Since January, 2003

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August 28, 2004
December 7, 2008
Half at I, Looking North (see more)

With an instruction to residents to Please Don't Panic, I'll pass along the news that Onyx on First, the 266-unit apartment building at 1100 1st St. SE, is up for sale. With a brochure touting "Excellent Transportation Infrastructure, Phenomenal Employment Opportunities," and "Shopping and Entertainment Options Abound," the sellers look to be trying to get in on what is clearly a rebounding multifamily market in DC.
Apparently there's no price set for the sale, and with a building that's 92 percent occupied with what looks like pretty high average rent numbers, I imagine investors will be taking a close look. The eventual sale (should there be one) could also be an interesting barometer of how "the markets" view the neighborhood. Proposals are due April 14.
The building, originally planned to be condos but converted to apartments during the construction phase, was developed by Faison and the Canyon-Johnson Urban Fund and completed in 2009. It was built the same time as its neighbor 100 M, the office building that recently bought for $57 million in a foreclosure sale. Onyx is on the same block as the New Jersey Avenue entrance to the Navy Yard Metro station, two blocks north of Nationals Park, and one block west of the Courtyard by Marriott that is being bought for $68 million. And, of course, just across the street from the Market Deli.
You can see my Onyx project page for photos and more information.
Comments (6)
 
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Comments

F says: (3/8/11 10:08 PM)
It's interesting that the brochure does not mention its close proximity to a soon-to-be-designated-historic-deli.


G says: (3/9/11 10:13 AM)
As long as they keep that name - "Onyx!" - I'm happy.


Charles says: (3/9/11 11:29 AM)
It is interesting that the rental rate maxes out with a $3.25/sf cap on income. Meanwhile, assuming the common area expenses, taxes, payroll, property management and CapEx run at or near 40% of income (fairly generous), we are talking a bottom line of roughly $2/sf.

Meanwhile, Rep Garber still has failed to respond to the financial modeling detailing the gross economic failings of his proposed "Corner Grocer", which, it should be noted, fails despite assuming an aggressive $3.80/sf NNN. (For those that might need clarification, NNN stands for triple-net and requires the tenant to pay all taxes, insurance, utilities, regular maintenance and repairs.)

It seems to me that Rep. Garber has proffered nothing more than a recipe for an abandoned building remaining as such for years and years to come. At best, we will be saddled with a “historic” eyesore.

In other news, one has to wonder if Onyx's new owner will continue offering the very healthy rent incentives and whether such owner is bound to the existing tenant’s – many of whom received verbal assurances that they would remain in place. It is not a stretch to believe that many residents might be looking at a very different picture than they originally contemplated when their renewal date arrives.

Very interesting times abound for those that live at the intersection of 1st and L Streets!


Ishmael says: (3/9/11 11:59 AM)
"...and whether such owner is bound to the existing tenant’s – many of whom received verbal assurances that they would remain in place."

I'm no lawyer, but if it is not written into someone's lease, then I can guarantee that the new owner will not have to honor it. I doubt that a verbal assurance from a low-level Onyx employee, who may or may not have a job once the building is sold, carries no legal weight.


Jenniferpdc says: (3/9/11 5:02 PM)
Charles - since you seem interested. The effective rental rate at the Onyx is considerably less than the $3.15/psf that the broker is listing as the "market" rental rate. At this time the newest and best located apartments in DC are topping out at around $3.50/psf for the market rate, but concessions in this building are probably still running close to 10%. I'm betting their economic occupancy is considerably less than 90%. Operating expenses for a high-rise of this nature generally range from 25% to 30%. I generally can't comment on this site, because I'm party to confidentiality agreements (I work for commercial real estate investors - and believe me I have alot to say about 225 Virginia Ave) but I don't have ths book yet. If taking the potential gross rent of about $7.2M, minus vacancy, concessions, etc. (based on the location, I would estimate at about 12%)and adding other income (parking, etc.) of about $2K/unit and then deducting operating expenses estimated at 30%, you would get an NOI of about $4.8M. DC multi-family is very hot right now, and Fannie/Freddie are giving out long-term money very cheap (although it's gone up significantly in the past couple of months), someone will probably pay for this based on a capitalization rate around 5.25%, estimating the value at around $90M ($340K/unit - which actually seems a little light on a price per pound basis).


Charles says: (3/10/11 9:24 AM)
Jennifer - Thanks for the insights. I really like your math and perspective. Your trading value of $91,429,000 does seem light on a per unit basis, but does translate to roughly $478 a square foot - a number that feels more palatable to me. Plus, this number does provide a buyer some upside (as the significant concessions should slowly disappear) against a relatively low cap-rate.

