Developer Plans New Apartment Building After Buying Up Chunk Of H Street Corridor
A new project is moving forward on H Street NE that would continue the corridor's wave of multifamily development.
D.C.-based developer District Growth acquired a row of low-slung retail properties at 1000-1016 H St. NE in an $8.5M deal posted Monday to the D.C. Recorder of Deeds. District Growth founder Sanjay Bajaj told Bisnow in an interview he is planning to replace the properties with a 70-unit to 80-unit multifamily building.
Bajaj said he aims to break ground by the end of next year on the building, which would span five stories plus a penthouse. He said the retail storefronts it will replace — sitting between the H and 10th street NE intersection and the Douglas Memorial United Methodist Church — are all now vacant.
The retailers that previously occupied the properties included Rita's Italian Ice, Marie's Beauty Supply, Mason's Barbershop and Liberty Tax. It also includes a small surface parking lot.
Bajaj said he considered incorporating ground-floor retail into his new building, but he ultimately decided to build only multifamily to maximize the number of units and reduce the project's complexity.
"It’s not a huge site where I can have an anchor grocery store or something, and retail requirements don’t fit the site," Bajaj said. "If this was a bigger site, yes, for sure I would’ve done [retail]."
The developer plans to build within the site's existing zoning, reducing the friction in the entitlement process, so the main hurdle before he can break ground is financing the new construction project in today's difficult capital markets environment.
Bajaj plans to invest up to 40% of the project's estimated $30M cost himself to mitigate the impact of rising interest rates. He said given that level of equity investment, combined with the relatively low risk of building multifamily in a growing area like H Street, he expects he can obtain a loan with attractive terms.
District Growth also has its own construction arm that can help alleviate the strain of rising construction costs, Bajaj said.
"We can’t control everything, but at least where it’s in our control we’re going to keep it as tight as possible and value engineer as much as we can," he said.
The building's units are planned to average 800 SF. He said he is building the project as apartments, but he may convert them to condos if the for-sale market improves by the time it delivers.
Bajaj said he was drawn to the property because it sits directly on H Street, a corridor with many bars, restaurants and other retailers where the number of remaining development sites is limited.
"Obviously that’s a new millennial happening place, and given the proximity to Union Station and the trolly, this has become the hot spot," Bajaj said, referencing the DC Streetcar that opened in 2016.
District Growth has another project near the H Street corridor under construction at 1358 Florida Ave. NE, where it is building a 40-unit multifamily building, and it has more development in the works along Northeast D.C.'s Rhode Island Avenue corridor.
Its latest project continues a years-long wave of development along H Street. Two major mixed-use buildings — Anthology and the Whole Foods-anchored Apollo — delivered on opposite sides of the 600 block in 2016. In early 2020, WC Smith and Rappaport delivered the 419-unit Avec mixed-use building between eighth and 10th streets.
