The Washington Post
Washington Post staff writer Dana Hedgpeth hosted Jim Abdo, president and chief executive of Abdo Development, in a discussion of development efforts in the District and surrounding communities. Abdo's firm specializes in luxury condominium, retail and apartment development.
In an article today, Dana writes that Abdo is behind one of the largest privately financed condominium projects in years in the District.
A transcript of the discussion follows.
NE DC: I live near the development of the old Children's Museum on H ST in NE. The number of condo developments in that area is staggering, and many longtime residents seem to feel that they are being pushed out. The income gap between the city's rich and poor is widening, while the two groups are becoming neighbors. Tensions are high, as evidenced by the graffiti on a sign announcing a condo development just two blocks away from yours: "Yuppies Out!" This has to be contributing to the recent upswing in crime the city is experiencing. Are there any plans to address this issue? Is anyone even talking about it?
Jim Abdo: Great question and something we should all be concerned about. We at Abdo pride ourselves by targeting projects that do not involve displacement. The Children's museum site is a perfect example.
That said, though the PUD process, at that site, we will be building nearly 20,000 s.f. of affordable housing...with no subsidy from the City. At the time, that was the largest, private, on site affordable program through the PUD process in the city's history.
Arlington, VA: As someone who has invested over $66 million in building new lofts in Arlington, how do you foresee the real estate market being affected by the BRAC realignment, specifically in those areas where a lot of defense contractors, civilian & defense contractor employees live and work. Do you feel the market will drop in Pentagon City, Crystal City, Clarendon, Ballston, and Courthouse over the next few years or will revitalization by companies such as your firm help to bolster prices? Are there any pieces of advice you would make to current homeowners or future owners looking to buy given your understanding of this shakey market in these upscale neighborhoods? Thank you.
Jim Abdo: Hi:
I continue to be very bullish in the Arlington market. I think you will see some softness in the near term as buildings that were originally built as apartments....then suddenly went condo are slowly absorbed.
The best advice is to purchase from reputable developers, who designed and built their buildings from the start as condos...not from someone who hopes to make a quick buck by jumping on the "condo craze" by switching an apartment building to condo in a flash.
Washington, DC: Until the 10th floor went up at H & 2nd, we had a view of the Capitol from our house.
Your monstrous building has now obscured that completely. How do you sleep at night, knowing that your selfish desire to make money has this negative effect on other people?
Jim Abdo: Sorry about your view. Perhaps you should buy a unit on the top floor...the view is wonderful.
No really, my "selfish desire to make money" helps our city make money, improves our tax base, reduces crime and has acted as a catalyst for change on the H Street corridor...an area of the City that was decimated after the riots of the 60's.
Because of our work there, this once important business district is starting to flourish again, the arts are returning, a new grocery store will be opening and people feel safer....all for the expense of your view!
Landover, Maryland: Mr. Abdo,
I've always admired developers' willingness to take big risks. How do you sleep at night when you have so much on the line, especially working in DC, where the politics of development can be especially challenging and ever changing?
Jim Abdo: I sleep well at night because I believe in what we are doing here. I believe in the direction our city is going and I believe that smart growth development and the re-establishment of the urban core is simply good business.
I grew this company step by step, with each new project came new knowledge and confidence. I will continue to look at areas that other may not.
WDC: Given the congestion already endemic to the NY Ave/Bladensburg intersection, won't your proposal create more of a traffic headaches? How do you propose to address that - I would think such a traffic/road plan needs to be part of any project there.
Jim Abdo: Another great question. We have studied the problems with traffic at NY Ave and Bladensburg road quite extensively. There are major problems there, but there is major opportunity there.
We have worked closely with DDOT to mitigate problems. In fact, our project will reduce the current number of curb cuts along NY Ave from 16, to just 2. We believe our project will enhance the area by adding an adjacent service road along NY Ave for people to access the property without stopping and turning along that busy street.
