Caution Returns
As the dust that the condo craze kicked up settles in cities around the country, what some are calling a “market correction”–one that analysts say could last anywhere from 18 months to several years–is creating a new normal for condo developers.
The Related Cos., notes Thompson, is “being very selective in what we do. … The only markets we’re going into are those markets that are productive.” That includes Atlanta and one of Related’s mainstay markets, Miami, where, despite slowing condo sales and the exodus of speculators, the company’s luxury waterfront properties are selling–albeit slower than they have in the past.
McCabe estimates that Miami-Dade County is home to about 25,000 condos-under-construction, and two-thirds of them are priced at $700,000 or higher.
To compete in that market, Related has recruited new architects and designers to bring innovative looks to its buildings. And it has started sending its sales force to cities around the world to try to interest brokers and wealthy buyers in taking a look at its Miami condos. “A year ago, you waited for people to come into your office, and you were inundated,” says Thompson. “Now, we’re taking a much more aggressive approach. We’re going out there in the world and telling people about Miami. It’s still a good story.”
Similar optimism echoes from Washington, D.C., where JBG Cos. is pre-selling a 136-unit waterfront condo tower in Rosslyn, Va., and has plans for a 110-unit building in downtown Washington’s Woodley Park.
“We enjoyed the last couple of years when the frenzy was out there. Who wouldn’t?” says Blocher. “But we’re returning to a normal absorption pace in the market. Now sales will take longer. And we’re being cautious. We’re making sure we’re making the right deal.” He adds: “We believe in the condo market.”
So does Bozzuto’s Baum. “In the development business,” he notes, “you always have to have a dose of optimism and an equal dose of reality. The reality is that we’re currently … oversupplied with condominiums. From an optimistic standpoint, there are still very sound fundamentals of real estate in Washington, given the job growth and economy, that we think will create opportunities for condominiums both for purchasers and for developers.”
–Sharon O’Malley is a freelance writer in College Park, Md.
