Special Issue, July, 2001 The Guy Next Door
By Cheryl Weber
It was the community that time forgot, an enclave of turn-of-the-century homes sitting dilapidated and bereft on the wrong side of the proverbial railroad tracks. Which is to say the wrong side of 16th Street, the black-asphalt line that runs through upper Northwest Washington, D.C. down to the White House. In recent history, it separated downtown’s hip, high-end addresses from the working-class communities. Three blocks east lay the derelict Logan Circle neighborhood, lined not with boxwood and BMWs but with liquor stores, auto body repair shops, and a parade of prostitutes and drug dealers.
It appeared that the one thing Logan Circle’s all-but-abandoned Victorians longed for was a loving hand that would peel away the debris, restoring them to their long-ago glory. They got just that in 42-year-old Jim Abdo, a passionate man who over three years has helped revitalize a fringe area by converting old buildings into airy, one-of-a-kind condos. And made money doing it.
During the week, Abdo, dressed in jeans and work boots, can be seen steering his pickup truck up Rhode Island Avenue and down the side streets, checking on the progress of a handful of construction sites. On a recent day at the Emerson, senior site supervisor Ken Bice was celebrating a huge hurdle---the power hookup. For 25 years, the brick turn-of-the-century structure had been empty and off the city’s power grid. "The biggest obstacle to rehabbing these buildings is getting utilities in, especially electric," Abdo says.
Like all his projects, this one was stripped to its shell. Now, two 1,800-square-foot condos occupy each floor and run from the front to the back of the 100-foot-deep building. Abdo ripped out two existing stairwells and installed an elevator shaft, so that a private elevator door opens directly onto the upper units, New York style. Interiors are appointed with glamorous items such as granite kitchen counters, Sub-Zero refrigerators, light-washed walls, and Italian marble in the bath. Abdo also stacked two penthouses on top of the building and gave them 20-foot ceilings and a wall of glass overlooking the city skyline. "I just love big, open space, " he says.
So, apparently, does his clientele—empty nesters and career couples with no children. Even in its raw state, one of the penthouses has already sold for $900,000, to a Philippine couple who found Abdo Development through the Internet. Abdo paid $1.25 million for the Emerson and is shelling out about $2.5 million to renovate it. Market rate for the building’s 12 units ranges from $300,000 for the ground-floor condos to $900,000 for the penthouses.
Along with the growing number of other developers who’ve descended on this 10-block radius, Abdo Development’s rise coincides with the city’s economic comeback. "D.C. has really lagged behind other urban centers," Abdo says. "Most others experienced a renaissance in the 1980s and ‘90s, but the lack of leadership in D.C. prevented it from happening here. The city has been a sleeping giant for a ling time, ready to wake up." Indeed, the combination of a new mayor in 1999 and a strong economy unleashed a lot of pent-up interest in the city from both the commercial and the private sector. "People who live in the suburbs are saying life in traffic is not worth it," Abdo says. "They can capture another hour and a half by living where they work and take advantage of new art museums and galleries."
Architect Sami Kirkdil, who does some of the company’s work, agrees. "People are taking pride in where they live. They’re not buying real estate just to flip it, as they did in the ‘80’s and ‘90s, " he says. "They’re taking risks in going to marginal neighborhoods, just to live in buildings they like."
Jim Abdo did that himself, back in 1997. He still lives on the top floor of the company’s first project—a four-unit 1890 brownstone that had been a flophouse. He’s the kind of guy who fundamentally trusts his own instincts, believing if he’s passionate about something, others must be, too. "I believe in the buying public," he says. "If you build something of quality, they’ll buy it."