Washington, DC (Northwest): After four years here, my partner and I are moving to Chicago because of DC real estate prices. $350K can buy a high-rise 1BR in downtown Chicago with a Lake Michigan view, or a 1BR next to one of last month's DC crime scenes with a view of our over-priced rental 10 feet away. I was blown away by your statement that a $200K studio in such a low-income area up NY Ave even BEFORE the inevitable chain stores arrive is suitable for DC's 'working class'. Do you really think this substandard housing is what the lower and middle classes of this city deserve? When even we as a young, gay, white couple with stable nonprofit jobs cannot afford to get our hair done in the 'salons' or shop in the 'boutiques' that you are so excited about bringing us, we were just wondering how you are able to sleep at night.
Jim Abdo: Wow. Everyone is worried about my sleeping at night. First of all, we are very proud to be taking under-performing industrial land and making possible for residential mixed us development. We will be bringing nearly 250 square feet of affordable housing to this site WITH NO SUBSIDY FROM ANYONE. We are purposely building at lower price points for the balance of the project to try to answer the needs of the middle class...a segment of the population that I believe has missed out on our housing boom....and that is how I sleep at night.
Springfield, VA: Curious if you've heard anything in regard to plans for the development of the Fort Belvoir proving grounds area in Fairfax County? Rumors persist about new town centers, condos, restaurants, and park areas. Do you think this will happen and, if so, do you see surrounding property values skyrocketing? Thanks!
Dana Hedgpeth: That area may see some spikes in prices as BRAC is unrolled, but I don't think it's been widespread yet.
Washington, DC: Jim,
The only potential customers I imagine for a Whole Foods or Crate & Barrel are the owners of the 3000 planned condos. Did the owners of the nearby single family houses you met with indicate an interest in these kinds of retail? The only other potential shoppers to the Mt. Olivet area are over a mile away in Brookland (not Trinidad).
This area is much different than Logan Circle. Logan Circle businesses have succeeded because there has always been a core (though a minority) of affluent residents in the Logan Circle area but more importantly in nearby neighborhoods. H st. NE likewise has a core of nearby (VERY nearby, less than 10 blocks) affluent residents.
Jim Abdo: We talked directly with the residents there. They are beyond excited about a Whole Foods or Harris Teeter at that site. We also believe that the incredible amount of commuter traffic right outside our door will support all sorts of retailers....keeping those important retail tax dollars here in the District.
I have always been a big supporter of a commuter tax...won't happen in my lifetime, so let's help our city by capturing these dollars before they flee to Prince George's county.
Stanton Park: Jim -
I'm a big fan of your work. Specifically, I'm a fan of the impact your work has on neighborhoods. I live close to H St NE, and after you took the first step with your development there we're already seeing plans for a new grocery store, new retail, etc. I think if you hadn't gone first we would see none of this happening.
Do you see anything happening with the old DC Farmers Market site, off Florida Ave NE? That could be a tremendous boon to the neighborhood, and it could provide tremendous housing as well.
Dana Hedgpeth: I do believe there are some plans for that site but they haven't been fully flushed out yet.
Washington, DC: Congratulations on all of your success! If you were just starting out, what areas of DC would you look to do development work in?
Jim Abdo: Thank...I'll take an easy one. I really like the H Street corridor. I believe it will look just like the new 14th Street in two years or less.
I think investing in that area will pay off well for all who join us there.
Washington, D.C.: Do you worry that the DC area will eventually run out of more-money-than-sense yuppies willing to pay sky-high prices for luxury condos? What are your plans for when the market becomes saturated or the economy takes a serious downturn?
Jim Abdo: Again, I continue to feel great about DC's future. Great job growth numbers, high fuel prices, disgusted commuters and a vibrant city all feed a continued desire for urban residences.
I am not worried about saturation as it relates to middle class housing. That segment needs help...and that is who we are targeting with the NY Ave project.
Trinidad: As a resident of the Trinidad area near where you are proposing this big development, I find it a bit imperial for you to think we want a "country club" environment in our quiet residential area, with the usual yuppie nonsense of coffee shops as some solution to the neighborhood "woes." What this area needs is improved infrastructure and road improvements. Can you speak to how this project will improve the quality of life for us already here?
