Category: Uncategorized

New Condominium Building Moderno is Quickly Selling Out

U Got Sales?

Posted by Ruth Samuelson on Feb. 4, 2009, at 3:17 pm

With no open houses, no advertising, and paint still drying, the Moderno’s quickly selling out.

Last weekend, Timur Loynab, sales manager of the Moderno near the corner of 12th and U Streets NW, had six scheduled walk-throughs. The weekend before, he gave seven tours. In a condo-glut market, he’s done no advertising beyond a sign on the side of the building that went up in early January. No targeted fliers. No fancy-themed opening-night party with circulating trays of Champagne flutes. No open houses. Until recently, the halls of this 19-unit building remained uncarpeted, and the paint on some walls was still wet.

Still, more than half the units-10-are under contract. Last weekend brought another offer. The price range is pretty typical for boutique buildings in D.C.: roughly $350,000 for one-bedrooms to $1.2 million for the most expensive three-level units, according to Loynab, who works for McWilliams Ballard.

Developers Paul Robertson of Robertson Development and Robb LaKritz and Joshua Adler of LaKritzAdler knew they had a good spot. “When we bought that site in the first place, we felt like this was about as strong a location as is left to build on U Street,” says Adler.

But the market’s also fickle. “The past year-really the past two years-has been such a strange time for condo sales in Washington. I don’t think anyone would know what would happen at any point.” According to a recent report by Alexandria-based real estate firm Delta Associates, more than 10,000 condos are for sale in the Washington, D.C., metropolitan area. So how can the area’s depressed developers get similar success? Follow along!

Locate your building roughly 60 steps from Ben’s Chili Bowl. President Barack Obama says U Street is the place to be. Or at least that’s what developer Adler thinks he read in the Washington Business Journal.* The line in the article “didn’t actually have quotation marks,” he says, “But maybe it was implied by Obama making Ben’s Chili Bowl his first place to eat in D.C.” Regardless, U Street is Obama Street, paved with Hope and Change. On election night, people danced in the streets and on bus shelters. Politico did a big feature that noted several Obama staffers actually live in the area and “even for Obama loyalists who don’t live there, U Street is becoming a communal hangout.” From the Moderno’s rooftop, Ben’s Chili Bowl is just out of sight. But as Adler noted, when people talk about lines around the block, they’re talking about 12th Street…home to his building.

Build practically on top of a Metro. The Moderno sits between both entrances to the U Street-Cardozo Metro stop. The closest is between 12th and 13th on U Street. When the escalators inevitably fail, the eastern entrance is a short jaunt to 10th and U. As commutes go, it’s pretty effortless. But LaKritz and Adler are still hoping to ease life for their buyers by getting a coffeehouse-type establishment on the ground floor. “What we’d really like to see is kind of a combination of café/gourmet market and wine bar. So in the morning, you can get cappuccino and breakfast. And in the evening, you can pick up lunch or dinner to bring home-but something that’s nice that’s already been made. And in the evening, you can hang out and have a glass of wine,” says Adler.

Find someone who loved U Street even before Obama discovered it. In 2006, Long & Foster real estate agent Lance Horsley was dealt a crushing blow. He’d pre-purchased a condo at View 14, a highrise still under construction at 14th Street and Florida Avenue NW, but the building didn’t sell, and developers turned it into rentals, nullifying his contract. Horsley, who says he would like to be “the mayor of U Street,” packed up his dreams and checked out 22 West in the West End and a few other spots around D.C. None gave him the U Street cred he was looking for. “I’m continually scouring for not only new buildings…but I’m also just looking specifically in that area for great projects,” he says. When Horsley got wind of the Moderno and its nice appliances and finishings, he knew he was ready to sign some papers. He purchased the largest penthouse in the building, with about 1,500 square feet and a deck with views in both directions. Horsley was so jazzed, he brought in three more clients to buy up some of the building’s most expensive units, all based on plans alone. So 2004!

Find even more buyers who promote you to their “friends.” At Yale University, Alex Reid and Adler were in an a capella group together. Seventeen years later, Reid is a lawyer looking for a condo in D.C., while his singing buddy happens to be constructing a swanky residential project. After Reid decided to purchase his Moderno unit, he took a camera into the building to document his new digs and posted the video on Facebook. The “tour” starts with a shaky shot of the exterior and an explanation about it being “in drywall phase.” He then leads viewers to his rooftop deck, making sure to note the future location of the hot tub. Various contacts chimed in. “Very exciting!” wrote one. “Where’s the lava lamp going to go?” Reid’s post also provided a few kind words about Adler, who responded with the final comment: “Thanks for the plug, Alex. I am indeed the developer. And we do expect delivery in January. There is ONE penthouse left, mirror image of Alex’s with U Street views from the hot tub on the roof deck. And there are several 1 bedroom dens and 1 bedrooms left. Prices from mid 300s to high 600s.”

Go to Italy. To developer LaKritz, Washington, D.C., is the “most European of [American] cities”-a wondrous land of ethnic fusion restaurants, where people don’t always work until 11 p.m., and they sometimes go out for drinks on weeknights. He wanted to “skip over this idea that New York is in some way more progressive than we are,” he says. So when it came time to shop for high-quality design elements, he thumbed his nose at Manhattan and headed straight for the Mecca of kitchen design: Milan. “What happens is design shows up at the Milan design fair. Then, it finds its way into the European market. Then 18 months after, it finds its way into New York. Then, a year or two after that, it finds its way to D.C.,” he says. In Milan, LaKritz picked out many of the Moderno’s modern touches, including German Liebherr refrigerators-built-in-and Spanish Porcelanosa cabinetry-made of rich mocha-colored wood. But Moderno’s process wasn’t all glam. Although he met reps for Porcelanosa in Italy, LaKritz did most of his ordering in a showroom in Rockville. Hey, what-ever works.

