The launch this month of the CityCenterDC condominium project in downtown Washington is another sign to some experts that the luxury condo market in the city is heating up.
We asked Lynn Hackney, president of UrbanPace, a D.C.-based marketing and sales firm that works with condo developers, to assess the strength of the high-end condo market and to describe what upscale buyers want.
In her responses, via e-mail, Hackney says the lower portion of the market still is where most of the action is taking place and the city has a long way to go to compete with New York and Miami in the luxury market.
Developers of the CityCenterDC project already are garnering lots of interest in their high-end condos. What does this project say about the growth potential of that segment of the market in the District?
I believe CityCenter was smart in their approach to unit mix, design and variety of sizes and tastes. While they certainly are making a high-end play as it relates to square-footage price and finish level, they have an assortment of sizes and designs allowing them to market to a large audience. Had they focused too much on the upper end — i.e. larger, more expensive units — I don’t believe they would have experienced the sales pace they have had thus far. Casting a wide net to a large audience, so far, it seems to be successful. And the timing was brilliant. They caught the market cycle in what we consider to be great — on the way up and out of the trough with virtually no supply. I would bet they are now likely very happy with the previous financing delays.
How do sales and price activity in the h igh-end market compare to that in the lower and middle segments of the condo market here?
D.C. is still not a high-end luxury condominium town as we see in New York, Chicago, Miami, etc. Specifically, short of “trophy” properties and very unique condos, in general, once the price point tops over $1.5 million we see a significant drop in the number of purchasers looking for condominiums as opposed to row homes or even single families, depending on the location in the city. Whereas the lower and middle are extremely active right now — sales pace has increased two fold since last year at this time and we have seen solid appreciation in most segments under $700,000 and particularly under $500,000. If you are going to make a play on the very upper end, it’s best to focus on smaller, boutique buildings in A-plus locations where the number of units can achieve a reasonable sales pace.
Describe the level of construction activity you’re seeing with the developers you’re working with and how it compares to the peak in 2005?
We are very busy currently and it’s certainly the greatest level of construction we have seen since 2005. However, it pales in comparison to the number of units delivered in those years. Ninety percent of multi-family construction right now is rental, not-for-sale condominiums. So while we are very busy relatively speaking, tons more than 2009 and 2010 — only two new construction buildings started in 2010 and we sold both — the for-sale supply is still drastically low. We hope to see some rental buildings switch over but that’s a difficult play once it’s planned for lease. We will be under-supplied for years at this rate.
What are the most popular must-have amenities buyers are seeking on high-end condos these days?
In the high end, you always need at the very least a front desk/concierge presence of a significant quality. Also, unlike the trend on the lower and even middle, people want two parking spaces minimum. Some type of outdoor space is a must. And the finish levels need to be superior and well executed. And always location, location, location. Views, views, views.
You’ve said that buyers are more interested in exotic finishes, instead of the cleaner trims of last year. Can you elaborate on that and tell us about other new design features?
Two good examples would be in the flooring and countertop categories. A wide plank reclaimed floor look is very popular right now with lots of “flaws” and texture completely opposite of the clean, tight line oak of last year. Engineered stone countertops with vibrant colors and patterns in contrast to granite [are also popular.] Tiles — that’s a big play right now. So many cool things you can do with shapes, texture, colors that were previously cost prohibitive for most price points but can now be done at just about any price point or product. Everything is moving more and more contemporary.
Are buyers still interested in open space floor plans or conventional ones where the rooms are more clearly defined?
At all times [they are interested in] open space plans even on the very upper end. However, buyers like space defined properly and designed according to lifestyle and use. You can’t just open up an entire kitchen/living area without really thinking through the flow of the space. And no matter how small, everyone still likes a true bedroom versus an open bed space. True lofts don’t get much play in D.C.