Jim Abdo: Ok. I simply borrowed from the "country club" model that is used outside of the urban core. We want to bring wonderful on site amenities to the area to stimulate the housing...that is what I meant by the country club model.
For example, as part of our phase one, we intend to build a 40,000 s.f. club with state of the art fitness, indoor pool, full size indoor basket ball courts and 7 day per week child care facility. There will be six different roof top pools, exercise trail and quick access to the 450 acre Arboretum. All of this along with the retail improve the quality of life for residents that are part of the development and those that live around it.
Montgomery County, MD: What do you foresee in the downtown Silver Spring and Wheaton markets in the near future?
Dana Hedgpeth: I think Jim would agree that these markets are seeing a boom as they get revitalized and for now that doesn't seem to be slowing up.
Penn Quarter...from the blog Gallery Place Living: When do you anticipate making a further announcement about development of the 3rd Street lot in the East End? What will become of the Harrison, the abandoned apartment building, next door? Thx, GP Living
Jim Abdo: We hope to break ground in Penn quarter late next year on several projects in the 3rd and Mass. area. One will likely be an office building that will incorporate the historic Landmark Canterbury building, the vacant lot will be housing. There are wonderful view at those sites of the Capitol and National Building Museum.
Brentwood NE DC: I live very close to your future NY Ave/Bladensburg Road project and couldn't be more excited about it. While we're lucky to have some good options along 12th Ave in Brookland and the Giant/Home Depot development, the neighborhood is desperate for more investment and commercial opportunities.
I understood from the article that you're waiting on zoning changes to be resolved this fall. What's your overall timeline (ballpark range, of course)?
Jim Abdo: Our time line for the NY Ave. development is to complete the entitlement process this winter and start breaking ground and clearing that site late Spring of 07.
First building we intend to build will be at the corner of NY Ave and Montana. It will be about 550K s.f. and will house a 65,000 s.f. grocery store....we hope a Whole Foods or Harris Teeter.
Washington, DC: Kids Museum Condos: Is there a Harris Teeter going up at 3rd and H NE, or is that a rumor? Please let me know!!!
Jim Abdo: We understand that the Harris Teeter will be coming to 3rd and H, right across the street from our Landmark Lofts (the former Children's Museum). It will be a mixed used development with other smaller retail uses and about 200+ rental apartments above.
I have seen the plans...in fact they are sitting here on my desk...and they look great.
Washington DC: Mr. Abdo,
After reading today's piece in the business section, we're lead to believe that you're batting 1.000 with your projects and their success. Care to fess up to any mistakes/mis-steps you've made during your career? How have they been learning experiences for you?
Jim Abdo: Fair question. So far I've been very fortunate. All of my development projects have been successful. There have been deals that I have passed on and regretted...and deals that I thought I would get, that I didn't.
It is a tough business. Things have to pencil out..and in an ever changing market, mistakes will be made. So far, so good. I also surround myself with very talented people like Toby Millman our VP of project development, Eric Price our former deputy Mayor of economic development, Ken Bice, Mark Turner on our constructing side....and I believe I have one of the most wonderful in-house architects in Washington with Ms. Jyh-Mei Lee.
My sister in law, Charlie is our office manager and she keeps me grounded!
Washington DC: An earlier questioner asked about the "old DC Farmers Market site, off Florida Ave NE." I appreciated your earlier comment about trying to minimize displacement, so I'd just like to clarify that there is still a vibrant, if somewhat chaotic, business district on that site. I live nearby and shop regularly there. The Post recently ran an article about all the opportunities for retail shopping. I'd be extremely disappointed if my fish and vegetable market were replaced with a Pottery Barn.
Jim Abdo: I agree. That is not our site. We are not the DC Farmers Market site...our site on NY Ave features junk yards, chop shops, a strip club and other such exciting uses. We believe the site can do far more for the City.