World’s Best Place for Real Estate Buys

by Matt Woolsey

Thursday, January 22, 2009

Washington, D.C., traditionally takes a back seat to world cities like London, New York and Tokyo when it comes to real estate investment.

That’s likely to change.

Thanks to a proposed $1 trillion wave government spending, investors are flocking to D.C. for opportunities in the commercial and residential real estate markets. All these new programs will need offices, after all, and their employees will need places to live. This year, Washington leapfrogged London for the first-place ranking in the world’s best cities for real estate investment. But don’t count out the world’s financial capitals just yet–even with massive financial troubles in London and New York, those cities finished second and third, respectively.

Why? It’s the appeal of long-term stability, and fears that emerging countries are going to take a harder hit. While the U.S. property market sputters, China is poised for its worst deflation in a decade, focused heavily on property price declines, according to Deutsche Bank.

“For the U.S. and U.K., part of it is flying back to safety,” says François Ortalo-Magne, a real estate professor at the Wisconsin School of Business.” For China and India, there’s a sense that we went there and tried it, but it wasn’t producing.”

Behind the Numbers

Forbes’ rankings come from the Association of Foreign Investors in Real Estate, a research association that tracks where member investors are finding the best opportunities around the world. AFIRE surveys its 200 members, who collectively hold $700 billion in cross-border real estate.

U.S. cities surged up this year’s list: San Francisco moved to sixth from 24th last year; Los Angeles moved to seventh from 19th; Houston moved to eigth from 32nd. Cities in the Asia Pacific region dropped: Sydney fell to 11th from ninth; Hong Kong dropped to 22nd from 10th place.

This year, investors know that valuations can’t be trusted. In 2008, the American residential market fell 19%, according to the Case-Shiller index; U.K. prices dropped 16% according to Nationwide, a U.K. builder. Commercial values in both countries have started to soften due to recessions on either side of the pond.

In 2008, investors to spend tried to call the bottom and gambled in emerging markets. This year, they’re looking at premium locations in cities with proven track records.

“We don’t feel comfortable that we are able to identify what value is,” says Richard Kessler, chief operating officer of Benenson Capital Partners, a global real estate investment group. “Having said that, if an opportunity exists on Park and 57th Street, or something we’ve always wanted to own on Pennsylvania Avenue in D.C., or some other very strategic long-term asset, we would look at it.”

That makes 2009 the year of playing it safe and not chasing exotic opportunities in far-flung locations. It’s even injected a sense of humility into the investing world.

“There used to be a rivalry between New York and London,” says Kenneth Patton, divisional dean of the New York University Schack Institute of Real Estate. “The subject has shifted to the fact that we’re both in the same lifeboat, and maybe it’s leaking.”

While some investors play it safe, others are content to wait out the real estate downturn entirely. “Most of the [usual] participants are sitting on the sidelines,” says Kessler. “There’s a lot of capital, but everyone is uncomfortable about deploying that capital.”

For their part, the optimists think 2009 might be the year that sideline money starts to come back into the marketplace–and, especially for the cities on this list, it will come back in a flood, not a trickle.

“There’s a lot of money that needs to be invested, says Ortalo-Magne. “The instant people feel an inkling of a turnaround, money is going to flow in.”

Whether that inkling comes in 2009 or 2010, however, is an altogether different question.

No. 1: Washington, D.C.

Commercial and residential real estate often function as different markets, but both need low unemployment and strong job growth to puts money in the pockets of consumers and help businesses to succeed.

At present, D.C. has the lowest unemployment rate in the country–4.1%, compared to the 7.2% national average. With President Obama’s stimulus package recommending $1 trillion in new spending, it’s unlikely government jobs–and those they support–will be leaving the District anytime soon.

Montgomery County Debuts Work Force Housing At King Farm

Washington Business Journal – by Mara Lee Staff Reporter

Montgomery County is ready to sell its first work force housing condominiums, just as the slow residential market begins to yield more affordable housing naturally.

The county spent $9.5 million to buy the 49 units at the Village at King Farm and an additional $26,000 per unit to replace carpet with laminate woodlike floors and remodel kitchens with granite countertops and stainless steel appliances. Part of that investment also went into common areas.

About half the condos are still occupied by renters who were living there when the county purchased the building. Those units will be renovated once the tenants move out.

The county will sell the units to Montgomery employees and Rockville city employees whose family incomes are 70-120 percent of the median family income. They must be able to make a down payment of about 5 percent.

The income limits vary by family size. For example, one-third of the units are reserved for buyers with incomes of no more than $42,000 as a single person, $48,000 for a two-person household, $54,000 for a family of three or $60,000 for a family of four. Those amounts may rise next year because the average income figure is recalculated annually.

The project contains two three-bedroom/den units, three two-bedroom/den units and 44 two-bedroom units. Prices start at $205,000 and top out at $380,000.

If all the units sell for the listed prices, the county will get $13.2 million — enough to cover the cost of purchase and renovation.

The work force housing will have resale restrictions for the next 20 years. If owners sell before 20 years, they get 15 percent of the gain between the market price when they bought the unit and the appraised market value when it sells. After that, they own all the value.

The Village at King Farm is seven-tenths of a mile from the Shady Grove Metro station and features a shuttle to the station. The county’s Housing Opportunities Commission managed the project.

Skip to content