An Interview With: Jim Abdo - Part 2
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Editor’s note: The first installment of this interviewappeared in the previous issue of Washington Real Estate Weekly.
Bisnow on Business: So your target demographic, to generalize, is the middle class of PG County.
Yes. We are targeting people that represent workforce housing, that represent federal jobholders who are driving in from Prince George’s County going right past our front door every day. And what we’re saying to them is you can enjoy all of these on site amenities that we’re talking about that can be found here and no where else anywhere in the city. And we can deliver this to you at between $150-200 per square foot less than anyone else can deliver it to you for anywhere else in already established Northwest neighborhoods of the District. We just think it’s very compelling that we can offer something there that if the average unit cost at the District of Columbia is $600-650 a square foot in northwest DC, and you can have all of these amenities that we’re talking about at $450 a square foot. We’re looking for middle class. We’re looking to reach out to the market that’s been overlooked during this renaissance that took place in the District of Columbia. We ourselves have catered to very high end purchasers. We do a very high end product. And it’s bothered us for some time that we’re seeing this evaporation of the middle class here in the city, and we don’t think it’s healthy for the city.
When will the first resident move in?
What’s the name of the development?
We haven’t named it yet. We’re looking to name it. We want to tip our hat to the Aboretum. We are going to call the clubhouse the Arbor Club no matter what. We’ve played with a variety of names that use the term Arbor and Arboretum. But we haven’t nailed it yet. And that’s something that we’re going to be looking at very closely. Maybe some of your readers have ideas and they’re welcome to email us or you those ideas.
Oh, great idea.
What an opportunity to name a gateway 17 acre site!
What’s the cost of the project, and how’s it being financed?
This is about a 1.2 billion dollar development when it’s all said and done. That may be conservative as you look at construction costs. Those things are just moving like a runaway freight train. We’ve already signed some capital partners from New York, and we anticipate once the PUD process is complete and the entitlements are in place we can go to closing shortly thereafter. It’s a pretty broad finance structure that includes a whole host of different players and people that we’ve done a lot of business with, and people that are equity partners and development partners. And you know, a lot of that gets shaken out after the entitlements are in place.
Any subsidies? And what benefit to the District?
No subsidy at all. We’re not looking for TIF financing, we’re not asking the mayor or city council or anyone for a dime. And we are also going to be offering up voluntarily about 250,000 square feet of affordable housing, again with no subsidy. This is at 80% of AMI. So it’s a real win for the city. We think conservatively that this project, if you consider recordation and transfer taxes and the income each new resident will bring here, plus the retail component considering that we’ll get 85,000 cars a day coming by, could generate between $20-30 million annually for the District of Columbia.
What other retail do you foresee besides a Whole Foods Market?
We’re talking with major drug stores, major booksellers, some junior big box stores that are very interested. We are pointing out to them that this is the highest traffic count in the entire city with the exception of the 14th Street Bridge. And you’re not going to put a retail location on the Potomac River. So, in effect, we’ve got the top retail site in the city. So these retailers that want people to know that they have an established presence in the District of Columbia should look at this as a billboard opportunity. When I look at this site, I think of all those cars every day as being minnows that are trying to swim upstream. And I’ve got this net out there, and I want to capture some of those minnows before they get out of Prince George’s County. And I want to capture those retail dollars for the District of Columbia. I’m one of these guys that’s been in favor of a commuter tax and will never see it happen. So you know, for me and for the District, this is a way to start getting some of those commuter dollars before they leave. I mean, think of the number of people that could potentially stop at a 65,000 square foot Whole Foods on the way out to their beach house instead of sitting in traffic? It’s an ideal sort of strategy to capture retail before people head out of town.
How and when did you acquire all this property?
Two years ago, we met with three brothers who owned 11 of the 17 acres. They had come into my office to talk to me about a site that was completely unrelated to this. It was a Capitol Hill site. They had seen work we had done up there and thought we might be interested in a small site they had there. And through the process of just some open conversations, they happened to mention that they were the owners of the site that the video slots were trying to go into. Which is what this site was. And I said to them, “You know what? That’s never going to happen. That will not happen at a gateway site in the District of Columbia. I want that site.” And they said, well, there are some guys who have control of it. They’re firm, under contract. And I just said when is the contract over with? And they gave me a date, and I immediately went and stuck it in my computer on the calendar. And I told Toby Millman, the vice president of project development: Do not forget that date, because we are going out to see them the day after. And we got in the car, drove out there. We were in front of them the very next day. And I explained to them what my vision was for that site and what I thought could happen out there. And they liked what they heard.