In regard to your 30% number, I totally agree. I should have done a better job of clarifying that the 40% number proffered included concessions, which I understand are generous on this particular property. At $2/sf the annualized NOI number at which I arrived was a bit lower than your $4,800,000 - coming in at about $4,590,000.

One final thing, if you have the time and given your knowledge about this specific marketplace, I would really appreciate your thoughts on realizable retail rents. My understanding is that between BID and DC taxes, there is a stiff headwind, which might partially explain the lack of real restaurant options.


Jenniferpdc says: (3/11/11 12:50 PM)
Retail has been a little funny the past couple of years given the economy, but generally 1st floor retail in office downtown, asking rates range from about $40 to $50 NNN, depending on the location. Banks pay higher (sometimes alot higher for prime corner locations), larger tenants less. Grocery stores and pharmacies are generally less than $10 NNN. I've seen a couple of deals in prime downtown location on Metro in about the mid-$50's, in the mid-$40's for restaurants or lesser locations, but new buildings. The thing is, the landlords are buying alot of these deals by very large tenant improvements packages, $125+ for only five year deals with free rent added in.

The owners around here are actually asking on average higher than downtown, in the high-$40's, which is highly unlikely. My guess is they will go alot lower than that if they could find a tenant.

My understanding, although I haven't seen the actual comp, is that Bureau of Land Management signed for about $33-$34 FS for the space they took in Lerner's building, signficantly lower than the orginal $46 they were asking.



58Model says: (3/11/11 3:22 PM)
I was told there would be no math...


Charles says: (3/11/11 4:21 PM)
Jennifer: Thanks for the tremendously useful information. As you might have seen in other posts, in addition to believing the "historic" bases for the Market Deli's nomination severely lacking, I have made arguments elsewhere that there is simply no economic underpinnings supporting David Garber's claim that a corner grocer will return to the space.

These numbers go a long way to proving out the fallacies in his logic and demonstrate that should such nomination prove successful, the only result with be the slow and continued dilapidation of the existing structure.

Thank you! Charles


David Garber says: (3/11/11 5:27 PM)
Charles,

Although I applaud your dedication to this cause, let me clear something up: I never claimed that a corner store would return to the space. I did say that if restored (and if it is landmarked, it is likely that it will eventually be restored), then it will be a desirable retail space.

My dedication to quality design and development in this neighborhood remains the same as it was during my campaign. If all land-use and design decisions were made with only the $/sf in mind, we would have a very sad looking city. I have been very supportive of Akridge's work in the neighborhood, and have kept them in the loop on all of my acclamations and concerns for each of their projects. I hope you all will do the same for me, as I am constantly meeting with and working with the people who are shaping the neighborhood.

I don't expect us to agree on every issue, but I do hope that our conversations will remain civil. I'll continue to do my best to keep the neighborhood informed about the initiatives I engage with here.

Again, I hope to see any and all at the Market Deli tomorrow morning, if only to have the chance to meet in person.


Charles says: (3/11/11 6:20 PM)
David:

David, in all civility, I think you have made a huge mistake, which has only been compounded by your subsequent actions. I have been vocal and consistent about this and I regret if my passion in believing your actions egregious and fully considered basis offends.

However, words and actions have meanings and I am afraid that you merely stating your "dedication to quality design and development" does not make it so. The quality design in the instant case is a ramshackled building that has gone without upkeep (or a tenant) for roughly 14-years. And your "support" for development is to sandbag the developer by filing this only upon their requesting a raze permit.

Again, words have meanings. While you protest that you constantly meet with people shaping the neighborhood, you conveniently avoided such public meetings prior to scurrying to the NW to find someone to sponsor your initiative. This despite openly acknowledging that this would be a subject of controversy.

Finally, you have failed to provide any reasonable set of economic analysis which sets forth a viable plan for the space at issue to find a tenant. Even if successful, your efforts would do nothing other than protect an empty and decaying structure, which should probably be condemned, undermining the growth and positive directions found elsewhere in our area.

Again, in case you missed it, you did this without calling a meeting and consulting your constituents.

Regards,
Charles


Charles says: (3/11/11 6:23 PM)
Sorry. Typo.

I meant to say "not fully considered basis" at the ending of the second sentence of the first paragraph.

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City Government Data for Near Southeast Records added or updated recently displayed here; click the "archive" links to see additional detail and older records. All data from DC Government databases and RSS feeds. JDLand takes no responsibility for errors, omissions, etc. (read CapStat disclaimer). Data is retrieved daily.

