Building Slowdown Turns Grand Visions Into Vapor
Tuesday, December 2, 2008
Bustling streets around the Washington Nationals' ballpark. Thousands of new homes along the Potomac River in Virginia. A new community on what was once a rolling Gaithersburg dairy farm.
The economic boom of recent years promised to deliver gleaming homes and high-end retail to struggling and newly forming neighborhoods across the Washington region. But that quest is running headlong into a withering economic slowdown and paralyzed credit markets, bringing new construction to a virtual stop and fueling anxiety among those who dreamed that their neighborhoods were the next frontiers.
"There's a question mark over every site in the D.C. area that is or was in the process of seeking financing," said Samuel Simone, managing director of Trammell Crow Residential, which is trying to obtain a construction loan for 600 apartments it had hoped to start building in NoMa, the industrial neighborhood north of Washington's Union Station.
Civic and business leaders contend that the region's long-term prospects remain strong if only because Washington is home to the federal government. But local governments are bracing for a further loss of revenue as they devise tax abatements and other incentives to keep development creeping along.
At the peak of the building boom, low-interest mortgages fed a seemingly insatiable appetite for new housing. Office developers erected buildings without having signed up tenants. Now banks are increasingly wary of taking risks, depriving developers of an essential engine to drive construction.
Greg Ossont, Gaithersburg's planning and code director, stood on a former dairy farm and recounted the high hopes prompted by a developer's plan to turn a couple of hundred acres into a home for nearly 5,000 people. For young families, Gaithersburg, in the Interstate 270 corridor, was becoming a geographically attractive alternative to Bethesda, Rockville and even Washington.
The developer has suspended the project, costing the city, at least for the time being, $2 million in construction fees, $1 million for a seniors center, renovations to eight major intersections and land for a school. Buzz about the city's future has faded.
"This was going to be a home run, and now it's not going anywhere," Ossont said as he checked on an abandoned barn on the property.
Nor is developer Bob Kettler's vision of paradise on the Potomac: 4,000 homes, offices, hotel rooms, a marina and a golf course designed by Jack Nicklaus, all of it on nearly 2,000 virgin acres in Prince William County.
The developer and his partners have sunk more than $200 million into buying the land and building roads and other infrastructure. Yet only the golf course is nearing completion. The rest remains mostly woods, a casualty of the depleted demand for housing.
Fred Bramell, 59, a retired truck driver who lives next door, had hoped the developer would buy the modest clapboard house his father built in the 1940s. But Kettler's inquiries ended last year, Bramell said.
"This place was going to be our gold mine," Bramell said as he raked leaves. "Now we're stuck."