Thursday, April 23, 2009
10th and K Entertainment Project
With a 45% ground floor vacancy rate, K Street’s health is currently struggling. These spaces have been vacant more than eight years and have seen several projects – all proposed with subsidies - come and go. Currently David Taylor Interests (DSTI) and the CIM Group (CIM) have proposed the following K Street Entertainment Project:
• 1016 K Street: This 3,000 sq ft parcel will feature Dive Bar, a trendy play on a vintage dive bar. Dive Bar will feature an iPod jukebox with a selection of many musical genres.
• 1020 K Street: This 5,600 sq ft parcel will feature Pizza Rock, a high-end pizza restaurant. The restaurant will feature pizza acrobatics and trained pizza artisans.
• 1022 K Street: This 4,300 sq ft parcel will feature Frisky Rhythm, an upscale nightclub targeted to an audience ages 30 and up.
• 1012 K Street: This 12,000 sq ft parcel will undergo building shell and core renovations. No tenant has been identified yet.
Major upgrades will need to be made to make the parcels market ready. Hazardous waste issues, seismic retrofit and utility upgrades, and antiquated infrastructure are just a few of the significant costs present in most K Street projects. Additionally, the tenants will be paying market rate rent and thus not undercutting existing businesses by offering subsidized mortgage rates. Tentative target delivery date is late 2009.
Financing: The total budget for this project is $11.8 million including tenant and developer investment as well as proposed public investment.*
Investment in 1016, 1020, 1022 K Street
Public Investment $3.4 million
Private Developer $3.4 million
Tenant $1.7 million
TOTAL $8.5 million
Est. investment in 1012 K Street
Public Investment $2.0 million
Private Developer $0.24 million
Tenant $1.1 million
TOTAL $3.3 million
Total Public Investment $5.4 million
Total Private Developer $3.6 million
Total Tenant $2.8 million
TOTAL $11.8 million
* The public investment is derived from proceeds of the Sheraton sale in 2008. Under the sale terms, half of the transaction proceeds would be available for DSTI/CIM projects in the JKL Corridor with City Council approval.