Dear PoP – Allegro Foreclosure

IMG_0504, originally uploaded by Prince of Petworth.

“Dear PoP,

I noticed a story in the WBJ from last Friday saying the Allegro (3460 14th St, NW) was going into foreclosure. As a resident I have not heard anything from our management (not surprisingly) and was hoping you could ask around to see what people have heard. Has this type of thing happened to other apartment buildings readers live in? Does it typically have any effect on the renters?”

I’ve received a lot of emails about this development. Folks have also been commenting about this development in previous posts. Since you are a resident I really don’t think you have to worry. The article said that the property will go to auction Nov. 18th. I imagine it will be purchased and you will not even know the difference. I suppose it is possible that the new owners may change marketing companies and possibly change some of the rents. However, I would think that you’ll be locked into the price on your lease (anyone know for sure?).

I’m also curious if anyone has experienced a similar situation or knows of anyone who has gone through something like this? Do you think it is safe to assume that the current resident will not really notice any difference?

27 Comment

  • B/c of DC tenant laws, I doubt the renters will be adversely affected. That said, I am not at all surprised by this. That development was a hot mess from the beginning.

  • 14th is right about tenant rights. DC is one of the very few jurisdictions to get this right for foreclosures. Tenants will certainly see differences, though.

  • I can’t imagine the new owners spending more money on maintenance and upkeep. They’ll buy it because they think they can make money off it.

  • The apartment complex I live in has been sold 2-3 times since I moved in, and while there were some minor changes, almost everything — including my lease — stayed the same.

  • A hot mess? What’s the story of the allegro? I actually like the building.

  • This is too bad for the owners. They rented 58% of the units in a high-end apartment building in a crappy economy in 6 months. That’s pretty damn good. It is surprising that they don’t have the margin to keep going, but it’s equally surprising that whoever holds their note isn’t willing to renegotiate the terms to give them another 6 months or so. I would think they stand to lose a lot more on this auction then they would stand to gain by being flexible.

    That said, as others have noted, I doubt that a lot will change. And I really doubt that the quality of services offered will decline. The allegro is in a competitive market with a few other buildings in their price range. Anything that the new management changes will affect their relative desirability. Business is business.

  • i am in the business and have heard inside stuff. the lender themselves is in danger of going out of business and the developer got caught like everybody else over leveraging the deal. his construction loan probably came due and he could not refinance b/c of the lack of income and drop in values.

    so basically it’s a big mess, but the building is great and will make it long-term.

  • On marketing –

    Kool Aid – The article linked in the original post says iStar is having their own problems. Thanks for the insider information.

    The Developer, Metro Properties, was doing boutique buildings (Newton Hall) before Allegro. When Giant moved, Jemal Douglas assembled the parcels of the old Giant, the auto body place behind it, and I think one other piece, for like $3m and sold it to Metro for around $10m. Metro was breaking ground as the market peaked. As mentioned above, over-levered/under capitalized real estate will always lead to foreclosure. Metro’s math was based on selling 297 $350k/$400k condos, not collecting $1600 a unit of rent.

    I would say the new owners will want to fill the building without discounting the rents too much from whatever amounts got the building 60% occupied. They might give another free month to get it 90% occupied. You can be sure, the new owners are not going to pay a price based on cash flow from 100% occupied. The smart money is waiting…

  • I live here and I’ve been counting down the days until my lease expires. The leasing agents are pretty plus/minus, moving in was a headache, the hallways smell terrible if the garbage (which is stored inside the building) is piling up, the appliances are pretty cheap and the courtyard has been torn up for at least five months. It’s an awesome place to live if you’re just out of college and used to dorm life but it’s no place for grown ups who enjoy quality. Of course the move in deal was sweet: three months free, but there’s no way in hell I’ll spend full rent on this place. About $1,900 for my really small one bedroom. They do have great security, a nice gym and once in a great while they have food/drink receptions but the bottom line is I wish I didn’t have a year-long lease.

  • But the biggest question is…will Thai Tanic II stay???

    When a new company comes in, always check to see what changes in terms of when you move out. Since most people will not stay more than one year, make sure the old lease terms will be grandfathered in. For example my old building changed management and it was a surprise to us when the new company said that tenets had to professionally clean their own unit before moving out. Um not thanks.

  • a, a, a – I would expect those things to change once new ownership takes over. Also, you may be able to negotiate a better deal to stay because there are several buildings in the immediate vicinity that have occupancies. I would wait to see what the new promotion is to fill up the remainder of the building and then see if you can negotiate from there. If they have to give someone 4 months free rent, why wouldn’t they just pro rate that for you. No wear and tear of moving or missed rents for allowing the unit to remain unoccupied. Obviously, you won’t be able to determine any of this until the building is sold and the new management takes over… I would fill up that half empty glass, take a chug and make it half full.

  • Thaitanic signed a lease and spent a good amount of coin building out the space, why would they leave? A fully occupied building will only improve the situation, I would guess the other commercial spaces will be occupied quicker with new ownership as well.

  • I live here too and when my lease is up if I have to pay $1825 for a one bedroom, I’m gone. Most of the inconveniences and annoyances are just part of living in an apartment complex so I can deal with that. This is not my first yuppie gulag. The one thing I can’t get past however is that I had interpreted the high rent as causing the building to inhabit an older crowd. But for the most part it is 20-somethings that like to play loud music and have their friends scream up and down the hallway at night.

    Okay, that hasn’t happened every night, but there are loud people here that do think this is a dorm. And the rent is far too high for what you get.

  • My wife and I are looking in the area and I mentioned this place to her just now. She said “the world’s busiest fire station next door” and it ended there. Just curious for those who live there, is that a big issue?

