West Heating Plant Auction Slow to Start

West Heating Plant

As reported in the Washington Business Journal, the auction for the West Heating Plant began last Friday but has yet to receive a single bid.

The auction runs until February 19th, so there’s still plenty of time until the gavel comes down. But the lack of initial interest may be telling of significant challenges GSA will have finding eager buyers willing to pay a high value for the property.

The problem is that the winning bidder almost certainly will not be permitted to knock the building down. While most developers would love to keep the sweeping views the unusually tall building will provide, the fact is that the costs to retrofit the building will be so high that they will quickly outstrip the value of that view.

Added to the uncertainty is the fact that the staff of the CFA have given strong indications that they will not look favorably on requests to alter the window openings. Given the hulking size of the building, without more windows it will be a gloomy interior (and GM is told that large beams block a lot of the light that does come through the current windows).

That same staff is still holding out hope that a non-residential use for the building can be found. In other words, they’d rather see a twenty screen movie theater instead of a twenty condo apartment building.

Perhaps likely bidders like the Levy Group and Eastbanc are waiting until the auction gets closer to the end to bid (GM employs this strategy in his equally important EBay auctions). But GM wouldn’t be terribly surprised to see the building ending up sold for a shockingly low price.

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4 Comments

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4 responses to “West Heating Plant Auction Slow to Start

  1. jacquer

    And purchased by Colonial Parking, perhaps. Hard to think of many residential or commercial ventures that would fit in that building without more windows (or perhaps some amazing skylight/atrium combination).

  2. Walter

    As the building and the land are being auctioned on an ‘as is’ basis, there are substantial costs — above the successful bid price — that will be incurred in remediating and removing the hazardous substances that contaminate the building, and possibly the land as well. And add the costs of removing and scrapping the boilers, pipes, and other machinery, and then also add the cost of repairs to the collapsing ‘seawall’ that helps control flooding of the property (the tidal Potomac flows up Rock Creek to the heating plant), and substantial sums of money will be spent on simply getting the building and site ready for another use.

    Further, there are constraints on building in the yard area of the site: a 16 foot right of way for a large, active sewer runs through the middle of the property from north to south, and GSA cautions any future owner from breaking the concrete cap that spans the entire yard, and uncovering whatever toxic and noxious substances that may lie beneath.

    Recouping all that up-front spending almost certainly dictates that the building be adapted for residential or hotel use.

    However, potential bidders are currently confronted with great uncertainty about the extent that alterations to the facade will be allowed. The height and wonderful views from the top are of no value if no one can live or dine at or near the top of the building.

    The mayor recently wrote the acting Administrator of GSA stating that any significant changes to the facade would be an adverse impact, and asking that the auction be deferred until the scope of allowable facade changes could be better defined. GSA rebuffed the mayor’s request, in part citing the determination by the city’s historic preservation officer that there would be no adverse impact, presumably premised on a view that any facade changes that would be allowed would be insignificant.

    Finally, any my opinion, if a developer is foreclosed from using the top of building because the facade can’t be altered, the building will be demolished, and a shorter building(s) constructed on the site.

  3. Pingback: What’s next for Metro

  4. Slow start? There’s an understatement for ya.

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