Recent Crime Incidents Archive  
200 B/O L ST SE   THEFT F/AUTO /  07/30/14
L ST SE AND 2ND ST SE   THEFT F/AUTO /  07/30/14
70 B/O I ST SE   MOTOR VEHICLE THEFT /  07/29/14
70 B/O I ST SE   THEFT /  07/29/14
1100 B/O NEW JERSEY AVE SE   THEFT /  07/28/14
400 B/O K ST SE   THEFT /  07/24/14
1000 B/O 1ST ST SE   THEFT /  07/23/14

Active Public Space Permits Archive  
1011 1ST ST SE    Pepco Holdings Inc 
Issued
excavation; new  
 06/26/14
to
08/26/14
1331 2ND ST SE    Carlton Ray 
Assigned
paving; streetfixture; excavation  
 02/10/14
to
02/09/15
908 3RD ST SE    Rachel Frankel 
Issued
streetfixture; new  
 07/24/14
to
09/21/14
1026 3RD ST SE    Wash Gas & Light Co. 
Issued
excavation; new  
 06/26/14
to
09/04/14
1331 4TH ST SE    Forest City Forest City 
Issued
excavation; new  
 01/10/14
to
02/10/15
913 5TH ST SE    Wash Gas & Light Co. 
Issued
excavation; new  
 06/26/14
to
08/28/14
1100 - 1199 BLOCK 1ST ST SE    tom cash 
Issued
excavation; new  
 06/27/14
to
08/25/14
410 M ST SE    Pepco Holdings Inc 
Issued
excavation; new  
 07/11/14
to
09/08/14
800 NEW JERSEY AVE SE    Pepco Holdings Inc 
Issued
excavation; new  
 06/20/14
to
08/22/14
880 NEW JERSEY AVE SE    WASHINGTON GAS 
Issued
excavation; new  
 07/28/14
to
09/26/14
301 TINGEY ST SE    Potbelly Sandwich Works LLC 
Issued
new  
 03/21/12
to
11/27/14

Recent Issued Building Permits Archive  
1011 1ST ST SE   
08/06/14 
TOLL DC LP / MITCH A. PERMUY
E1407892 / SUPPLEMENTAL
   
08/11/14 
TOLL DC LP / ALBERT J. PEARCE
FB1400108 / SUPPLEMENTAL
1259 1ST ST SE   
08/11/14 
CAPITAL RIVERFRONT HOTEL LLC / CAPITAL RIVERFR HOTEL LLC
AH1400636 / CONSTRUCTION
AFTER HOURS FOR PERMIT NUMBER B1401471 FOR 8 / 12 THROUGH 9 / 11 FROM 5AM TO 7PM MONDAY THROUGH SATURDAY.
1212 4TH ST SE   
08/07/14 
TAKOREAN / FVI 2020
B1410615 / CONSTRUCTION
REVISION TO TL1400052 TO INCLUDE OUTDOOR SUMMER GARDEN WITH 14 SEATS AND 7 TABLES.
1201 4TH ST SE   
08/12/14 
JBG/FEDERAL CENTER LIC / JIM CALABRESE
AN1400129 / CONSTRUCTION
PLEASE EXTEND PERMIT AN1300174 THIS IS THE FIRST EXTENSION AND PERMIT WILL BE VALID UNTIL 1 / 31 / 2015.
1212 4TH ST SE   
08/01/14 
MIKE LENARD 1451 BELMONT ST NW SUITE 214 / PAUL THIEBERGER; MIKE LENARD 1451 BELMONT ST NW SUITE 214; PAUL THIEBERGER
P93379840 / SUPPLEMENTAL
   
08/05/14 
FC 1212 LLC / THE YARDS
TL1400165 / CONSTRUCTION
FIRST TIME TENANT LAYOUT FOR NEW MANAGEMENT OFFICE 2ND FLOOR TOTAL OF 780 SQ FT RENOVATION LIMIT TO MECHANICAL ELECTRIC AND FIRE LIFE SAFETY ONLY
1331 4TH ST SE   
08/14/14 
F. C. 1331 LLC / FVI 2020
B1402843 / CONSTRUCTION
CONSTRUCTION OF A BRAND NEW 11 STORY BUILDING. THE BUILDING IN TOTAL IS 350 000 SQ FT. ADDING 327 RESIDENTIAL RENTAL UNITS 20 000 SQ FT. IN COMMERCIAL SPACE AND 3 BELOW GRADE PARKING LEVELS.
   
08/15/14 
CLARK CONCRETE
AH1400650 / CONSTRUCTION
AFTER HOURS TO POUR CONCRETE ON JOBSITE FROM 7AM TO 7PM FROM SUNDAY TO SATURDAY 8 / 15 / 2014 TO 11 / 15 / 2014
1000 5TH ST SE   
08/07/14 
DISTRICT OF COLUMBIA HOUSING AUTHORITY / KIM MITCHELL CDKM CONSULTING LLC
FD1400029 / CONSTRUCTION
FOUNDATION TO GRADE TO INCLUDE UTILITIES
   
08/13/14 
UNITED STATES OF AMERICA /
FD1400132 / CONSTRUCTION
NEW FOUNDATION TO GRADE PERMIT FOR NEW COMMUNITY CENTER INCLUDING UTILITIES. REVISION TO FD1400029 TO REVISE STRUCTURAL DETAILS OF COLUMS.
   
