4250 Connecticut Avenue (Nov. 2015 Google Street View image)
UDC is getting the keys to 4250 Connecticut Avenue.
After negotiations with the building’s owner, Bernstein Management, the university “executed a long-term lease agreement with a purchase option.”
With the Student Center, “[i]t transforms Connecticut Avenue into a new gateway for UDC,” said UDC President Ronald Mason in a December 19th statement.
Once UDC’s Board of Trustees signed off on the idea, all UDC needed to close the deal was the DC Council’s approval. It got it on Tuesday, December 18th, when the Council voted to approve a three-year lease contract.
This makes UDC a major player in the retail market at Van Ness. Combined with the ground-floor retail at the UDC law school at 4340 Connecticut, and with the master lease on the former Walgreens at 4225 Connecticut, UDC will control 40,000 square feet of retail space in Van Ness. That includes 85% of the unleased retail space between Van Ness and Albemarle Streets, according to Van Ness Main Street.
For now, 4250 and 4225 Connecticut are to be used as swing space while buildings on its campus undergo renovations and modernization. But Van Ness Main Street urged Council member Mary Cheh and Council Chair Phil Mendelson to request that UDC submit a letter of intent about retail with the lease contract submitted for approval. It did so. In the letter drafted with VNMS, UDC commits to begin the search for retail tenants in 2019.
Specifically, the letter of intent says:
- UDC shall commence, in January 2019, the formal process to hire an experienced, active and reputable third-party retail broker or brokerage firm within seven (7) months of approval of the Sublease Agreement by the Council.
- UDC shall instruct the retail broker or firm to seek a mix of retail tenants as recommended in the Retail Study.
- UDC shall make a good faith effort to consult with [Van Ness Main Street (VNMS)] on potential retail tenants under consideration for the Retail Spaces.
- UDC shall offer prospective retail tenants lease rates, concessions, and tenant improvement allowances, consistent with the market, condition of the space to be occupied, and as appropriate in UDC’s judgment, incentives to attract particularly desirable tenants; all to facilitate the lease-up of the Retail Spaces in balance with the interests of the Van Ness community, which includes local residents and current/future businesses, as well as UDC staff, faculty and students.
- UDC shall, in good faith and with input from VNMS, endeavor to execute signed leases for the Retail Spaces within twenty-four (24) months of the approval of the Sublease Agreement by the Council, recognizing that actual occupancy may occur later if there is a need to construct improvements to the Retail Spaces.
- In order to attract quality retail in the retail space at 4250 Connecticut Avenue, UDC shall offer approximately 40 parking spaces in the upper parking level exclusively for the use of customers of the retail tenants.
(Here is the Council legislative summary and history.)
Later on December 18th, ANC 3F passed a resolution reinforcing the elements of the letter of intent, and, in essence, calling on the Council to become a partner in activating retail at Van Ness. The ANC requested that the Council provide adequate funding in its upcoming fiscal 2020 budget to ensure that UDC has funds for tenant and building improvements for 4250 Connecticut that would attract quality retail, as Bernstein Management had planned to do. The promised improvements included updating 4250 Connecticut’s north and east façades, and installing green roofs and new pervious paving areas.
Bernstein Management submitted plans for facade and sustainability improvements earlier this year.
Council oversight hearings start in February and on the FY 2020 budget hearings will follow after the mayor submits her budget sometime in March.
For those in the community who are concerned about the future of retail at Van Ness, this will be your opportunity to weigh in. Stay tuned for the schedule of hearings and directions for submitting testimony.
Green Eyeshades says
So, retail broker will be hired by mid-July 2019, retail leases will be signed by December 2020, all retail will actually be occupied by “later” than December 2020?
But UDC’s lease runs only three years from December 2018, if I understand the summary correctly.
Two years of UDC’s three-year lease will have expired before all retail leases must be signed. Less than one year will remain on UDC’s lease by the time all the retail is actually occupied. By the time UDC is required to sign subleases with retail tenants, the retailers will have only one year of assured occupancy. Is that right?
It feels like somebody dropped the ball here. Either UDC must be forced to sign up the retailers sooner, or UDC’s lease from Bernstein must be extended significantly, so that prospective retailers can plan on occupancy of more than one year under their subleases.
Green Eyeshades says
The December 10 post about this transaction revealed that UDC will have an “option to buy” the building from Bernstein. I did not see that earlier post when I commented yesterday.
In the earlier post, the chief operating officer for UDC is quoted in the second paragraph:
“UDC is seeking the DC Council’s approval first for a three-year master lease, then capital budget funding for purchase. Troy LeMaile-Stovall, the chief operating officer of UDC, told ANC 3F’s November 20th meeting UDC is optimistic that it will hear about capital funding this budget cycle.”
https://www.foresthillsconnection.com/news/udc-seeking-dc-councils-approval-for-3-year-lease-then-purchase-of-4250-connecticut/
So this newer post, ten days later, says “with an option to buy” right in the headline, but focuses on the letter of intent rather than the option to buy.
My comment yesterday would be moot if UDC actually acquires ownership of the building at some point during the three-year lease. With full ownership, UDC could offer retailers long-term leases.