Team led by Hines Interests named master developer of 67-acre Walter Reed campus

Jonathan O’Connell – The Washington Post

D.C. Mayor Vincent C. Gray (D) and his economic development team have selected a group led by Hines Interests, of Houston, to oversee efforts to transform the former Walter Reed Army Medical Center in Washington into a 3 million-square-foot town center project.

The choice ends a months-long competition between Hines and two other finalists to be named master developer of the site. All parties have been working to curry favor with residents of the neighborhoods surrounding the former hospital, which closed in 2011 and where the D.C. government is moving to acquire nearly 67 acres.

With a proposal called “The Parks at Walter Reed,” Hines and partners Urban Atlantic and Triden Development won the endorsement of both community groups and Victor Hoskins, deputy mayor for planning and economic development, who said Hines offered the District the best deal and a vision that most coincided with its own.

Hines, founded by Gerald D. Hines in 1957, brought on a slew of partners with long résumés in their fields, including home builder Toll Brothers and shopping center developer Weingarten Realty. In all, the companies plan 2,097 residential units, a mix of townhomes, duplexes and apartments, as well as 250,000 square feet of retail and 20 acres of open space.

The housing would include 318 residential units subsidized below market rate and a 73-unit senior living community. The original hospital building, where President Eisenhower died, would become a hotel and conference facility by Hyatt and Crescent Hotels & Resorts, part of a commerce and science center with space for George Washington University and a Massachusetts Institute of Technology “Fab Lab,” aimed at spurring location innovation.

In an interview, Hoskins praised the other finalists, led by Forest City Washington and Roadside Development, both partners with the city on other projects, but said the Hines team had the best plan for Walter Reed due to its proposed economic terms, affordable housing, environmentally sustainable features and adherence to the District’s small area plan for the campus.

“On this site and the characteristics of this site, Hines was just the best fit,” Hoskins said.

After initially presenting their ideas at a public forum in July, all three teams ran campaigns aimed at winning the favor of residents. Hines won two key endorsement recently.

In mid-September Advisory Neighborhood Commission 4A, which represents residents on multiple sides of the former hospital, endorsed the Hines proposal and a week later ANC 4B, which represents neighborhoods to the east, picked the Hines team as well, saying its proposal best conformed to the city’s plan. Five members ANC 4B voted to back Hines, three to back Forest City Washington and none for Roadside Development, which centered its bid around its relationship with Wegmans.

Hoskins said residents appreciated Hines’ adherence to the city’s plans for the site. “I think they saw what we saw, which was a real commitment to it. [Hines] really embraced it,” he said.

The choice was also a reflection, Hoskins said, of Hines work, with Triden as a minority partner, on the downtown project CityCenterDC. Hines, through myriad overseas connections, landed a $622 million investment from the real estate investment arm of the Qatar Investment Authority, allowing construction to begin in 2010 despite the national financial collapse.

For all the Qatari investment may mean to the District, it hardly stands out among Hines’ portfolio of urban projects around the country. Last week the firm secured a $300 million investment from Singapore that will allow construction of a 72-story luxury condo tower next to the Museum of Modern Art in New York to begin next year. In San Francisco, Hines is planning a 61-story, 1.4 million-square-foot office tower, which would be one of the tallest buildings on the West Coast.

Walter Reed gives Hines another long-term D.C. project now that CityCenter’s 520,000 square feet of office space, 458 apartments and 216 condominiums are nearly done. CityCenter is expected to provide the city with millions of dollars in tax and lease payments for many years. At Walter Reed, Hines envisions a $1 billion development providing the District $37 million annually in taxes.

A major next step for Hoskins and Martine Combal, the Gray administration official who heads the Walter Reed Local Redevelopment Authority, will be securing control of the campus from the Army, which still maintains and secures it. Hoskins said he was not sure yet what it might cost to acquire the property or who would pay for it. “It’s really hard to say if that would come out of our pocket or that would come out of the developers’ pocket,” he said.

Also uncertain is whether the Walter Reed redevelopment will require subsidies from the District, but Hoskins stressed that Wegmans — despite the grocer advocating on behalf of D.C.-based Roadside — and other retailers were very interested.

“Wegmans is like any other retail grocery store,” Hoskins said. “They examine a location very diligently. Our conversations with them have pointed to this site. We know that these decisions are always hard but the bottom line is that they were serious about this site prior to this selection and we expect that they will be afterwards.”

The Walter Reed project initially drew interest from nine developers. Hines-Urban Atlantic posted information and videos about their proposal at their Web site, Walter Reed Tomorrow.