Another Condo Goes Rental

IMG_7190, originally uploaded by Prince of Petworth.

Sidney on the Avenue located at 3318 Georgia Avenue is going rental. Seems like a number of condos are turning over to rentals. Is the trend of previously designated condo projects switching to rentals a good thing or a bad thing?


22 Comment

  • Reality is that nobody wants to buy an over-priced condo in a death trap of neighborhood.

  • I suppose it doesn’t matter if the units are occupied by renters or owners, as long as they are occupied. Unowned/occupied units are a blight on a neighborhood (and Georgia Ave definitely doesn’t need any more blight).

    I agree with Zbergman that these will be hard to sell in such a crime-intensive neighborhood.

  • It is a bad thing for the rental market as it continues to flood the area with more supply of rental homes, thus lowering overall rents. Why are people referring to Georgia Ave in such a derogatory way? The police station is right around the corner on Park Road and the neighbors really seem to look out for one another…

  • Before this turns into another long thread about GA, please remember that good people live here. My god, I’m sorry we couldn’t afford a half-million dollar brownstone on the ‘other side’ of Sherman/11th/13th/14th etc. Get over it people!

  • A friend of mine lives DIRECTLY behind that police station. his driveway backs right up to it. and his car got broken into. thought that was classic. Also the price was too high for the neighborhood in this market. People might have been duped into paying it when the market was booming and everyone thought come 2010 georgia would look like conn ave or something. But my question is. who would rent a luxury unit in this location? I mean at least when you buy its a good investment. albeit a looooong term investment these days. I wouldnt pay a premium to RENT granit counters on Georgia Ave. I think people came to dc and saw neighborhoods like U Street change so fast and thought they could just plop down anywhere and that in a couple years there would be a starbucks. Developers were all to happy to provide units to these people and now they are left holding the bag. My questions is what does this mean for the Donetille Condos above the metro? If they had to switch their Highland Park building to rental at columbia heighs how on earth will they sell those?

  • The market to buy condos is still a relatively strong part of the DC market – I wouldn’t lose faith in the Park Place condos yet. I sold my 1BR condo in Adams Morgan in 2005 and units in my old building have continued to go up in price, not down. It’s actually still very competitive to try to buy a condo and hard to find anything affordable. (I’ve been commenting on my friend’s long hunt for a condo a lot on this blog lately)

    Also, rentals can be big money makers as well as selling condos…maybe Donatelli just didn’t want to compete against themselves by selling so many units in the neighborhood at once.

    Also not losing faith in Georgia Ave any time soon. I have no expectations that the development will happen overnight, but it didn’t happen that way on U St either, it started very slowly before it took off. Most people that bought here aren’t hoping for neighborhood replacement anyway…just for greater choice in where to shop and eat — evolution, not revolution 🙂

  • I dont have a problem with Georgia Ave. I quite like it and would gladly buy a condo there. If it was an affordable unit without a bunch of B.S. bells and whistles I dont care about that was actually priced fairly for the neighborhood. but there is this Georgia Ave expectations premium that is priced in to every unit. I think if condo developers these days did away with all the froo froo they would find a niche market of young buyers who dont care for those things and are on a limited budget. they could cut their overhead and provide housing to people they would otherwise price out by putting 40 grand worth of appliences in the kitchen. And lets be honest. these are the kind of buyers who won’t be turned off by Georgia Ave.

  • Good or bad doesn’t matter much to them – it is likely necessary. Most of these condo projects were way more expensive than they had to be – they had to be luxury (and tack on thousands to the asking price) instead of trying to market to first -time owners who couldn’t afford to buy a whole house and would use the condo as a stepping stone and they are left sitting on property that few can afford.

    I lived in a studio condo on the Hill before I bought my house. It had been bought many many years prior as a first home and the owner had eventually upgraded and turned the unit into a rental. It wasn’t fancy – no granite counters, no stainless steel appliances, wall-to-wall carpet, etc. – but it was affordable to a first-time buyer. What they are building now – the only first time buyers that could afford them are lawyer/lobbyist types with no student loans to pay back and an income of $100,000+.

  • exactly ET. why would that kind of buyer want to live on Georgia Ave. developers dropped the ball here. Plenty of young people living in group homes in that very neighborhood right now would have jumped to buy in this building if it was affordable. Developers can save themselves a hundred grand putting in ikea kitchens and low end bathrooms and pass that savings on to first time buyers. couples with combined income of 65 grand etc.

  • A friend of mine who works for a real estate developer (and used to work for a CDC) told me that pretty much the only projects developers have been willing to undertake in recent years are either “luxury” or affordable housing — they’ve apparently been the most lucrative (the tax credits they get related to affordable housing make it pay off for them). I wonder if that will change at all based on the current state of the housing market.
    As for the increased supply of units lowering rents, as a renter I see this as a good thing — rents right now seem high to me (obviously this varies by neighborhood, etc).

  • At builder cost, granite counters and stainless appliances do not significantly effect the price point of “luxury” properties. A baseline, stainless fridge, DW and range might cost $4K more than comparable, mid-level, white appliances and 25 sq ft of granite might end up costing $3K more than tile – a total of $7K. Therefore, one shouldn’t expect any meaningful savings if these items (which most buyers want) are not part of a new offering. It’s solely the market and the projected growth (hopefully) of property value the drives price and from 1998 – 2006, the 20011 zip code outpaced most other areas of the city (on average).

