Challenging the sluggish economies, companies plan new Bethesda luxury condo project
Since the economy ran into a recession, renting an apartment, carrying a knockoff handbag and driving a used car have come into vogue, but developers Monty Hoffman and Doug Firstenberg are trying to turn back the clock.
Hoffman's PN Hoffman and Firstenberg's StonebridgeCarras plan to start next year on the construction of 60 luxury condominiums ranging in price from $750,000 to $3 million as part of an upscale retail and residential development in downtown Bethesda.
The developers are betting that despite the ongoing sluggishness of home sales and consumers' pullback from luxury offerings, they will be able to persuade financial partners to back the project so construction can begin next spring or summer. They say that by the time construction is complete, by mid-2014, there will be almost nothing else like what they plan to offer to elite buyers. In all, the two plan 250 units, 40,000 square feet of ground-floor retail and 1,300 underground parking spaces on what is now a county-owned parking lot at the corner of Bethesda and Woodmont avenues.
"When you think about the super-high-end market, you're talking about 60 units and you have three years to market and sell them," Firstenberg said.
Echoed Hoffman: "There's a dearth of this type of product, and it's a gap that's widening."
If the experience of the other deluxe condo builders in Bethesda is an indication, Firstenberg and Hoffman should fare well with their two buildings, to be called the Darcy -- named after 19th century Bethesda store owner William E. Darcy -- and the Lofts.
The existing Lionsgate, modeled after the Kennedy-Warren apartments in the District, offers 24-hour concierge service, valet parking and whirlpool baths for every condo. Selling for just under $1 million to $2 million, only 10 of 158 units remain, according to developer to Mark Dubick of Duball, based in Reston. The other high-end condo property in Bethesda, the nine-story Adagio, has only 14 units left, according to Mayhood Co., which is marketing it.
Dubick said that if new condos can be financed there, wealthy international buyers will be ready. "You can absolutely justify building some new condos; it's just everyone still has a hangover from the last ditch," he said.
Still, Bethesda has not been immune to the downturn. The Patrinely Group began marketing units for another proposed condo project, Trillium, in 2006, but has still not begun work. Non-residential properties that carried debt into the recession fared worse. The owner of the Hyatt Regency Bethesda was foreclosed on and the property was nearly offered at auction. The Bethesda Theatre, after having millions of dollars poured into it in recent years, also went into foreclosure and received no outside bidders at auction in June. The federal government agreed to sell an office building at 7550 Wisconsin Ave. in August for $12.5 million after holding an online auction; it had suggested an opening bid of $14 million.
Further, the Stonebridge-Hoffman project, a public-private partnership with the county, is not as simple as building atop a piece of dirt. The developers have had to arrange for the relocation of fiber-optic cables from the site and construction will force the closure of Woodmont Avenue for two years. The parking lot, called Lot 31, currently provides 750 parking spaces that will be lost until a new underground parking garage is built that will provide nearly twice that number.
"The short-term is going to be really tough," Firstenberg said.