with  a sneak peek of its fourth hotel, the city's first Pendry resort, a boutique "new luxury" flag bringing three new food and beverage concepts. The entire second phase, opening on the fifth anniversary of Phase 1's debut, will bring 15 new dining options by next year, further cementing it as an anchor of the District's hospitality scene.

"What it’s done is create a destination, not just for D.C. but the region as well," Deputy Mayor John Falcicchio told Bisnow. "The Wharf means more visitors to D.C., and that means more jobs and tax revenue."

The hospitality, food service and amusements industries have lagged behind other sectors of D.C.'s economy as the District recovers from the pandemic — D.C. had about 800,000 jobs pre-pandemic and about 762,000 today, with two-thirds of the deficit coming from those industries, Falcicchio said.

But The Wharf provided a buoy while the economy was sinking. Falcicchio said at full build-out, The Wharf's hotels, offices, residences and food and beverage options will support roughly 6,000 jobs, with The Pendry contributing to that total as it staffs up.

In total, The Wharf's second phase is slated to add 547K SF of office space across three buildings, 255 apartments, 96 condos, 95K SF of retail and 131 hotel rooms. New public spaces also include a 1.5-acre park and the new Wharf Marina.

District leaders have been eager to tout The Wharf's success as a sign of how to create smart public-private partnerships that can revitalize an area. D.C. provided $200M in financing to develop The Wharf, and already reaps $60M a year in tax revenues, Hoffman & Associates President Shawn Seaman said during a Bisnow event in May. 

The District is continuing its support of Southwest through a $3M grant to the Southwest BID for a Mobility Innovation District. The program, which will hold a launch event next week, is intended to pilot new transportation options like an electric shuttle that can ferry visitors on the National Mall or Southwest residents to The Wharf.

Steve Moore, executive director of the Southwest BID, is expected to join officials from the U.S. Department of Transportation and D.C. for the event, which will also have demonstrations from scooter company Spin, mobile electric vehicle charging startup SparkCharge and electric shuttle company Circuit.

“The Wharf is now a restaurant district, an entertainment district, a cultural destination and the go-to place to sit by the water,” Moore said in a statement. “It is the catalyst for the renaissance of southwest DC and is rapidly becoming an example to cities with underused waterfronts across the country.”

All that investment has steadily risen the profile of Southwest, bringing along other property owners with it. Donohoe Hospitality, which acquired its first hotel in the quadrant more than 40 years ago, has seen business at its Southwest D.C. hotels strengthen with the arrival of The Wharf, Donohoe Hospitality President Thomas Penny said.

“It’s fair to say that Southwest is now no longer the little sister to Northwest, it is an even competitor,” Penny said.

Donohoe opened its 154-room Cambria Hotel Washington DC Capitol Riverfront in February of last year. Penny said he welcomes the addition of The Pendry, which will only strengthen the area’s reputation as a destination for staycationers and out-of-town visitors alike.

“As Southwest becomes the epicenter of activity, obviously it benefits our hotels and businesses looking to stay in Southwest,” Penny said. “Having higher-priced assets in Southwest only creates a full continuum of rooms going from midtier to luxury, so again, we benefit from that as well.”

The strength of The Wharf's hotel market is twofold, developer Monty Hoffman told Bisnow in an interview this week. 

First, The Wharf's more than 1M SF of offices are 85% leased across both phases, and Hoffman said he's seen about 60% occupancy in his buildings compared to 40% average occupancy across the D.C. metro for much of this summer, according to Kastle Systems data.

Second, venues like The Anthem, Arena Stage and the area's many bars and restaurants continue to serve as a draw for leisure travelers. Combined, the two have made The Wharf an ideal destination for the so-called bleisure traveler who has driven the hospitality sector's recovery.

"Our numbers are very good right now, in fact they’re better than they were in 2019," Hoffman said. "The leisure crowd is more than made up for. The business crowd is not quite what it was before Covid, but we have more than compensated for that."

While festivities for The Wharf’s second phase grand opening begin Wednesday, there are more milestones and openings on the horizon. Two concepts from celebrity chef Gordon Ramsay, a new outpost for local chain Milk & Honey, and a location of buzzy New York coffee chain Blank Street Coffee are all expected to open by early 2023, with plenty more on the way.

Hoffman said The Wharf’s owners are taking lessons learned from the development’s first phase and carrying them into the second, including keeping some sections of the roads in the development pedestrian-only.

The Wharf’s biggest day for foot traffic came before the pandemic, during 2019’s Petalpalooza. But today, Hoffman said he’s not interested in trying to surpass that total. Instead, he’s focused on ensuring visitors and the estimated 1,500 residents of The Wharf are excited to shop, dine and spend time in the completed development’s public spaces.

Hoffman said The Amaris, a 96-unit luxury condo building in the second phase, is about 60% pre-sold. With Phase 2's The Tides, a 255-unit apartment community, and liveaboards on The Wharf’s piers, and there’s plenty of built-in activity expected for the area. There are also 350 workforce and affordable units across the entire 1-mile-long project.

“We have some extraordinary spaces that, honestly they cost a lot, amazing spaces of value for affordable and workforce housing. It’s not a stuffy environment, it’s a very diverse overall community,” Hoffman said. “While I’m confident in our outcomes in unveiling the entire Wharf, I am really excited about the people and the market’s reaction to the public realm spaces that we’re creating throughout.”