Rarefied Air: DC's Luxury Loft Market

• December 1st 2008

by Mark Wellborn

Walking into a property that is listed for $2.7 million is a little overwhelming, and when that property is an industrial loft in Adams Morgan it can be awe-inspiring. Last weekend, UrbanTurf was invited to take a look at two lofts at 2424 Lofts, a four-unit development on 18th Street, Adams Morgan’s main drag. During the tour, we began to wonder what the market is like for homes like this in DC, and who is buying them.

Before getting to that, we should talk about the units.

The larger of the two lofts (R2), listed for $2.7 million, is a 3,800 square-foot, three-floor industrial space that has a living area big enough to throw around a football. There are 14-foot ceilings, two bedrooms, a private deck on the second floor, a roof deck with downtown views and a garage parking space. The concrete floors and exposed ductwork reinforce the unit’s industrial feel. Because the unit is at the back of the development, it remains relatively immune from the weekend noise coming from 18th Street.

The other unit on the market (R1) is at the front of the building, and is listed for $1.99 million. The maple flooring, high-end fixtures and ten-foot windows that run along the wall that faces 18th Street give the 2,600 square-foot condo a very refined feel. An important difference between this unit and the one in back is that it looks out on the neighborhood’s main strip and is more vulnerable to weekend crowd noise.

The lofts were open last weekend by invite only. While invite-only showings usually point to the exclusive nature of a property, in this case it had much more to do with location.

“If I had a $2 million house listed in Georgetown, I would make it open to the public,” listing broker Fred Bates told UrbanTurf. “But people who are strolling around neighborhoods like Adams Morgan on a Sunday are not all that likely to pop into a $2.5 million open house.”

Perhaps more to the point is that DC is not a city that attracts a large clientele that is interested in buying properties like these two lofts. According to MRIS statistics, only fourteen condos above $2 million have sold in the DC area over the past year. Bates guessed that there are probably less than ten prospective buyers in DC that are currently looking for this type of home. Eight people have already come by to take a look at his listing.

“DC has gone through a tremendous transformation in the last decade, however it is not considered a city that people flock to for this type of home like they would to New York City and Chicago,” Bates said. “While I think DC will be a world-class city in the next ten years, most people that are looking for homes like this are looking outside the DC area.”

Another factor that will limit the list of prospective buyers for a property like this is the amount of cash on hand that is needed for a down payment. A representative from Washington Home Mortgage, who was at the open house, told UrbanTurf that a buyer would need to put down at least forty percent of the closing price for one of these two properties. That is about $1 million.

The building’s current roster of tenants, which includes a record producer, a woman who owns a defense contracting company and a German professor, are a diverse and wealthy group for this section of the 20009 zip code.

Bates initially heard about the larger unit at 2424 Lofts because one of his clients from California was looking for a loft in DC, and had grown tired of being shown what have been dubbed “McLofts,” units in new developments that purport to be lofts but are in fact a far cry from the converted industrial spaces that gave rise to the term. Bates has since become the listing broker for the property and is spending a good deal of his marketing budget advertising in other cities.

“I think the buyer is going to be someone young, perhaps a business owner or attorney coming from outside the area,” Bates said. “Fortunately, there are still a lot of people with $1 million cash on hand.”

This article originally published at https://dc.urbanturf.com/articles/blog/rarefied_air_dcs_luxury_loft_market/373.