Wal-Mart nixes stores at Skyland, Capitol Gateway

Wal-Mart has canceled long-standing plans to build two stores in D.C., raising doubt about the future of Skyland Town Center, the massive project in Ward 7 a decade in the making.

The news came Friday morning as part of an announcement that the world's largest retailer would close 269 stores worldwide, including 154 in the United States. Prior to releasing its full list of store closings(one in Baltimore, none in Virginia), Wal-Mart said it will pull out of the Skyland and Capitol Gateway projects in Southeast and Northeast D.C., respectively.

"As part of a broad, strategic review of our existing portfolio and pipeline, we've concluded opening two additional stores in Washington, D.C., is not viable at this time," a Wal-Mart spokesman said. "Our experience over the last three years operating our current stores in D.C. has given us a fuller view on building and operating stores in the District. This decision will not affect our three existing stores and we look forward to continue serving these customers in the future."

We're reaching out to the developers of Skyland and Capital Gateway for comment and will update this story when we hear from them.

The $220 million Skyland project on 18 acres at the intersection of Good Hope Road, Alabama Avenue and Naylor Road SE is being developed by a joint venture led by The Rappaport Cos., WC Smith and the Marshall Heights Community Development Organization. The project has faced tremendous hurdles over the years, and the developers have said it is not viable without Wal-Mart as an anchor.

The project won the Washington Business Journal's Best Real Estate Deals award for perseverance in April after Wal-Mart officially signed the 125,898-square-foot lease in December 2014. The most recent hurdle was resolved in October, when the city came to an agreement with Safeway to rid Skyland of a restrictive covenant and advance the project. The D.C. government agreed to pay Safeway $900,000 a year for four years, beginning in 2019, to do so.

Site work for the first phase is well underway, but vertical construction was not scheduled to begin until early next summer. L.F. Jennings is the contractor. Click here to view a webcam showing construction.

Skyland is expected to include 200,000 square feet of retail and 267 units in the first phase, and roughly another 210 units and 142,000 square feet of retail in a second phase. The development team has compiled a diverse mix of funding sources — $55 million in EB-5 foreign investment, a $7 million D.C. grant and $40 million in tax increment financing, among them.

“I am angry and I take this personally as I advocated to bring them to Ward 7. The District had a deal with Wal-Mart to bring in five stores with two coming to Ward 7. They signed leases and now they have broken their deal,” said Councilmember Yvette Alexander, D-Ward 7, in a statement. “This has racial and social-economic discrimination implications. This is a major setback but I am confident that the District will do everything possible to move forward with the projects.”

D.C. Mayor Muriel Bowser said she's "blood mad" about Wal-Mart's decision, according to NBC4.

Capitol Gateway, at 5800-5804 E. Capitol St. NE in Capitol Heights, is already under construction. In addition to the 130,000-square-foot Wal-Mart, plans for the $120 million, 11-acre site include 20,000 square feet of additional retail, 312 affordable housing units and open space. A&R Development and The Henson Development Co. are the developers.

Wal-Mart Stores Inc. announced in 2010 it would enter the city of D.C., building four stores, at New Jersey Avenue and H Street NW, at Georgia and Missouri avenues NW in Brightwood, in Capitol Heights and on New York Avenue NE at Bladensburg Road, which later was nixed. Under pressure from then-Mayor Vincent Gray, Wal-Mart announced in late 2011 it would open two more stores in the District, at Skyland and Fort Totten.

The New Jersey Avenue, Georgia Avenue and Fort Totten stores are all open and unaffected by the announcement.

http://www.bizjournals.com/washington/breaking_ground/2016/01/wal-mart-nixes-stores-at-skyland-capital-gateway.html

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