Douglas Development

Woodward & Lothrop Building, 1025 F Street NW, Washington, DC 20004

The Woodward & Lothrop Building

The Woodward & Lothrop Building is a signature accomplishment of Douglas Development’s passion for historic preservation and redevelopment of downtown Washington, DC.  Bringing back this historic landmark to its original glory was no easy challenge but it was one worth doing.  Today, the Woodies Building reminds us of the historic past of this beloved historic treasure and shines a bright future on downtown Washington, DC’s retail renaissance.

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History

Samuel W. Woodward and Alvin M. Lothrop began a dry goods retail store business in Chelsea, Massachusetts, in 1873 and had several stores in the Boston area.  On February 8, 1880 they opened their first Washington D.C. store at along Pennsylvania Avenue (currently the location of the US Navy Memorial).  This first D.C. store was so successful that within a year they moved to a larger location on Pennsylvania Avenue.

After the flooding in 1886, they moved again and began building the flagship store we know today as the Woodies Building on the corner of 11th and F Streets NW…

Soon after moving into the original building they were outgrowing the space and began purchasing neighboring properties.

By 1897 the store occupied almost the entire block surrounded by 10th, 11th, F and G Streets NW.  In 1898 and 1902, the buildings were renovated behind a new façade facing G Street designed by Henry Ives Cobb.  Two additional floors were added between 1912 and 1913, and yet another building added  in 1925.

The building attained its lasting form in 1927.  It stands ten stories and once held over 400,000 square feet of retail space.  The exterior was decorated in cast iron and leaded glass accents with flower designs and the Woodward & Lothrop monogram.  It was declared a D.C. Historic Landmark in 1964.

After the company’s bankruptcy and liquidation in 1994, the iconic building stood vacant while developers and city officials debated its future.  The building was purchased by the Washington National Opera in 1996 for $18 million but the daunting cost of $200 million to convert the build from retail space to a new home for the Opera was too much.

In 1999 the building was sold to Douglas Development Corporation for $28.3 million.  Then, over the course of the next several years DDC worked to have the building rezoned from department store to retail/office uses which was finally approved in 2001.

Redevelopment and historic preservation of the building occurred between  2003 and 2005 in order to get the building ready for new tenants.  Improvements included the addition of two all glass floors on the roof of the building.

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Rezoning

The Woodies Building was originally zoned as a department store with alternative uses for arts related retail and/or residential.  During the time of redevelopment there was a tremendous focus on attracting residents back to the city and pressure was placed on developers to dedicate all or part of any redevelopment to residential uses.

Residential uses were not the right fit for the Woodies Building.  Due to the vast floor plates of 50,000 square feet in the building a enormous atrium would need to be cut in the middle of the historic structure in order to accommodate residential uses…

 

Not only would redeveloping the building into residential vastly disfigure the historic structure it did not make economic sense.

In order to rezone the building to a retail/office use DDC needed to  agree to residential projects at 2 alternative sites: 912 F Street – The Ventana;  400 Massachusetts Avenue.

In April 2001 the Zoning Commission unanimously approved the petition and granted the order that allowed office use.

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Retail Leasing

Leasing this historic structure faced several challenges due to it’s size and lack of quality retail in the area.

The local community had a deep desire to see a department store return to downtown.  Since zoning was already in place for a department store use, DDC first began to meet with Macy’s.  Department stores had left downtown for suburban malls years earlier and overall fashion retail was not in a great position in the neighborhood.  Macy’s untimely declined leasing the building due to its size being to large to meet their needs.  So, in order to attract quality fashion apparel retailers…

 

the first space was leased to popular international clothing retailer H&M.  This deal was done solely on the basis of percentage of sales and all tenant improvements were funded by Douglas Development.  The retailer was also given a kick out clause in their lease where they could walk away if they were not happy with the store’s performance.  In exchange for these concessions, the retailer has to operate a true flagship store.  This initial gamble would pay off to kick start the retail renaissance of the East End.  Ten years later, H&M’s sales have far exceeded expectations and continue to increase at an impressive rate each year.

