For years, a centerpiece of the former Walter Reed Army Medical Center campus in Northwest D.C. has remained dormant while a new neighborhood has grown around it.
That could soon change.
The trio of companies redeveloping most of the campus — Urban Atlantic Development, Hines and Triden Development — have tapped Marcus & Millichap to market the 308,206-square-foot General Hospital building for sale and redevelopment. Marty Zupancic, Eric Jentoft and John Slowinski are listing the site.
The property, facing Main Drive NW and the Great Lawn, is known as Building 1. It opened in 1909 but has been empty since 2011 when the campus was closed and operations moved to Bethesda under base realignment.
The site is surrounded by new development: To the northwest, Children’s National Hospital built has opened its new innovation center on 12 acres. To the north, east and south, Hines, Triden and Urban Atlantic are well underway on the 66-acre Parks at Walter Reed, a 3.1 million-square-foot mixed-use town square.
D.C. owns the 66 acres, including Building 1, and ground leased them to the joint venture, which is redeveloping them under the master plan or, in some cases, engaging other companies to redevelop portions. For example, Toll Brothers is building townhomes at The Parks.
But the ground lease allows for the master developers to sell the property on D.C.’s behalf, meaning a 100% fee-simple deal for the building and land could be in the works if a deal is reached. I’ve reached out to Vicki Davis, managing partner of Urban Atlantic, and will update this post if I hear back.
Marcus & Millichap will accept bids for the site, but marketing materials don’t indicate an asking price. D.C.’s Office of Tax and Revenue shows an assessed value of $84.25 million for 2024, and Zupancic said the team will spend about 90 days trying to test the waters in the market to gauge interest in the building.
The Walter Reed General Hospital building was the campus’s original hospital facility. It treated wounded soldiers and pioneered new surgical techniques for decades, including serving as a center for the research and development of the polio vaccine. A larger 1,200-bed facility was built just north of Building 1 in 1977, but that was demolished to make way for The Parks.
“We want to focus on taking the historic things about the building and adapting them to new life,” said Zupancic, a senior vice president of investments for Marcus & Millichap, in a phone interview.
He said “adaptive reuse” could take many forms. The approved area plan for the campus allows for residential, retail, hotel, office, education and restaurant uses. Different areas of the hospital’s four wings may be suited for one kind of real estate versus another, he said.
“It’s a centerpiece for the entire campus,” Zupancic said. “There’s so much you can do here, slice up the property to use in any way, shape or form. Some things and some pieces of the puzzle are more suited for certain uses, but we envision some potential for multiple things.”
But there are also resources to help get the project financed in the difficult environment that real estate faces in 2023, with the building sitting in an opportunity zone and in a designated “severely distressed” census tract, which opens up the ability to use New Markets Tax Credits, plus possible historic tax credits.
The Parks at Walter Reed’s main square, anchored by a Whole Foods, other retail and apartments, is the centerpiece of the larger $700 million development, which is slated to include 2,100 housing units, 100,000 square feet of retail and 200,000 square feet of office at buildout.
The long-term plan is for most of the historic buildings remaining on the campus to be redeveloped or preserved. But the development team has also marketed a few other properties on the campus, largely aimed at developers with niche ambitions.
Read More at Washington Business Journal.
Marcus & Millichap is the nation’s largest brokerage firm focused exclusively on investment sales. It is based on a simple premise: matching each property with the largest pool of pre-qualified investors. With over 2,000 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research, and advisory services. Founded in 1971, the firm closed 8,954 transactions in 2020 with a value of approximately $43 billion. Marcus & Millichap has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more about the company, please visit www.MarcusMillichap.com.