  • My immediate fear would be that not only does it go rental but there’s a Section 8 deal that’s been put in place. Not that I live around there of course. And if there’s Section 8 units with granite counters and such I might just turn to crack and see if I can get one!!

  • Someone needs to ask Jim graham if all this low income development on Ga avenue is going to be the smartest thing for this area. I thought crating mixed income Dec wa what they were targeting for. So far everything south of the station is 100% low income and without expiration. This has me very concerned.

  • My impression is that going rental is not a great deal for either developers or renters, the former for obvious reasons, and the latter because it seems like the rent ends up being pretty high on these units, and doesn’t drive down the rent on other properties. That’s just an uneducated guess, though, so I could be wrong.

  • I don’t think Section 8 will be big in many of these new condos. The problem section 8 tenants usually have bigger families than a 1 or 2br would support.

  • In my experience, Section 8 also covers homeless transitions to low cost housing as well as subsidized housing for mental patients who are considered self-sufficient enough to live alone with regular supervision by caseworkers, etc. In my 64-unit building, at one point, there were at least 8 units occupied by people on Secton 8 or city subsidies. One of the remaining is known as “Crazy Yelling Man” because he tends to scream and yell very loudly and incoherently at all hours of the day and night and, because he’s on the city dole, he can’t be moved outunless he’s a physical threat to other tenants no matter how much of a nuisance he is.

    Oh, sorry…I went a little off topic there…

  • Generally, I think it’s a bad thing that this much rental is going to be on the market, but if you’re a renter actively looking, it’s pretty good news. Bottom line is that greater supply = lower price, and anyone looking for a lease should be able to score a decent bargain. Were I a betting man, I’d guess that a lot of these “luxury” developments (i.e., adding a marginal $5000 worth of granite, marble, and stainless steel to an otherwise average apartment, as Geezer points out) now convereted to rental are probably going to find themselves cutting “move in” specials (1-2 mos. free rent, etc.) to fill up, without lowering the monthly rent too much. This basically amounts to lowering the rent several hundred bucks a month but keeps the baseline high for rent increases down the road or payment of a premium once the original term of the lease runs and tenants go month-to-month. Also, it serves to dissuade poorer renters from moving in, as the base rent will remain prohibitively high for a lot of people, thus maintaining some sense of exclusivity/luxury for the building. Smart renters who may not have fallen into the “luxury” category in 2006 will get some benefit from it, but they’ll have to move once the original term of the lease runs to realize the full value of any move-in bargain.

    I don’t think any of these higher-end places will wind up with significant Section 8 occupancy rates, though. No developer who started out targeting a lux clientele wants to risk having a building branded “Section 8,” however inappropriate the label may be.

  • There would have to be way, way more supply of rental properties to lower the price, and the nicer, newer units would probably be the last to suffer. I keep hearing from friends searching for a decent apartment how hard and expensive it is. I think it’s absolutely right that these condos on Georgia should rent for less than an equivalent apartment by the metro in Columbia Heights, but I doubt they’ll be cheap (and certainly more than Section 8 would pay(, or available for very long.

  • This area is a bit of a tough sell because it’s a bit far from the GA-Petworth metro stop, where the main redevelopment is taking place. But the Lamont Street lofts is around the corner and that sold out.
    I’m not sure what “low income development on Georgia Ave” take5 is referring to. With the Central Union Mission’s abandonment of its plans to relocate to Georgia Ave, I’m not aware of any purely or even mostly low income development along Georgia Ave. I am interested in hearing about specific examples. The biggest project on the books now for the area South of the metro is the redevelopment of the Park Morton apartments, and that involves a transition from purely low income to mixed income housing. I know lots of activists who work for low income housing and I have yet to hear any of them speak of the plethora of good housing options available for people with low incomes, or all the great new low income housing that’s in the pipeline.
    As far as Section 8 is concerned, it might be effective for use as a bogeyman but I don’t see any developer of luxury housing looking to the Section 8 market to fill their apartments. They will try every other option, including letting the apartments sit vacant, before letting in people with housing vouchers. Take a walk around the Columbia Heights metro at night – many if not most of the rental units in the newer buildings are dark and unoccupied. They could have been filled a long time ago if the developers were willing to go the Section 8 route. Moreover, I seriously doubt that any federal or city housing subsidy would be large enough to pay the rent in any of these new luxury rentals.

  • I am constantly amazed at how many commenters on here think five blocks to the metro is “far.” I consider myself close and I’m ten blocks north.

  • I just found a Craigslist ad about these:

    They’re asking $2400 for a 2br … do you guys think they’ll actually get that?

  • Reading all of these comments has been really fascinating! My boyfriend and I are signing a lease on a one bedroom unit in that building, and we can’t be more excited about it. The neighborhood doesn’t worry us at all. We’ve been around looking at other places in the city, and GA Ave, Petworth is NOT the worst we’ve seen. The price (1200/mth) is quite reasonable to us, and the proximity to the metro is one of the reasons we decided on it. (Its 3 or 4 blocks, not far at all) I know I’ll be returning some nights from the metro alone, and I’m not the least bit worried about it. I think as long as you keep your wits and don’t make yourself a target, you’re fine.

    The apartment is GORGEOUS, and we can’t wait to move in.

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