Other fashion retailers soon followed to the Woodies Building.  Spanish clothing and accessories retailer Zara opened on 2 floors of the building along F Street in 2007.  Finally, Forever 21 opened on 3 floors of the building along G Street in 2009.

Madame Tussauds opened its first DC based wax museum in the building in October, 2007.  Then after a few short years in 2010, the museum under went a $2 million expansion to include the U.S. Presidents Gallery which features all the presents and ends the historical journal in the Oval Office to meet the current Commander in Chief.

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In the Words of Douglas Jemal...

Real estate development, and particularly revitalization and rehabilitation of historic, iconic, landmark properties, is about so much more than the numbers. While – at the end of the day – it is the developer himself – and the decisions that he or she makes – that will determine the success or failure of the project, it also depends on the state of the real estate market, the development of the surrounding neighborhood, the existing and future political climate – and perhaps above all else – patience and timing.

I feel the story of my acquisition and redevelopment of the Woodies Building…

1025 F Street, NW, Washington, DC, perhaps provides the most complete example of a development that faced the entire gamut of typical hurdles to overcome, and, due to its history, its high profile and its location – quite a few additional challenges.

The Woodward & Lothrop department store building was constructed in stages in the late 19th and early 20th century. The department store was the sole occupant in the building until it closed in 1994 due to the bankruptcy of the parent company. In 1996, the building was put up for sale at auction. I was one of the three final bidders, but the Washington Opera submitted the successful high bid of $18 million. They planned to turn the building into the site into a Downtown Opera House. However, they soon found several insurmountable obstacles made this conversion impossible from both an engineering and an economic perspective. For example, in order to convert the building to an Opera House, they needed to reconfigure the exterior of the building as well as remove the interior columns. The additional structural support that this would have required would have been impossible due to the building’s location, right on top of Metro Center. The Opera soon realized that their only course of action was to put the building up for sale again. I was determined that this time, I would be the successful bidder.

In February 1999, while traveling in California on a short business trip, I was informed that in fact my bid for the building had been accepted, $28.3 million with a 30 day close, contingent to nothing. I soon arranged the logistics for this purchase, and by late March 1999 I had this treasured asset under my control. My excitement was evident, as I was quoted in a March 4, 1999 article (Corridor Real Estate Journal) “It’s a magnificent piece of property and the catalyst of the whole area. It’s got its own Metro Stop and 50,000 square foot floor plates.”

Despite the iconic nature of building and fantastic location, I faced an array of challenges that had to be overcome before the redevelopment could actually occur. First of all, and most importantly, was the zoning, the building was zoned as a department store, its alternative uses were “arts related retail” and by matter of right, residential. In the late 1990’s, there was a tremendous focus on attracting residents back in to the City, and tremendous pressure on developers to dedicate all or part of any redevelopment to residential uses.
However, I always understood that the Woodies Building was unsuited to a residential use, as its vast (50,000 square foot) floorplates precluded the layout of viable apartment space. The only way this would have been possible would have been to create an enormous atrium – literally to cut out the entire middle of the building. Not only would this have resulted in a tragic disfigurement of a beautiful, valuable historic asset, it also made no sense economically. I was not willing to destroy this asset to suit the purposes of a shortsighted political agenda. If the City was not willing to allow me to do what was right with this Building, I was perfectly happy to live in the building myself, with my dog, until the time was right.

I always knew that the proper use for the upper floors of the building was for office space, this was the only use where the floor plate size would be an advantage rather than a handicap. Therefore, I patiently and determinedly endured the attacks on me regarding the zoning and uses for the building from housing activists and others. No less than Senator Daniel Patrick Moynihan weighed in on the fate of the building, in a letter he wrote to the Zoning Commission in late 1999, citing “the building’s long downtown history and presidential interest in keeping the building zoned for residential and “begged” Chairperson Clarens not to permit office space on this site”. How the preferred use of my building became the business of a longtime U.S. Senator from New York I have never figured out.

