Land Rush
Jim Abdo, president and CEO of Abdo Development in Washington, remembers walking D.C. properties for sale in the 1990s, often running into just one other person: Monty Hoffman. “There were times he and I would bump into each other walking through some old building,” Abdo says. “He knew why I was there and I knew why he was there. We both saw the potential.”
Today, both Monty Hoffman and Jim Abdo have a lot more company, much of it from out-of-town, when they search for deals. “The national home builders are paying too much,” Monty Hoffman says. “They’re inflating the wholesale pricing.”
Despite the new level of competition, PN Hoffman has no plans to transplant its urban roots. “Our challenge is to continue to find unique opportunities,” says Tapparo, the company’s senior vice president of operations. “We’re not looking to fill a field full of condos.”
Instead, the company has continued to prosper by partnering with landowners or large multifamily firms on deals in the District and close-in suburbs. “People do approach us because of our reputation, not only in terms of our design, but our ability to execute,” says Josh Dix, vice president of acquisitions and development for PN Hoffman. Among the company’s deals: a joint development with Atlanta-based apartment REIT Post Properties, which is working with PN Hoffman on The Condominiums at Carlyle Square in Alexandria, Va.
When SJG Properties wanted someone to develop its land, a prominent local architect, Eric Colbert, sent Gerstenfeld to PN Hoffman. This is another instance where the firm’s construction arm was an asset. “We needed someone to do the construction, and that’s one reason that we partnered with them,” says Ashley Gerstenfeld, principal with SJG.
PN Hoffman has also worked with local governments. At Mather Studios, an extensive rehab project in Washington, it included low-cost artist lofts in its proposal to the District, which owned the land. In Bethesda, it agreed to build a public parking garage below grade and fix a vehicular intersection in exchange for the air rights to build retail, market-rate condos, and affordable housing. “We have relationships and a track record with different jurisdictions where we’ve purchased or contracted to purchase future projects,” says Steve Earle, president of PN Hoffman. “In exchange for a reduction in price, we agree to provide an affordable housing component.”
Monty Hoffman wants to do more of these projects in the future, which would develop his reputation as a neighborhood builder and protect his business from a slump in high-end condos.
“We’re working on a couple of projects that have an affordable component,” the former structural engineer says. “That’s a hedge against [a downturn with] the luxury condo product.” Still, he says the Washington’s expected job growth and high barriers to entry should keep the market steady.
Despite widespread concerns about the condo market in the national press and elsewhere, Joe Bonner, a managing director for Prudential in Parsippany, N.J., thinks his joint venture with Monty Hoffman will be fine. “He’s very cautious about what he does, he’s very selective about the sites he works, and he targets a product for a market,” he says. “Everyone is subject to potential downturns in the market, but I think his product, given the quality of what he does, can weather the storm.”
PN Hoffman
- What: Boutique multifamily developer
- Founded: 1993
- Headquarters: Washington, D.C.
- Employees: 80
- 2005 Revenue: $100 million
- Units owned/managed in 2005: 1,000 rentals plus retail
- Units started for 2005: 650
- Geographic coverage: Washington metro area
- Top goal for 2006: Grow the company via diversification. “We’ve added a new brokerage division, we’re pursuing larger complex redevelopment opportunities, and we’re continuing development and construction of our pipeline of mixed-use projects,” CEO Monty Hoffman says.
Leadership Lessons – Monty Hoffman
- Age: 44
- First Job: Construction worker
- Desired Company Impression: “That we made a difference in the city and helped lift up neighborhoods.”
- Favorite Quote: “My most recent is, ‘Pain is temporary, but glory is forever.’ It’s on my son’s wrestling t-shirt, but I think it’s a good long-term business strategy, too.”
- Biggest Challenge: “Finding good deals is our biggest challenge right now. Some developers are willing to pay too much for smaller deals with the anticipation they can pass it off to their customers. I’m not as confident in their ability to do that.”
