Construction under way on CityCenter DC by Tim Evanson.
In downtown Washington D.C., the scaffolds of a $950 million development, the CityCenter DC, are rising. In the place of D.C.’s old convention-center-turned-parking-lot, the new three-block development will include residential units, commercial space, and public parks and plazas. It will be pedestrian-oriented, LEED certified, and gardens will line the rooftops. The development is “one of the largest active developments on the East Coast.”
Even with the prospect of a double-dip recession in America, the Qatari Diar Real Estate Investment Company is betting $700 million on it. The CityCenter may be a foreshadowing of America’s new economic engine for the next half-decade based on smart growth developments.
With a thousand new residents arriving in Washington every month, the city has big plans. Billions of dollars may soon finance developments in Washington D.C.’s “Southwest Waterfront, McMillan Reservoir, the former Walter Reed Hospital campus, the O Street Market and the grounds of the St. Elizabeths Hospital.”
D.C. Mayor Vincent Gray visited China last month to seek private funding, starting with $1.5 billion for Washington’s new streetcar system.
In San Francisco, the Bayview-Hunters Point/Candlestick Point redevelopment is in negotiations with China Development Bank to receive $1.7 billion of $3 billion needed to turn a former military base into an urban renewal campus. The redevelopment intends to push innovations in “social policy, technology, urban design, real estate and finance.” It includes private-public investments in neighborhoods and transit infrastructure.
The amount of private funding in these developments is particularly unique. Washington, D.C. had to search for private funding in order to not exceed its debt limit. Unable to secure domestic private capital, both San Francisco and Washington looked overseas. This should not be the case with $5.1 trillion (2009 figures adjusted to 2012) of pent-up corporate cash in the United States.
In order to invest the American economy, financial institutions need to shift away from the instruments that led to oversupply in the suburban housing market and build channels to funding smart growth developments. And unlike sprawl, smart growth means building quality assets with long-term value.
With cities outpacing the growth of suburbs for the first time in a hundred years, the demand is strong for this new built environment. The market is moving. Government needs to pare back incentives toward suburban housing and loosen the roadblocks to smart growth. As in San Francisco and Washington, it need only align with the market to unlock growth.