08/20/14 
UNITED STATES OF AMERICA / BRUCE G. PICKETT
E1408304 / SUPPLEMENTAL
1015 HALF ST SE   
08/12/14 
HALF ST SE LLC / SAM HOLLEN RAMCO OF DC INC.
TL1400162 / CONSTRUCTION
INTERIOR TENANT LAYOUT OF 1ST FLOOR PERFORMANCE STUDIO SPACE AND OFFICE SPACE. PARTITIONS FURNITURE MECHANICAL ELECTRICAL AND LIFE SAFETY. CBS
   
08/15/14 
HALF ST SE LLC / ROBERT L HUNTER
M1402951 / SUPPLEMENTAL
   
08/16/14 
SAM HOLLEN / DONALD VEALS; SAM HOLLEN; DONALD VEALS
E83010192 / SUPPLEMENTAL
1201 HALF ST SE   
08/01/14 
LIVE NATION / JOSE VEGA A-1 ENGINEERING
TN1400164 / CONSTRUCTION
TO PLACE A TENT IN PUBLIC SPACE FOR SPECIAL EVENT AT NATIONALS PARK
200 I ST SE   
08/08/14 
DANIEL RILEY / OMAR BIAGAS; DANIEL RILEY; JOHN BIAGAS
E47247428 / SUPPLEMENTAL
41 L ST SE   
08/20/14 
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY (WMATA) / SAMIR ALQUTRI - GEOTECHNICAL SOLUTIONS INC.
SB1400402 / CONSTRUCTION
GSI PLANS TO DRILL 4 SOIL TEST BORINGS TO CONFIRM SOIL STRENGTH WITH A HOLLOW-STEM AUGER EQUIPPED WITH A SPLIT SPOON SAMPLER FOR THE SPT N-VALUE TESTS DOWN TO A MAXIMUM DEPTH OF 80 FEET BELOW EXISTING GRADES. ALL BORINGS WILL BE DRILLED TO THE MAXIMUM DEPTH OR AUGER REFUSAL WHICHEVER OCCURS FIRST. THE BORE HOLES DIMENSION WILL BE 3.25 INCHES AND SHALL BE GROUTED UPON COMPLETION.
601 L ST SE   
08/06/14 
DISTRICT OF COLUMBIA HOUSING AUTHORITY / JOSEPH M MAGNOLIA
P1407161 / SUPPLEMENTAL
20 M ST SE   
08/06/14 
SOUTHEAST REALTY LLC /
P1407613 / SUPPLEMENTAL
100 M ST SE   
08/06/14 
SQUARE 743 INC /
P1407610 / SUPPLEMENTAL
   
08/16/14 
NORTHWOOD INVESTERS LLC / STANLEY HUBBARD; NORTHWOOD INVESTERS LLC; STANLEY HUBBARD
E14516088 / SUPPLEMENTAL
901 M ST SE   
08/14/14 
CARLTON RAY
AH1400642 / CONSTRUCTION
TO PERFORM TEMPORARY LANE CLOSURES
1201 M ST SE   
08/14/14 
CARLTON RAY
AH1400641 / CONSTRUCTION
TO PERFORM TEMPORARY LANE CLOSURES
1111 NEW JERSEY AVE SE   
08/12/14 
NJA ASSOCIATES LLC / COLIN CLARK
B1308085 / CONSTRUCTION
CONSTRUCT A NEW 13 STORY APARTMENT BUILDING WITH THREE BELOW GRADE PARKING LEVELS FIRST FLOOR RETAIL A PRIVATE SWIMMING POOL PROJECTIONS OF BAY WINDOWS 324 UNITS TO INCLUDE MECHANICAL PLUMBING ELECTRICAL AND ELEVATOR WORK.
1500 SOUTH CAPITOL ST SE   
08/04/14 
LIVE NATION / DAVID VEGA
AH1400629 / CONSTRUCTION
TO CLOSE OFF STREETS FOR LOADING AND UNLOADING OF STADIUM EVENTS 7PM - 7AM
300 TINGEY ST SE   
08/05/14 
FC BOILERMAKER LLC / PHILLIP B MOBLEY
M1402818 / SUPPLEMENTAL
AH = After Hours; B = Alteration & Repair; D = Demolition; E = Electrical; FB = Boiler; M = Mechanical; P = Plumbing and Gas; PC = Post Card; R = Raze; SG = Sign; TL = Tenant Layout; TN = Tent; RW = Retaining Wall;

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