A former commercial real estate broker who bought a controlling interest in venerable Cafritz Co. says he will try to make it once again one of the biggest developers in the Washington region.
Bruce R. Baschuk, 54, last week bought an undisclosed amount of Cafritz, a family-owned company founded in 1925 by Morris Cafritz, who built a dozen office towers downtown over four decades. After Cafritz died in 1964 and his wife, Gwendolyn, in 1988, much of their assets, mostly buildings, went to a foundation they created to make grants for programs such as adult literacy, health care for low-income children and art and music events.
Baschuk will manage and lease the 2 million square feet of commercial space and 6,800 apartments the foundation owns in the city and the Maryland and Virginia suburbs. He declined to disclose the price. He had no partners in the purchase, he said.
"He has very exciting plans," said Calvin Cafritz, son of the founder. "He wants to take the company into development, and we really haven't been doing that."
Baschuk started his real estate career nearly 24 years ago as a broker at CB Richard Ellis Group Inc., representing business tenants looking for space. Eventually he became managing director, heading the D.C. office and overseeing about 30 brokers. He left the business five years ago to work in nonprofits, saying he wanted to give back to the community. For the past two years, Baschuk has been running Jubilee Enterprise of Greater Washington, a nonprofit group that develops affordable housing in Anacostia. The Cafritz foundation is a major donor to Jubilee.
Now, Baschuk wants back into the industry. "I missed making deals," he said. "I missed the competition. I missed the thrill of the hunt."
Developers and brokers are watching his comeback closely.
"He's starting off with an old-line name, and that has a lot of credibility," said John E. "Chip" Akridge III, president of the Akridge Cos., one of the biggest developers in the D.C. region.
On the other hand, critics question whether Baschuk's plans are too ambitious.
"He's certainly capable, but I wonder whether he's too late to the dance," said Brian McVay, a senior managing director at brokerage firm Cushman & Wakefield, noting all the developers crowding into the local real estate market.
The Washington Post recently talked to Baschuk about his plans:
Q. What do you have planned for Cafritz Co.?
A. We're going to go to a whole different level. Before, the Cafritz Co. might do a building every five years. We're going to be doing a number of [office, residential and other types of] buildings every year. I want us to be named in the same sentence as John Akridge, JBG Cos. and Boston Properties. We're going to play in the same field.
We would like to do most of our development in D.C., but if you look at where the job growth is, that's where the opportunity to develop lies. And that is pointing right toward Northern Virginia. We also want to develop condos and apartments. I'm in the middle of discussions with people in Maryland and Virginia to do housing, retail and office.
How do you propose to finance this development?
We will invariably have investors in those developments. We'll have a handful of people who will be equity partners. They'll invest and we'll invest in some of our developments. There are individuals and institutions who are interested. We have not formalized those relationships. We will have a handful of well-heeled investors.
How's the D.C. real estate market as you see it?
I think it's a seller's market. Prices are historically high. How long is that going to last? I don't know. I wouldn't call it a bubble, though. D.C. is just too strong. We won't struggle as much as other markets that are more dependent upon the standard economy of corporate America like Pittsburgh or Dallas. We're a government town, and it's a very resilient place to do business.
Has the market peaked?
I wouldn't say it's peaked. It's clearly sensitive to interest rates. The very strong markets are going to hold. We're not sitting on a high-tech bubble. Even Northern Virginia, which was growing significantly under a high-tech boom, imploded and is now starting to rebound.
What happens when interest rates go up?
I just think there will be a continued interest in quality real estate, but there won't be quite as much activity as there has been. If the rental rates for office space are fixed and the interest rates are going up, then your return drops, so people will look at alternative investments rather than real estate.
Dana Hedgpeth writes about commercial real estate and economic development. Her e-mail address is firstname.lastname@example.org.