In fact, the site today generates about 280,000 dollars in tax revenue for the District.
Our plan, once implemented will generate $40 million dollars annually....and we are asking for no subsidy from the District.
College Park, MD: Dana & Jim,
It's one thing to take risk about an area of the city to live in, but do you think all the new residents of all the projects all over town will still be there once they have school age children? Will new parents with advanced degrees also take a leap of faith and enroll their children in the public schools in the NY Ave area?
What are you thoughts on all the condo developments around PG plaza and old Hyattsville? What changes, if any, do you forsee these neighborhoods?
Jim Abdo: Schools continues to be a concern of mine and will ultimately be a missing link in the long term success of housing in the District.
For our part, we will be assisting Langdon Elementary School with some much needed repairs as part of our NY Ave development. There is also a Charter School building on our site that we hope will attract a new, well run Charter School...hopefully for junior high students.
Washington, DC: As a returning District resident (after a four-year absence) I think it's great to see so much development going on around the city. And having lived in NYC and Boston as well as DC, I realize high housing prices are unfortunately a fact of life.
That said, my question is this: do you think young, single professionals are being priced out of this market?
Jim Abdo: Yes. I am concerned that there is a polarization of the city taking place. There are multiple developers who address the wealthy ...myself included....and there are actually quite a few who address those of very low income.
It is the working class/you professionals who are getting priced out. That is the sole focus of our NY Ave development. 3.5 million s.f. that we intend to price 150-200 $ per s.f. less that what is offered in convention neighborhoods in NW DC.
Fairfax, VA: I agree with Trinidad. Why do developers in general want to take a perfectly good thing from the middle class and ruin it by driving long-time residents out and catering to the new upper class? The two examples that come to mind are Metro West and the article in today's paper about Hollin Hall.
I realize that what you're doing is trying to improve a blighted neighborhood, but it's not going to make lower-middle class people like me move there. It'll still be unaffordable, just because of the D.C. address. I'm already being driven out by the new upscale development at Metro West. Where do you suggest people in my position move, since no new developments anywhere are affordable?
Jim Abdo: I don't know your income level so it's hard to say. But I would hope that our NY Ave development would appeal to people just like you.
With 250 s.f. of affordable house as part of the project, I think we are making a significant dent. That could represent 300 units alone. And we are doing this without a process of displacement.
Washington, DC (Capitol Hill): How has the recent crime emergency impacted interest in the residential development projects underway in areas that many people still consider unsafe? Has it given you any pause to develop in those areas?
Jim Abdo: I don't like the term crime emergency...and I am not saying that as a developer, but someone who loves this City. Our crime rate overall has dropped considerably.
That said, what we have experienced recently needs to be dealt with quickly ...I think the Mayor and Council responded well.
The recent crime has not given me pause...if anything it makes me more determined to provide opportunities to more and more areas of the City. We provide Local Small business participation in all of our sites, apprenticeship programs to people in the neighborhoods. Ken Bice, our senior site super is working to hire former crime offenders who have completed a program. People in these transitional neighborhoods need opportunity....we bring it to them. 85% or our employees are DC residents ...hired from the communities where we work. All of that helps reduce crime.
Washington, DC: I'm sure that business builds to where the market is, but I haven't seen a single condo development in DC or the surrounding area in the past 3 years that wasn't deemed a "luxury" project. The kind of condo that used to sell for $65,000 is now selling for $225,000. I don't know anyone whose income has tripled in the past 3 years, so who is buying these condos? (This is not sarcasm, it's a serious question).
Is there any interest among condo builders in providing a non-luxury product? I'd line up outside the door of a developer who told me he's skipping the granite counters and just providing solid housing for someone who makes less than $100k/year and doesn't want to spend more than 50% of his income on housing. But maybe I'm alone?
Dana Hedgpeth: Good question. I'll be curious to Jim's answer. Others have had similar questions, especially given how expensive this area is.
