In early April, The Real Deal brought D.C.’s real estate community together for a conversation about the unique opportunities presented by this complicated moment in the capital’s history.
Hosted at the newly opened BSH Experience & Design Center, just blocks from the White House, the event featured a panel discussion with a trio of D.C. development principals moderated by TRD’s CEO and Editor-in-Chief, Stuart Elliott, followed by canapé- and cocktail-fueled networking.
The evening marked not only BSH’s entry into the evolving D.C. market but also TRD’s first Capital City event. Panelists Phillipe Lanier, Brook Rose and Clint Mann gave attendees a look behind the scenes at how they’re approaching luxury construction in the face of a market in flux.
“D.C. is changing, and I think that will reset the expectations of what luxury condos are priced at,” said Lanier, Principal at Eastbanc.
“D.C. is the only major urban market in America where, when we build a luxury product, we sell it for 20% more than what we built it for, while in other markets, you get double, triple, quadruple.”
One of the big changes D.C. has seen in the last six months has been an influx of ultra-high-net-worth individuals who are hungry for historic homes with recently renovated interiors.
“The renovation part is the component that really pushes the numbers,” said Rose, Founder of Brook Rose Development, who says the discrepancy between luxury renovations and older luxury housing is the highest he’s seen in 25 years. “People with the funds and the resources want fresh, want new, right? And they’ll pay for it.”
Mann, President of Urban Pace, explained the difference in purchasing habits between D.C.’s old money and those who are moving into the market. “We’ve had a lot of wealth for a long time,” he said, “but it’s been quiet wealth, and we haven’t seen people willing to kind of stretch and spend those really big dollars.”
Of course, no discussion of luxury development in an urban area would be complete without tackling the billion-dollar question: is office-to-resi conversion possible in this market?
“D.C. is majorly over-officed, so there are a lot of buildings here that either need to be converted or torn down,” said Lanier, who emphasized that local and federal incentives are not the main hurdle to conversion. “The main reason why it’s not happening is interest rates.”
After the panel concluded, attendees spread out into the various Bosch, Thermador and Gaggenau displays to digest what they’d just heard while enjoying Bavarian pretzels fresh from the oven and dessert hidden in refrigerators around the space.
“Having The Real Deal on-site is extremely valuable to our market here,” said Chris Kozimor, President of ADU. “It’s great to hear current insights, especially with the transitions that are going on, from people who have their boots on the ground locally.”
Attendees enjoyed getting a sneak peek inside the newly opened BSH Experience & Design Center, which will give area developers a place to get their hands on the latest luxury appliances from across the Bosch, Thermador and Gaggenau lines.
“I’m very excited to be here in the new showroom,” said John Kusturiss, Partner, Development and Asset Management at Penzance. “We featured them in one of our signature condo projects, so we’re very familiar with the brands and love to see what they can do.”
Next up, The Real Deal and BSH are bringing the conversation to Chicago and Houston, continuing the discussion on luxury development and market trends. Click here to secure your spot for the events!