By Anita Huslin
Washington Post Staff Writer
Wednesday, December 26, 2007

Two prominent restaurants have pulled out, but the developers of National Harbor, the giant condo-office-retail project on the Potomac River in Prince George's County, say interest in the residential portion of the project has held up well, despite the housing slowdown.

Buyers have put down deposits on all but 48 of the 450 condominium units offered in the first phase of the project, a strong showing in a region where many developers have had to scale back or cancel projects outright.

At National Harbor, as in any other project, sales aren't final until they close. Buyers have walked away after putting down deposits at many other projects in recent months.

"In the last six months, we saw a 60 percent cancellation rate of all contracts written," said Kenneth Wenhold, regional director of the real estate research firm Metrostudy, adding that "condos, in particular, had a very high rate."

But National Harbor may be able to defy the trend, Wenhold said. With the 2,000-room Gaylord National hotel and convention center set to open on the site early next year, the project "has a nice synergy of different land uses. It's got an A-plus location, it has a lot of financial backing and a lot of money being pumped into the ground all around it," he said.

A recent study by RCLCO (formerly Robert Charles Lesser & Co.), a real estate advisory firm in Bethesda, cited four housing developments in the United States that appear to be bucking the national trend of slowing sales. Two were in the Washington region: National Harbor, and CityVista on 5th Street NW between K and L streets. The proposed sales at National Harbor represent about three-quarters of all condominium transactions in Prince George's in the second half of the year, according to one survey. CityVista has sold 200 of 351 new condos, at an average of about $510 per square foot, since March, when they went on the market, according to another survey.

"Normally if you can do just 10 a month, that's fantastic," said Len Bogorad, managing director of RCLCO.

Stuart Prince, residential development director for the Peterson Cos., said units are selling at an average price of $475,000 for about 960 square feet. Marketing of an additional 300 condominiums is scheduled to begin in the fall, and the developer has approval to build 2,500 units.

On the retail side, several restaurants have signed leases, including Rosa Mexicano, McCormick & Schmick's, and L.A.-based Dolce Enoteca e Ristorante. An agreement between the Peterson Cos. and the Ark restaurants, to open Sequoia and Gallagher's steakhouses at National Harbor, fell through. The developer is negotiating with another steakhouse to replace Gallagher's.

Overall, the signing of retail tenants has come more slowly, and most are not expected to be open on April 1, when the adjoining Gaylord center opens, said Marc Menick, Peterson's vice president of sales.

"First the hotels follow the convention center, and restaurants follow hotels" in committing to a new development, Menick said. "Retailers, fashion retailers especially, are always the last to commit."

Some of the people who have put down deposits on the new condos say they did so because they plan to be working nearby.

David Hainline, president of CSI Capitol Services, a special events and meeting management company, bought a two-bedroom, two-bathroom unit with views of the Potomac on the third day the sales office opened. He plans to use it when he works late managing events at Gaylord.

"Condos are scary, especially in a down market," he said. "But it's a great investment. It's waterfront living, and the amenities it will have . . . all the restaurants, all the piers and the walking paths . . . this is going to be a great asset."

It's sometimes difficult for Montgomery County native Marcus Johnson to explain to people why he is moving to Prince George's County. He recently found the perfect visual aid on a flight back to the District.

"I was sitting next to this multimillionaire businessman and as we banked over the Wilson Bridge, he looked down, pointed his finger and said "What the heck is that?' " recalled Johnson, a jazz musician whose latest CD contains an instrumental homage to a Prince George's County golf course, "Potomac Ridge."

"And I said: 'That's where I'm moving.' "