One of two JBG projects initially planned as apartments that switched over to condo.
The JBG Companies announced last week that two of its projects planned for the U Street Corridor would be delivered as condominiums instead of the original plan of rental apartments. It is the latest indication that large condo projects are making a comeback in the city.
JBG’s announcement included two buildings — one with 65 units, one with 91 units — but a few even-larger projects have been announced in recent weeks.
PN Hoffman is planning a 130-unit condominium on Parcel O at the Yards. MRP and CAS Riegler recently won a bid to construct 126 condos over retail at the Navy Yard Metro chiller site.
“You probably have to go back to 2006 or 2007” to see condos being built with 100 or more units, said Delta Associates’ William Rich. “We’ve seen large projects at CityCenter and Gaslight Square, but they were built in multiple buildings, so they don’t necessarily deliver all at once.”
There are a couple of reasons that larger, for-sale projects are now springing up. Demand for condos in the region has been outstripping available supply for at least a year in the region. Also, larger condo projects are starting to look more lucrative for developers in part because the apartment supply is outpacing demand in the DC area at the moment, said Chris Ballard, principal of real estate marketing firm McWilliams|Ballard.
“When a developer would look at a job and expect significant rent growth in the coming 12, 18, 24 months, there’s a lot more bias toward rentals,” he said. “These days, I’m not talking to anyone that’s expecting to see rent growth in the next 12-18 months. We’re seeing the bias shift toward condo.”
There likely won’t be many apartment-to-condo switches like the one JBG just announced this cycle, Rich told UrbanTurf, but he did state that about 2,000 apartment units under construction have the potential to be converted before they deliver. For JBG, U Street makes particular sense for a shift: Rich said it’s one of the strongest markets in the city for condos, along with Petworth, Shaw and Columbia Heights.
As for if the DC area will see 200-300 unit condo projects anytime soon, Rich said “the new normal” for large condo projects is in the 130-unit range.
PN Hoffman CEO Monty Hoffman said his firm won’t be building much bigger than the 130-unit project planned for the Navy Yard.
“I’m not for building really large,” he said. “130 is about the top.”
Another reason building more condos has become easier is financing, Ballard said. Both government financing and construction lending have relaxed somewhat, making it easier for developers to deliver larger buildings.
Though prices will be high, competition in the market could still be a boon for consumers, who at the moment have few options in specific DC neighborhoods.
“I think as you get more competitive, everyone’s going to raise their game, and I think it’s going to mean better product this cycle,” Ballard said. “We’re going to be delivering better-designed, better-executed product than we’ve ever seen before.”
This article originally published at http://dc.urbanturf.com/articles/blog/why_more_and_bigger_condo_projects_are_coming_to_the_district/8643
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