What are your other major projects on their way right now or recently finished?
We have two underway that represent two full city blocks in two different municipalities. One is the H Street Gateway project. Again, we like these gateway sites that are in very important corridors. H Street is a corridor that had been overlooked, decimated after the riots of the ‘60s. Not unlike 14th Street where our offices are located, where we really helped turn this corridor around. We looked at H Street, saw a lot of great fundamentals there. And we bought the Capital Children’s Museum site on H Street about a year and a half ago. It was a 2.4 acre site. We took that through a PUD process. Now we’re in the process of building along with development partners there 480 units of all residential housing, which includes the largest on-site, non-subsidized affordable housing component in the city’s history. And we’re going to be breaking that record ten fold out at the New York Avenue site.
What’s the other one?
The other one is a city block on Clarendon Boulevard in Arlington. It represents our first project outside of the District. It’s between North Queen Street and North Pierce Street all the way down to 16th Street. We’re doing two all new buildings, ground up construction. These are called the Wooster and the Mercer Lofts. And you can see those on our web site at www.abdo.com, and you can also see the Landmark Lofts at Senate Square where we’re transforming a 140 year old building that was originally built by the Catholic Church for the Little Sisters of the Poor. And then it was owned by the Children’s Museum. We’re turning that into Landmark Lofts at Senate Square. And we call it the Landmark Lofts because we intend actually to landmark that building through our development process there.
After selling your restaurant business in South Carolina 15 years ago, why did you decide to come to DC, and why to the development business?
I really evaluated where I wanted to be. I really wanted to be in a culturally diverse area. And Washington really spoke to me. There’s so much historic fabric here. I love historic preservation. And I started this company, it will be ten years old in about another eight months.
You just came out here out of the blue? You didn’t have any relatives, friends?
Nope. No relatives, no friends, no nothing. Came here and just said this is a great place. This tremendous opportunity here spoke to me in a lot of different ways. I love it here. It’s a perfect division of seasons. I’ve got access to the mountains, I’ve got access to the beach. I don’t have winters like I had in Ohio, and I don’t have summers like I had in South Carolina. It was right where I wanted to be, and it fulfilled every expectation I’ve ever had.
How did you create a development company?
Abdo Development started off with a single row house in Georgetown, then I did a four unit flop house in Dupont Circle, and then I rolled in from that to half a city block on P Street. We converted a boarded up crack house at P and 15th Street when no developer would go east of 16th Street. The banks wouldn’t even loan to me there. I had to fund that out of equity lines from my own home and residence, because I couldn’t get any lenders to do it. But when I was finished, it sold at a record price per square foot. I had bought up half that city block. At that point the floodgate was open. We went from there into Logan Circle and started buying up portions of 14th Street and reestablishing the retail corridor of 14th Street and so on and so forth. And you know, we helped bring a lot of retail over to this neighborhood. Not just housing but also retail.
You opened an urban marketing center in January.
Yes, and one of the things that’s kind of fun that we do is we actually trademarked the term “hard hat happy hours.” And we’ve got close to 5,000 people on a reservation list for our Wooster Mercer project in Arlington. People talk about a housing bubble. We’re not seeing it. We’re not feeling it. We have 87 units out there for sale. We have almost 5,000 people on a reservation list. With our Landmark Lofts project we’ve got almost 3,000 people on a reservation list. And what we do, because we’re so hands on, is we build the stuff ourselves, we design it ourselves, we have our own in-house architect, we stamp our own plans. We have this urban marketing center where we have these hardhat happy hours, and we bring people in off of our list that have been pre-qualified and we have a big old party. And everybody gets an Abdo Development hardhat. And then they get scheduled for a tour. It’s a very cool space, it’s very fun. You get to see the bathrooms that we do, you get to see the kitchens that we do. It looks and feels like the product that we bring to the marketplace.
What’s your family think of your business?
For my daughter, who will turn three this month, I’m going to remind her this for the rest of her life that I went out a couple years ago and bought her a children’s museum. Granted it was moved, and we’re converting it. But I can tell her that we did close on a children’s museum on the month of her birthday. And that’s something that I’ll always remind her. :)