  • I’ve lived here a couple of months and really like it. If you get an interior unit you cant hear anything besides the courtyard waterfall, which is nice. Also, if you have a large dog this is one of the few places in DC that wont hassle you. That said, it is a younger building, so if hearing parties on Friday and Sat. nights would be an issue, I don’t reccomend the building.

  • I used to live and own in Columbia Heights and really liked the area. I’m taking this opportunity to present an alternative in Crystal City – Water Park Towers.
    We have an excellent staff, incredible fitness center and phenomenal views of D.C. Parking is convenient and inexpensive to D.C. standards. Each apartment has its own washer/dryer, private balcony and control of your own HVAC.
    I encourage you to visit or call us at 703-418-1000

  • Crystal Shitty – My Personal Hell. Thanks WPT.

  • Wow, is Archstone Smith hurting so bad that they now have to spam blog posts?

  • to asl: I have a place looking out on the open interior courtyard and never hear any firehouse noise. I like it, but I am on the 4th floor w/ a really good layout. I was also shocked at how young (some undergrads!) my neighbors are, but other than that I am happy (although nervous about the new owner).

  • Why are you nervous about the new owner when you don’t even know who it is? I could understand if reputation was an issue, but you can’t even question that at this point. A new owner is investing their own capital in the building, why would they do anything to jeopardize their own capital?

  • I’ve lived in the building for 3 days. Yes I pay too much. I’m shocked by how many “kids” are there too.

    I intentionally got a place away from the firehouse so other than game night it’s quiet. Considering I used to overlook 16th, it’s an improvement.

  • I live at Allegro and actually really like the place. I have the same complaints as a lot of folks, especially the hallway noise.

    Here is my question though: Why does everyone seem to think that someone will buy this place? The market has improved significantly, but that doesn’t mean the real estate market is great. As some of you will remember, in order to get 58% of the building filled, they had to cut prices on apartments significantly. Can anyone actually make money on this place? What happens if no one buys it at auction?

  • like old man smitty, i too anticipated that the high rent would be the case for an older crowd. i have tried to talk to people who play their music too loud or who have parties, but nothing is really done and alot of the young people supposedly are not even paying their own rent and do not seem to care about anyone else in the building.

    i will say that despite all of the parties and noise, i am usually able to get a decent sleep at night as it turns out to be pretty quiet thus far. i hope this does not change when the building becomes more occupied. like others have said, it is a competitive market, and there are plenty of other new buildings around too. good thing this place was not made into condos as the dishwasher and washer/dryer are not very wonderful.

    the good thing…i have less than a ten minute commute!!

    maybe we all should have an older party night!! haha

  • Tenants should be glad they didn’t buy in a building that gets foreclosed. Gets much more complicated, and there are horror stories (in DC and elsewhere) about owners losing their home and obligated to pay off their mortgage. crazy shit.

  • I imagine that the reason there are lots of college students in the building is because of the high rents are really only attractive when your parents are footing the bill… as someone who pays my own rent, I wouldn’t pay what they’re charging.

  • I think that it is very interesting the length that some of these bloggers are going to bash this place. I have lived here longer than most of the people responding, and have nothing to complain about. If it is the demographic of the building, then living in an up and coming neighborhood within the district wasn’t the right choice for you, has nothing to do with management or ownership. If you think that $1600 or $1800/month for a smaller unit is too high, then signing a 1 year lease was again, your poor decision. If you want to live in a more established neighborhood, then again, you will be paying more in rent, and again, complaining about your monthly expenses. If the appliances aren’t that great, then perhaps owning would have been a better option for you, OR living the in penthouse where the appliances are all upgraded.

    Personal opinion, this place is amazing. If I need a maintenance technician, they are timely. If I have a question for the management/leasing staff, they are timely. If I need a cab or a friendly face to accept my packages, the front desk staff is amazing. If i let someone know about an issue that needs to be handled by the cleaning crew, it is done well and done right.

    As far as possibly getting no buyers during the auction, then the bank will obviously take over ownership temporarily (until they find a buyer). I mean, come on. What are you afraid of? The bank isn’t going to tear the building down… the structure isn’t going to collapse because it is bank-owned. What are your fears? As far as the management staff, 9 times out of 10, the new owners choose keep them running the property because they are already familiar with the day to day operations and it would actually be more costly to get a new company in and trained and familiar it… not to mention, its a gamble, becoming almost 60% occupied in 6 months is amazing! Most Apartment buildings average about a year a half to become fully occupied. What are the odds that a new management company can do that as well, and as quickly? Not to mention, EVERYONE is offering discounted rent. Before I signed my lease with The Allegro, I looked all over the city. Everywhere I went had free amenity fee’s and free parking and minimum of 1 month free rent (usually 2 or 3) and I felt as though, even without discounts, The Allegro was a better deal.

    The building is great. The amenities are accessible at all times, the gym is state of the art, and my neighbors are friendly… all things I would want in an apartment home. If noise is an issue, then perhaps renting a single family home would have been a better option for you. I, too, live on the penthouse level, and fully intend on staying come lease renewal time… regardless of my rent going to full market value.

    So next time you have friends over and they are commenting on how beautiful the building is, and in shock at how nice your apartment is (including your appliances), just remember how much you bashed the building, and stop to really embrace how good it feels to have someone compliment your home!

  • seriously…innocent bystander??

    not so innocent are you…

    something in the innocent bystander’s comments seem to have “i work at the allegro” written all over them.

    are people who live there not entitled to their own opinion?

    i am sure there must be some people who enjoy it even more now that they live there and some that do not.
    however, everyone is entitled to their own opinons and to feel free to voice them. it is wonderful that you love your place as much as you do, but do not think it is ok for others to have opinions differing from yours.

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