Why Larger Condo Units Aren’t Being Built in DC

  • July 18, 2014

by Lark Turner

A Capitol Hill project with larger condos from Madison Investments.

It’s a common refrain: DC needs bigger condos for families that want to stay in the city.

Requests for larger, family-sized condos come up almost every time a development is proposed, especially in the city’s densest areas. They’re brought up at ANC meetings, in conversations with home buyers and often in the comments section of this website. But developers in the city say the market and demand for big condos isn’t quite as large as people think.

“For really large condos, that market is not that deep and the locations for that product have to be very special, very selected,” Monty Hoffman, the head of Wharf developer PN Hoffman, told UrbanTurf recently. “It makes for good dinner conversation, but from a business perspective it may not be quite as deep as some people think.”

That means residents face an uphill battle convincing developers that the type of new homes that a neighborhood needs are family-sized units, especially when those developments are in neighborhoods in the heart of the city. At a recent ANC 2B meeting about the St. Thomas Parish Church project in Dupont Circle, ANC Commissioner Mike Silverstein asked the developer CAS Riegler if larger, family-sized units might be considered.

“We’d love more two- and three-beds so that people can have children and remain in the neighborhood and go to our local schools,” said ANC 2B-09 Commissioner Noah Smith, summarizing the ANC’s thinking on larger units. (The ANC has also supported micro-unit projects in the neighborhood.)

Some neighbors may also prefer living next to condo owners, whom they perceive as more invested in the community, and families in particular, because they’re seen as more quiet. But whether young families are actually interested in living in condos in the densest parts of the District is another question.

David Gorman, a principal at Lock 7 Development, echoed Hoffman when he suggested that the people most interested in DC condos are affluent young professionals, not families.

“Personally, I think families are still looking for the amenities of a house-space for children, a yard, a garage,” Gorman told UrbanTurf. “The majority of buyers we see for our units are young professionals without children who want to be near shopping, restaurants and downtown.”

He also noted that the larger units get, the less developers end up reaping in price per square foot, the reigning indicator of a successful project in the development world. Micro-units, if they end up working well in DC, will take in a healthy rate per square foot in the rental sphere. Big condos, unless they are very high-end units going for top dollar, just don’t offer the same return on investment as smaller condos.

“Generally people prefer more space to less space, it’s just a question of how much more buyers are willing to pay for the larger condo,” Gorman noted. “It’s historically been accurate in DC that prices per square foot go down as the square footage of the unit increases.”

Still, some developers, including Madison Investments, are working on projects intended to target the family market. Madison’s Barry Madani told UrbanTurf that the company’s upcoming project on Capitol Hill at 912 11th Street SE (map) would be targeted at family buyers.

“We’re bullish on larger units at the moment,” he said. “We just think that with everyone going micro and making units smaller and smaller that [larger units] are something people want.”

Such units may work best in a neighborhood like Capitol Hill, where land is less expensive than it is in Dupont and families are searching for homes but increasingly being priced out of the rowhouse market, Gorman suggested.

“I’d think that areas with the most expensive houses would also make the most sense for a larger condo,” he said. “It may be a good option if someone is priced out of a house — like Capitol Hill or Chevy Chase. “

This article originally published at https://dc.urbanturf.com/articles/blog/if_the_district_needs_them_why_arent_developers_building_bigger_condos/8755

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