In the midst of the news about the Wall Street bailout the Washington Business Journal investigated how the further tightening of the credit market may influence construction inside the district.
“[Securing financing is] a significant problem,” said John Sikaitis, vice president of research for the D.C. office of Jones Lang LaSalle Inc. “For any speculative project, both inside and outside the city — even in core locations downtown — it’s basically impossible.”
James “Jad” Donohoe IV, whose company plans a 200,000-square-foot office building at 1111 New Jersey Ave. SE, said he has no choice but to broaden his financing net to include nontraditional sources of funding, such as syndication arrangements with multiple banks, sovereign wealth funds and equity from hotels that will be part of the development.
“We’re still in the early stages now, but we’ve already been searching those things out for this and for other projects we have out there,” he said.
The Arts at 5th and I is suggested to be 18 months from breaking ground. Hopefully the commitment from the future tenants such as the Me by Melia hotel aids prospects for financing.