Forecasting Washington, D.C., development in the Trump era

Washington, D.C., is a city attuned to deadlines, facing moves, shakeups, and personnel shifts every two to four years. This is especially true between a November election and the inauguration of a new president the following January.

In the midst of such a holding pattern, the promotional billboard with a countdown clock on Maine Avenue may not be the first thing on anybody’s mind. But the ticker, marking the days until The Wharf, a $2.2 billion mixed-use mega-development on the city’s southwest waterfront, opens, also anticipates another significant change for the city.

“We view this as a paradigm shift,” says Monty Hoffman, the co-manager of Hoffman Madison Waterfront LLC, the real estate partnership behind the ambitious scheme. “If you look at world-class cities, the images you normally see are the skyline next to the waterfront. We’re late to the game of commercializing the waterfront, but now all these connections are possible.”

Whatever Americans think of when they picture our nation’s capitol, Hoffman believes that image is about to change.

And it’s not just because of his own massive project—225,000 square feet of office space, 870 residences, 175,000 square feet of restaurant and commercial space, three hotels, and a 6,000-person concert hall—anchors the frenzy of activity in a quadrant of the city suspended by a failed urban renewal scheme.

With other mixed-use developments such as Buzzard Point, The Portals, and Waterfront Station, the southwest D.C. waterfront has been one of the nation’s busiest construction submarkets.

The Wharf is indicative of how urban growth nationwide—particularly in the wake of policies that cleared out existing residential blocks—have set the stage for blockbuster developments. It’s also a case study for how the District has changed in the face of skyrocketing real estate values and an influx of new residents. (The millennial population has jumped 30 percent in the last decade.)

“There’s a great deal of swagger here today that did not exist even 10 years ago,” says Hoffman. “Think of D.C. as a teenager and the federal government as the parents; now, D.C. is starting to create its own identity.”

Where some feel confidence in this period of transition, others feel anxiety. Some feel the incoming Trump administration, whose followers have used “draining the swamp” as a rallying cry, will have a not-so-positive effect on the city’s growth streak. Also worrisome is Trump’s talk of cutting funding for sanctuary cities such as D.C.—Mayor Muriel Bowser has stated she won’t be changing the city’s immigration policies anytime soon—as well as freezes or potential cuts in the federal workforce.

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John F. Kennedy once said D.C. was a city of “southern efficiency and northern charm,” a quip that gets at one of the many dichotomies at the heart of its identity. Compared to other major U.S. cities, D.C. has sometimes struggled to establish a national presence beyond its role as the capitol. Congressional control of its budget, as well as an economic reliance on the federal workforce, doesn’t help, nor does a half-century of declining population.

But things have changed in D.C. since the Great Recession. When other cities struggled in 2009, the stability of the federal workforce helped D.C. weather the storm better than most, according to Peter Tatian, a senior fellow at the Urban Institute. President Obama’s election “created a buzz” in the Capitol, he says, an attraction that happened to occur as the millennial rush toward urban centers began cresting.

D.C.’s built-in attractions—a walkable urban plan, public transportation, and picturesque neighborhoods—made its stock quickly rise. Just two years ago, Forbes recognized the changes when it named D.C. the coolest city in the nation, praising the dining and entertainment options in the “high-amenity city.” Now, says Tatian, the city has become much more diverse economically, with the same startups you see in other cities and growth outside the government sector.

“I think residents feel safer and as a result are more entrepreneurial,” says Eric D. Shaw, director of the city’s planning department. “There was perception that there places you could not go. I think 15 years later we are seeing a thriving city built around catalytic economic development projects like Gallery Place, the baseball stadium, and the NoMa-Gallaudet metro stop.”

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Vincent Gray, a native Washingtonian who served as Mayor from 2011-2015 and now represents the 7th Ward, says D.C. has become a “city on the grow” over the last five years, exhibiting a dynamism that’s become a potent draw, boosting the city’s population by 80,000 in the last decade.

Big developments, such as CityCenterDC downtown, the new Nationals Park, as well as new arts centers and hot neighborhoods such as Shaw and Columbia Heights, have welcomed a growing and diverse population (while also fueling concerns of gentrification).

“People used to find it difficult to differentiate the federal presence from the local one,” says Gray, “but now there’s more local confidence in the city.”

The capitol’s sustained post-recession bounce has given it increased cultural cache and a relatively booming economy, with signs the upswing will continue: The Metropolitan Washington Council of Governments, a regional nonprofit, predicts D.C and the immediate area will grow by 42 percent by 2045, with a majority of that growth—315,000 people—occurring in the District.

Gray points to the arrival of companies such as WeWork, as well as the arrival of the 1776 startup incubator, as signs of forward-thinking, diverse growth and the city’s emergence as a tech hub. George Mason University’s Dr. Stephen Fuller believes that if D.C. can continue to diversify and play off the region’s global connections, it can continue to grow.

“Our connectivity to the world is greater than any other metro area, we just have to trade on it,” he said.

Rapid growth has also brought questions of affordability and equitable development, which hasn’t been shared across the city (Gray pointed to eastern parts of D.C. as areas that needed more focus). According to Aaron Terrazas, an senior economist with Zillow, over the last 6 or 7 years, almost all the growth in the region has been inside the District, which has only accelerated the rise in rents and property values.

The shift in home values mirrors the bigger trends toward urban living. At the start of the Bush administration, homes in the upscale suburbs around the Beltway were 14 percent more expensive on average than those in the city. Now, downtown homes are worth 27 percent more.

“If you look back even a decade ago, inside the city was relatively affordable,” he says. “I’m not sure that’s the case anymore.”

City planner Eric Shaw says the city is squarely focused on growth strategies that make D.C. work for everyone, pushing sustainable growth, improved infrastructure, and accessible transportation (via the Move DC Plan). To tackle affordability issues, he outlines a few must-dos: The city should invest in quality public services, including schooling and transportation; broaden the pool of desirable neighborhoods; add housing in stable neighborhoods; and ensure affordable rents across all neighborhoods for those without the income to meet market rate prices.

Issues of affordability and equity both inform the debate over D.C.’s future, and the direction of its trajectory. Some, like former Mayor Gray, worry about the city’s image and economy, as well budgetary and legislative changes that could be enacted by the Republican Congress.

“I think it’s creating anxiety,” says Gray. “The federal government is a hugely important part of our city, and people [here] clearly didn’t expect Trump to win.”

Hoffmann, the real estate developer, remains sanguine, and sees demand continuing to drive development and growth. New administrations always prove good for the real estate market as a new cadre of appointees and staff move in, he says. From Clinton to Bush, D.C. has always seen an uptick, and he expects the same with President-elect Trump’s arrival.

Hoffman and others see a city that’s ready to shake the unfair national stereotype of being a “company town” tied to the federal government. “We won’t overreact to a change in the administration,” he says. “As a city, we’re much more durable than that now. We’re going to see an influx of people and ideas, not a reversal.”

Deputy Mayor Brian Kenner, who just penned an optimistic op-ed about the transition, echoes a similar hope for D.C.’s continued prosperity. Kenner argues, “[its] upward trajectory is not defined by who who sits at 1600 Pennsylvania Avenue.”

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