Key magazine, the New York Times’ real estate publication, came out this weekend. It includes an article entitled “A Cure for the Condo Glut?” all about developers who transform their condo buildings into rental units when sales slow. The piece is almost entirely about the plight of Jeff Blum and David Franco, the builders for View 14, a residential building at the corner of Florida and 14 Streets, a few blocks north of U Street. As the story tells it, the partners threw a massive bash in September 2006 to promote the opening of their sales office. In the weeks that followed, they expected 50 of the building’s 180 units to be sold. Instead, they sold 18.
So, they decided to transform the units into rentals, which entailed, among other things, adapting room dimensions, changing appliances and finishings, expanding the lobby, and adding a game room—-essentially, a lot of work.
I’d never heard the details of this transition before. But, on two different occasions, I’ve heard people say that they expect the building to actually go back to being condos eventually. (One person had purchased a unit before the transition occurred; the other worked in real estate.) The article touches on this possibility as well. Toward the end of the story, the author interviews developer Chris Donatelli, who built two residential buildings up the road on 14th Street in Columbia Heights. One high-rise, the Highland Park, wasn’t selling as quickly as he wanted, so Donatelli turned it into rentals.
Donatelli points out that if the market for condos heats up again in a few years, developers who have shifted from condos to rentals could always go full circle by converting their rental buildings back to condos. But for now, even developers whose projects once seemed like can’t-miss propositions are learning to think long term, just like the rest of us.