That combination of faith and fortune-telling ability is what helped Abdo succeed in his first business venture. An Ohio native, he graduated from Wooster College with a degree in sociology. After college, he managed a pizza shop in Hilton Head, S.C., which he parlayed into a statewide chain of five restaurants called Sharky’s. "What I loved most was building them," he says, "not operating them." So after 11 years he sold the company and moved to a historic section of Washington, D.C. There, surrounded by stately old buildings, Abdo’s entrepreneurial instincts kicked in again. He turned to urban development, using profits from the sale of his restaurant chain to finance his first project. Since its inception in 1996 and a volume of $880,000 that first year, the company has renovated about 20 buildings. In 2001, Abdo anticipates sales of $20 million.
Although Abdo put himself through college by working on old buildings, he’s had no formal training in design or construction management. What calls him to his work is simple and visceral: He’s in love with the quality of craftsmanship and the level of build-out found in historic buildings—characteristics he aims to replicate. "I have to love what I’m building," he says, "or I’m not happy." Abdo typically selects architecturally interesting structures then uncovers and restores noteworthy details. Finally, he adds modern amenities and as much light and volume as the design can spare.
That enthusiasm for unfettered living space resonates with buyers in the District, with its dearth of industrial buildings. Most condominiums on the market have 8-foot ceilings and traditional floor plans. Abdo, on the other hand, consistently reduces the number of units in a building so he can create soaring ceilings and large expanses of glass. "It’s a big selling point for him," explains architect Willy Rueda, who also does some of Abdo’s design work. "He’s trying to make space, not two fireplaces and two baths. It’s celebrating everyday life experience and making more of shelter than being able to go to the kitchen in an efficient way. With Jim, you’re dealing with someone who has very clear goals about what he wants to accomplish."
Indeed, Abdo’s a visionary not just in business matters but also when it comes to reshaping physical space. "When you can see it, you want to make it happen, " says Abdo, who’s involved in every phase of design. It’s a fluid affair that starts with a walk through the empty building with Bice and an architect and engineer. They’ll take notes on its core structural and mechanical elements and figure out how to move floors and walls to create more openness. And designs are often modified on-site. "These old buildings are moving targets." Abdo says. "It’s like putting up a huge erector set, making room for systems and taking advantage of the infrastructure that exists."
Of course, the quality and location of existing elements such as mechanical chases, elevators, and stairwells, determines whether or not a building is a wise investment. Well before making an offer, Abdo’s done a lot investigative work. One factor he looks at is the building’s floor area ratio, or FAR code, a standard the zoning commission sets for the density of a building or a lot. It restricts the height of a building as well as the floor area he’s allowed to build. "The key component is determining what your allowable floor area is, because ultimately that’s what you’re selling," Abdo says. "We always look to see if the allowable floor area and the entire lot coverage has been maxed out. You can’t just drive by and think you know what you’ve got."
Bice, who’s also company vice president, heads up a crew of six permanent employees, plus part-time help, who do primarily demolition and carpentry. He’s been in construction since high school and owned his own firm for 12 years before Abdo found him, working nearby on similar residential and commercial jobs. The two do the estimating together by hand. Bice is on the site by seven every morning, solving problems or wielding a hammer himself when necessary. "My job is to meet or beat the budget," he says. "If a ridiculous roofing price is submitted, we’ll do it ourselves."
The profits get shared among all employees, project by project.
Taking it to the streets
With the competition encroaching and prices rising sharply, Abdo’s worked harder to protect those profits. He has stepped up inventory, acquiring buildings the company can work on over the next three or four years. He’s also diversified his business to include a mix of speculative condos and income-producing properties. He owns a string of houses near his own residence, including 40 rental units. And in 1999 Abdo established another foothold in the community with a separate division—Abdo Commercial. "There was a tremendous demand for our product, but services were not keeping pace with the types of people moving in," Abdo explains. "The neighborhood didn’t appeal to long-term residents."
