D.C.-Area Condo Sales Up 12% Last Year, With Another 'Big Increase' Expected In 2020
Developers are building increasingly large condo projects in hot D.C. neighborhoods, and the appetite from buyers appears to be meeting supply.
New condo sales in the D.C. Metro area increased by 12% in 2019, and condo sales in the District were up by 20%, according to a new report from McWilliams Ballard.
"Much of the overall increase is from the District," McWilliams Ballard Director of Market Research Nick Caine said. "Several larger buildings like the Avidian started sales, were successful and pushed that number higher. The market is clearly hungry for larger buildings, with a wide range of unit types and sizes, in maturing locations like the ballpark."
The Avidian, a 171-unit condo project from Monument Realty, sits just north of Nationals Park at 1211 Van St. SE. The building began sales last year, is expected to deliver in April and has now sold well over 100 units, Monument Realty founder Michael Darby told Bisnow.
Darby said the project has been successful because of its relative affordability — its condos are selling for about $725 per SF — plus its location in a bustling, retail-filled neighborhood and its amenities. The size of the Avidian building gave Monument the ability to set aside more space for amenities, he said, giving it an advantage over other condo projects in the market.
"With how comfortable the rental users have become, it's important to be able to have those amenities for a condo, otherwise they don't have the incentive to move," Darby said. "The buyers in the market want to own because they see the value of ownership, but not at the expense of their current level of enjoyment, and that has a lot to do with amenities."
McWilliams Ballard's report is not the only one that showed a strong D.C. condo market. Delta Associates' Q4 report found D.C.-area condo sales last year increased about 10% from 2018. Urban Pace's data found demand for upscale condo condos increased 15.5% in 2019.
Urban Pace is managing sales at eNvy, a 127-unit condo building from Jair Lynch that also sits near the ballpark. Urban Pace President Clint Mann said that building has achieved an "extremely strong" pace of six sales per month and is selling in the low-$800 per SF range.
"The increase was fueled by historically low unemployment and interest rates," Mann said of the market's demand growth. "With more product coming to the market to meet the demand, developers need to be thinking about the 'experience premium,' that their projects are offering."
The demand for smaller condo projects in more established neighborhoods has also been strong, J Street Cos. Chairman Bruce Baschuk said. J Street expects to deliver a nine-unit Pacifica condo project in Dupont Circle next month.
Baschuk said it has sold three of the nine units ahead of delivery, a faster pace than he expected. He said the building's sales have exceeded its projected prices of $1,100/SF.
"I was worried because I had heard anxiety about high-priced units, that it was a slow market with lots of competition," Baschuk said. "There are two or three very big projects that are taking a lot longer to sell. This is more of a boutique building, and people have responded very well."
J Street is closing on a construction loan next month and plans to break ground soon on its 64-unit Congress Street condo project in NoMa, Baschuk said. He said he thinks there is pent-up demand in that neighborhood and is optimistic about the market going forward.
"There are thousands of new residents that have moved into NoMa and they're all renting," Baschuk said. "They're dying for a place close to where they live, but to not rent anymore."
At least two other condo projects are also under construction in the NoMa area. Urban Investment Partners is building the 99-unit Tribeca project on New York Avenue, and JBG Smith and LCOR are developing a 179-unit condo building as part of the Eckington Yards project.
Experts predict the D.C. area's condo demand will continue to accelerate this year, with more large projects under construction in the District and growing activity in Northern Virginia.
"We expect another big increase in the District's sales in 2020, with more large buildings like Eckington Yards and Kennedy on L getting started," Caine said. "There will still be plenty of smaller and midsized buildings starting and likely selling out within the year, but it's larger projects that tend to move the needle on sales."
"The vast majority of buyers were already in Fairfax County and were looking to downsize," Moy said in January. "The last condo project to deliver in Tysons was in 2008, so the idea of pent-up demand in the area was really 100% accurate in our case."
Delta Associates' Moustafa Fahmy said he sees more condo projects moving forward in Arlington and Alexandria in response to Amazon HQ2, and he expects demand to grow as the tech giant continues to hire in the area.
"We think demand in 2020 is going to steadily increase quarter over quarter," Fahmy said. "That's likely due to Amazon HQ2 approaching. They're going to bring 25,000 jobs, and while most people will be turning to apartments, there is still going to be a large influx of condo projects being built."