Meyer Consulting Engineers

Little Things Important to Silver Spring Development

By Neil Irwin
Washington Post Staff Writer
Monday, July 7, 2003; Page E01
The Gramax Heliport building, a 1960s office building, could well be the embodiment of all that has gone wrong in the development of Silver Spring in the past half-century.
It is an eyesore at 8060 13th Street, surrounded by more eyesores, near the intersection of Georgia Avenue and East West Highway. It has not been used as offices in a decade, instead standing as a testament to the lethargic process of Silver Spring development, even as most of Montgomery County has boomed.

The Gramax Heliport building in Silver Spring is getting a $25 million renovation. It will be a 180-unit apartment building. (Courtesy Of Rst Development)

After all these years, the Gramax building is being renovated into a slick, modern apartment building with 180 units, most of them reserved for people with moderate incomes.

The construction of Discovery Communications' new headquarters in downtown Silver Spring, which opened this spring, and the new headquarters of the American Film Institute nearby, have captured lots of attention as milestones in the redevelopment of the run-down suburb.

But another generation of building projects like the Gramax has begun. The projects are generally smaller and less flashy than Discovery and AFI, but it is the success of these projects that will determine the character and prosperity of Silver Spring and perhaps offer lessons in redevelopment to other Metro-connected inner suburbs.

Office buildings such as those housing Discovery are important to revitalizing Silver Spring, developers say, but the degree to which those projects spur more residential and retail development will determine the ultimate success of the revitalization.

There are signs that is happening. Besides the Gramax building, several firms are at work on smaller apartment and condominium projects: JBG Cos. plans a building with about 210 apartments on the site of the old Canada Dry building on which construction is to begin in late summer, and Foulger-Pratt Development is at work on a 223-apartment tower near the Metro stop.

"We feel like Silver Spring is generally an improving market," said Stewart Bartley, a principal of JBG. "These types of inside-the-Beltway locations are getting more desirable as traffic congestion gets worse and worse."

Work continues on a retail complex in downtown Silver Spring, built by Peterson Cos. and Foulger Pratt, that already contains a Whole Foods grocery store and is being expanded to include more restaurants and stores, a project comparable to Discovery and AFI in the city's development.

Next door is City Place Mall, which opened in 1992 in an earlier iteration of Silver Spring redevelopment. It was unsuccessful but a $4 million renovation began last month.

"It was basically a small vertical mall off by itself in the middle of no other retail," said Larry Hoffman, principal of H&R Retail, which is leasing the property. "It never took off, and we've been waiting and waiting for something to get going. Now it finally is."

Those mid-size projects, along with a dozen or so smaller ones, represent the inevitable march of developers toward desirable land. But people who have been involved with efforts to develop the city say something more complicated is afoot.

The 15-story, 130,000 square-foot Gramax, for example, does not have what most developers would call ideal location or structure.

First, it needs a top-to-bottom renovation to be acceptable to modern renters. The only way it could work financially, said Scott Copeland of RST Development, is to reserve most of the apartments inside for moderate-income residents, in exchange for tax and other benefits. RST also controls properties across the street that will eventually be more conventional apartment buildings.

The $25 million project has received a range of incentives, including a tax-exempt bond underwritten by the Montgomery County Housing Opportunities Commission, along with various forms of financing assistance from the county, the state of Maryland, and the Housing and Urban Development Department. The trade-off: 70 percent of the apartments must be priced to be affordable to those who make 60 percent of the region's median income. Last year's median household income was $87,000, so households with an annual income of $52,200 or less would be eligible. Fifteen percent of the apartments are for tenants with special housing vouchers and 15 percent are to rent at the market rate.

Gramax is half a mile from the Metro station and is surrounded by auto-repair shops and other light-industrial businesses Because it is such an old building, it will not have the rooftop pool or other such amenities that make market-rate competitors more attractive. It will have a fitness room, high-speed Internet access and a 4,500 square-foot space on the first floor for art exhibitions, Copeland said.

"It's a place where teachers and police officers and ordinary people can afford to live in a good, safe, attractive building, which there aren't enough of in this area," Copeland said.

The area is a reminder of how different Silver Spring is from its neighbor, Bethesda. Silver Spring, historically middle class compared to the high-dollar homes and stores of Bethesda, remains grittier, though to what degree that will change with the new wave of development is an open question.

For development officials in other communities, the lesson may be that each suburb is different, and that those differences can be exploited.

"You have to look at what your assets are," said Elizabeth B. Davison, director of the Montgomery County Department of Housing and Community Affairs. "The cornerstone for practically all of this has been the Silver Theater. We took that historic theater and re-created its grandeur, and have been able to attract AFI and Discovery. We've been able to take that and create multiple kinds of incentives that build on Silver Spring's history."

Neil Irwin writes about commercial real estate and economic development every week in Washington Business. His e-mail address is irwinn@washpost.com.