Creating Community in Downtown DC
Have you noticed there is no one in Downtown Dc since the Pandemic? With most of the offices closed, people are few and far between.
The biggest reason for this is the lack of residences in Downtown D.C. in comparison with the volume of office space. A report, issued last month, looked at the current state of Downtown D.C. and offered up a plan for the next nine years of development.
The report noted that less than 10 percent of the 91 million square feet of Downtown is residential space. In comparison, 71 million square feet is dedicated to office space-- which translates to 78 percent of all square footage of Downtown space. And new offices are on the way as well.
With the new “work from home” (WFH) culture, office building owners must now consider if they should be renovating buildings to compete, or transitioning those buildings into residential space or something else.
The DC government and the Downtown Business District owners like the Golden Triangle Business Improvement District are backing legislation that would provide a tax abatement of about $20 per square foot for 10 years, capped at $5 million a year in order to renovate and turn space into residences. This is something that the mayor’s office is seriously considering in order to spur a resurgence in a seriously disrupted downtown area.
According to Brian T. Kenner, deputy mayor for planning and economic development in dc, the legislation is being taken seriously. The analysis is a cost-benefit between how much revenue can be created by encouraging affordable housing vs. continuing to allow office over saturation.
Part of the January report explores implementing an incentive program that would encourage office-building owners to convert 400,000 square feet of outdated office space into residential space. As it currently stands, development is still heavily focused on office buildings.
In a few years, after all, ground-up development sites developed downtown will consist primarily of building demolitions and new construction backed by large office tenant buildings or gut renovations into new Class A office space. There will also be the occasional office to hotel conversion, but there will be no office-to-residential conversions until the price of older buildings drops significantly or conversion incentives are offered.
Downtown is already a relatively attractive area to be in, and ripe for retail development as well. There are already 160 restaurants in the area, but only 740,000 square feet of retail. The report expressed that additional retail would create a powerful regional shopping destination to build communities around.
Downtown DC remains an attractive place to develop, but the area faces major competition from other parts of D.C. and regional markets that have always competed by price and now are increasingly competitive with regards to amenities.