That, in fact, is what separates Abdo from the small time investors. For the past two decades, individuals have tried to turn this part of the city block by block. But it lacked the right commercial anchors. The neighborhood’s renaissance gathered speed in 1999 with the announcement of the arrival of a 40,000-square-foot Fresh Fields, a trendy supermarket chain offering upscale foods and organic products, which opened in 2000. Local residents get some credit for clinching that deal. After hearing the company was scouting around for the right D.C. location, they went into action, putting together a marketing study that included numbers on population density, housing values, and income levels. Although the site Fresh Fields was considering for occupancy wasn’t his, Abdo did his part, too. He arranged a meeting with the grocers up in one of his condos with 16-foot ceilings. "We sat in the bay projection and I said, ‘This is the kind of unit your customers are living in. You can see your site from these windows.’ I told them how much money people are paying to move to this area. Ten days later they did the deal." Adds Abdo, "It’s visual. When I show them the vision I and the residents have for this neighborhood, it’s like a snowball rolling down the hill."
The developer is putting together an assemblage of commercial properties that butt up to his high-end housing projects. Whereas the residential side involves mostly speculative sales, these are buy-and –hold properties with long-term leases. Abdo currently owns seven commercial buildings, including a historic row house he renovated to use as his won office. It’s an elegant space awash in natural light, modern art, and oriental rugs.
In choosing his retail mix, Abdo keeps an ear to the street. He’s called neighborhood meetings to find out what kinds of services people want. They also e-mail their requests, and Abdo conveys their wishes to retailers. "We invite retailers to nice events with wine and cheese, and they introduce themselves to the community. We did that with CVS (the drugstore chain) and Fresh Fields."
After Fresh Fields came to his corner of the world, Abdo booted an auto-body shop next door. Now he leases the remodeled building to CVS. "I like to see city streets that are vibrant and active, " Abdo says. "But the last thing I want to see happen is to have it turn into another American strip center." Southland Corporation has come calling, but Abdo turned them down. Instead, he’s cherry-picking among eclectic and independent enterprises. Currently he’s in negotiations with Vespa (the Italian scooter dealership), art galleries, small banks, and a pizza oven place. Soon he’ll be landlord to the first Caribou Coffee in the District, a Minneapolis based retailer second to Starbucks in sales.
With such an investment strategy, Abdo’s confident of bobbing with the next economic cycle. But for now, the brisk market and rising prices are astounding everyone. "We’ve always gotten about 2=30 percent more per square foot on Jim’s properties than any other residential developer," says local real estate agent Stephanie Okonek. With no marketing beyond a sophisticated website, www.abdo.com, 25 percent of its product is pre-sold, according to Monica Boyd, the company’s sales and marketing director. Boyd, who’s affiliated with Pardoe Real Estate, handles everything from loan pre-approvals to closings. The buyers are pretty pleased with their investments, too. Over the past year and a half, some of the condos have appreciated by more than $100,000. SO it’s not surprising that 25 percent of Abdo’s sales come from former clients who are trading up.
As the company grows, so does the size of the jobs. Next up is a $13 million renovation. So is the soaring economy the limit? "Our goal is not to be the biggest developer in Washington," Abdo says. "We’re too hands-on and into craftsmanship to get to that level. We feel like we’re almost a family business, run by tight, solid core people."
Indeed, Abdo Development is closely tied to its community. It’s not just that Abdo lives there. The guy who maintains the company Web site rents one of his apartments. So does a member of his construction crew, a man who had virtually lived on the streets. When possible, Bice hires from the neighborhood. Abdo is also sensitive to the gate of anyone displaced by development. Most buildings he buys are vacant. But when there are existing tenants, the company will rent one of its own apartments at the rate the tenants have been paying and reimburse moving expenses, or offer them money to move on their own.
And like some developers who name streets after their children, Abdo calls his buildings by family names. There’s the Sterling and the Withington, both named for his grandfather. And, of course, the James. Bice got his turn on the Emerson—it’s his father’s middle name.
"Jim is so into what he does. It’s part of him." Okonek says. "Jim is actually like the guy who lives in the neighborhood who wants to turn it around." But unlike the guy next door, he has the knack for pulling it off.
Cheryl Weber is a freelance writer in Severna Park, MD