My response to these pressures was best summarized by a quote in a September 1999 article: “There has been a tremendous amount of injustice done to me over this property. But I am the pitcher, I own the property, and nothing happens until the ball is thrown”. I was determined that, with time, patience and the proper plan, the optimum use for the asset could be achieved, and what I knew to be the Correct Plan for the building could be executed.
In the spring of 2001, my patience was finally rewarded. In return for my agreeing to build residential projects at two alternate sites (910-916 F Street and 400 Massachusetts Avenue), the leading downtown housing activist groups agreed to support my zoning petition for office use above the second floor of the building. In April 2001 the Zoning Commission unanimously approved the petition and granted the Order that allowed office use.

Now that I had the zoning in place, I could actually get to work on leasing the building. However, the downtown housing pressure was not the only pressure at work at Woodies. There was tremendous desire for the return of a department store downtown, and in fact at the time the zoning order was granted I was working closely with Macy’s on making this a reality. This was no small achievement, not so many years before, the downtown department stores had completed their exodus of Downtown D.C., to the suburban shopping malls. I was tasked with reversing this trend, and beginning the process of luring them back. Despite a pledge of tax increment financing from D.C., Macy’s ultimately balked, and I began to court other retailers, looking at broader alternatives to the tenant mix. I held my leasing meetings at the loading dock of Woodies, to the sound of an Otis Redding tape (Sitting on the Dock of the Bay).

In 2003, I began to finalize my negotiations with my first retail tenant at the property, the popular international clothing chain H&M. At the time the building was under construction and had a tower crane welded to the roof. I leased the space to H&M solely on the basis of a percentage of sales. I also funded all of their tenant improvements out of pocket, and gave them a kick out clause in their lease whereby they could walk away if they were not happy with the store’s performance. For these concessions, I insisted that H&M open a true Flagship Store, with all the bells and whistles, a store worthy of the Woodies Building and its location (Metro Center). We agreed to terms and H&M opened late in the summer of 2003. Since F Street had not yet begun the “renaissance” then underway at some other parts of the East End sub market (7th Street), this was considered a gamble, but a gamble that I was confident would ultimately pay off. It did, H&M’s initial sales far exceeded expectations and now – 9 years later – they have continued to increase at an impressive rate each year.

By early 2004, my base building renovations were largely complete, these improvements included the addition of a new, all glass, 9th and 10th floors, with setbacks that maintained the historic appearance of the property. The office portion of the building began to be occupied, largely by full floor users. The initial office leases were to the GSA, first the EPA, then to the FBI. Then the building continued to fill, basically leasing up a floor at a time to a variety of private users, with the Recording Industry Association of America occupying the 10th floor by 2007. Also by 2007, the remaining retail spaces at the building were being occupied by significant tenants, Zara, Madame Tussauds Wax Museum, and finally by Forever 21.

Woodies has become everything I had envisioned that it could be and should be, and along with it, the F Street Corridor and the entire East End of Downtown has been converted to a vibrant, 24 hour Destination for retail, restaurants, entertainment, residential and office uses.

Although it became an incredibly successful project from an economic standpoint, the redevelopment of the Woodies Building was never about ROI, IRR, NOI or DSC. It was about Vision, Patience and Confidence. The Vision to see what the Asset, the Neighborhood, and indeed the entire City could be and would be with the right leadership to get it there. The Patience to take the time, devote the effort and wait until the forces aligned to ensure that the development was done the Right Way. And the Confidence to believe in your plan and see it through, for if you don’t truly believe in what you are doing, you will never convince others who are crucial to the success of your development (tenants, zoning board members, surrounding property owners, etc.) to believe in and support your efforts.

- Douglas Jemal, 2012

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