D.C. housing market's collapse lessens developers' swagger
Monday, December 28, 2009
In the go-go years of the housing boom, in one of Washington's hippest neighborhoods, Scott Pannick built more than 300 loft-style condos, many of them attracting fevered bids even before their gourmet kitchens were installed.
"Sold just like that," Pannick recalled, snapping his fingers.
That was before the housing market collapsed, before Pannick's lender seized his last modern design -- the glass, steel and brick Metropole on 15th Street NW. In September 2008, days after the fall of Lehman Brothers, Pannick trumpeted the opening of the Metropole by throwing a Hollywood-style theme party, with cigarette girls, spotlights and pink champagne.
The only thing Pannick is building these days is a playhouse for his 3-year-old daughter. He has dismantled his 15-member staff, shuttered his office and, in January, plans to decamp for six months to Buenos Aires to contemplate his future, the options for which include writing a novel. "I want to forget and move on," Pannick said. "I'm burned out."
The swaggering developers who drove Washington's revival during the boom, putting up scads of new housing and offices and reveling in eye-popping profits, are now scratching to survive. With residential and office construction down 41 percent from a peak in 2008 and condo sales plummeting by 83 percent since 2005, many builders have slashed payrolls or recast themselves as contractors and consultants. Some of those who rode the boom are still plugging away, setting up for the recovery, but others are taking time off or abandoning the real estate business. One is pitching a reality TV show. Another has returned to the land, raising sheep, growing tomatoes and delivering farm-food orders to Washington households.
The swagger is now a limp.
"Where we might have gone out to the Capital Grille to eat steaks, we now meet in a conference room and drink ice water," said Jim Abdo, a developer who has cut his staff by more than half since 2005. "The mood is a mood of humility and contriteness and self-reflection. There were a lot of people who were intoxicated by the times and the easy access to capital. A lot of them are gone."
For 10 years, Jeff Neal co-owned Monument Realty, which built offices and condos across the area and was among the developers with grand plans for the still-largely barren area surrounding the Washington Nationals' new ballpark. As the market faltered, Neal left Monument, taking over a failing real estate brokerage that he closed this year.
Now, Neal says, he's writing a book about politics and developing a reality TV show, the details of which he declined to discuss, except to say that he's not the star. He also plays a lot of golf.
Neal claims no interest in running a real estate firm in the future, but he also admits to no regrets as a developer. He dismisses the suggestion that the downturn is a kind of cosmic leveling, revenge for years of profiteering. "Monument had a big profile, we were active and I know the principals had a reputation for being big dogs," he said. "But we were just doing our job, taking on high-profile projects. I don't feel we were put in our place. We made some bad investments that didn't pan out. We lost money."
The hard landing brings challenges. Bharath Kort was a general contractor before he and a partner started Macy Development in 2003. Macy built eight condo projects, some with catchy names, such as The Matinee and The Constitution, designed to entice buyers willing to spend $400,000 or more for a slice of the urban life.
"You had a constant flow of money -- big money -- coming in," said Kort, 47, who emigrated from India in 1989. He hoped the market would remain strong for another decade to finance his retirement. "The idea was to make as much as possible and enjoy yourself."