Logan Circle, DC: Mr. Abdo, I was wondering what the plans are for the pair of abandoned houses on the north side of Rhode Island Ave. between 14th and 15th NW. I see an Abdo sign in front of them, but no visible progress has occurred in the 3 years I've lived in the neighborhood.
Thanks, and good luck with the zoning change for the project up at NY and Bladensburg!
Jim Abdo: Thanks Geoff. We intend to start on the Rhode Island Ave. project in 07. We will be saving the distressed stone facade and incorporating that into a new 90 foot tall condo building that will feature one unit per floor...each with private elevators that open directly into the living rooms.
Boston, MA: Mr. Abdo - I LOVE what you have done around the Logan Circle area. Just curious - do you maintain a dialogue with other DC developers (e.g., Mr. Hoffman, etc.) to compare notes on plans?
Jim Abdo: Hi. Thanks for the nice words. Yes, I maintain a dialog with many area developers, including Monty Hoffman, who's work I admire.
We do not compare notes or plans, but we all feel strongly about the health and livelyhood of our City.
Trinidad, DC: Are you planning on selling memberships to the "state of the art" club to neighbors that don't live in your condos? Or will it be exclusively for residents? As someone who lives in the area, personally, I'd pay big buck for access to good facilities and a pool.
Jim Abdo: Yes. As a neighborhood resident, you would be welcome to join the club ...whether you buy a unit or not. We intend for this to be a win/win for the entire community.
Washington, DC: How can developers and lawmakers consider "affordable housing" affordable?
It's absolutely affordable to those who are unemployed and those who are have a low or fixed income, but what about those of us who have duel income households clearing between $75k and $100k? For those of us in that range, unless we have some inheritance or lottery money to put down on a home, anything over $200k is out of reach, and we don't even come close to being granted the federal and local subsidies for "low income" people. Since when is making almost 6 figures a year amount to being poor? Even in New York, LA, and Chicago I know friends who are able to find decent-sized and affordable housing.
"Affordable" housing in this region is a JOKE!!!!
Jim Abdo: I agree that it is a challenge...not sure I'd call it a "joke".
We believe our project at NY ave directly addresses the needs you describe...even the market rate units. We intend to produce hundred of units in the 200k range and that is not counting those that are the affordable units.
Again, without subsidy, there is only so much a private developer can do. As a product of the working class, I am diligent in my pursuit to answer this need.
Mark in Wash, DC: Other than having developers set aside units for low/middle income residents (subsidized or not), what changes to federal and local public housing policies do you think would improve the current housing crunch in DC? My sense is that public-private partnerships yield the best results. You're the private, what about the public?
Jim Abdo: I couldn't agree more that public private partnerships are the answer.
Inclusionary zoning seems to be the prevailing silver bullet of the time....I am concerned that it will simply not work, as most housing developers will not be able to "pencil out" the economics to make it work.
Why are we able to do it? Because we are looking to non traditional areas of the city and taking the risk of transforming industrial land to allow for residential. This formula would never work in NW DC where the land basis to far to high to create an 8% affordable housing component.
Gaithersburg, MD: Hi Jim,
Where will all the industrial uses of land go after you are done making residential developments out of them all? I'm not saying everything, but we still need to have warehouses to store things that will go to your grocery store, laundromats for the health club, shops for the buses that (hopefully) will service your development. If we keep turning industrial land into residential, is DC going to turn into Manhattan?
Jim Abdo: Great question and one that I will end on. Yes, the City does need some industrial land to meet it's operational needs.
We, as a City, need to look closer at how we are currently using our industrial land. Are our agencies efficient? I see a lot of underperformance by DC agencies as I look at their use of industrial land. Let's make these agencies look at efficiency.
Maintaining a certain amount of industrial zoned land is important...that said...do we want a trash transfer station right at the eastern gateway of the Nation's Capitol? I am embarrassed by what I see everytime I drive into the City on NY Ave. We need to re-establish this great avenue.
Thank you for all your excellent questions...my fingers are tired!!!!!!
Dana Hedgpeth: Thank you to everyone for asking such great question and Jim thanks for coming on to answer them.