Tuesday, Jan. 23, 2007

Takoma Pavillions condo project to get new owner

Rental units likely due to market shift

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Brian Lewis⁄The Gazette
Centex Corporation, the Dallas-based former developer of The Takoma Pavilions, has sold the condominium project due to a softening market for condominiums in the area.
A change in plans has been announced for The Takoma Pavilions, a project that has become part of a growing trend among developers to abandon the weak condominium market in favor of more stable rental units.

The project will not be canceled as some expected, but taken over by a new owner, said Ronny Salameh, division manager for the former developer of the site, Dallas-based Centex Corporation. Salameh did not disclose whom the new owner would be.

Construction on the site on Blair Road NW near the intersection with Cedar Street will look essentially the same, as the firm underwent several years of meeting with neighborhood groups to make sure the project met the standards of the historic district.

‘‘The market changed a little bit, so we retook a look at our portfolio and decided to do some things and not other things,” Salameh said. ‘‘The job is still going to happen ... now someone else will be building it.”

One key difference is that the project no longer will be composed solely of $200,000 to $500,000 condominiums, but mostly rental units due to a shift in the market, he said. What the buyer will do with customers who wanted to buy condos would be up to the buyer, he said.

‘‘You’ll find that out there on the marketplace, not only with Centex, but with a lot of multifamily buildings. ... The condo market has softened a little bit,” Salameh said. ‘‘The rental market has actually thrived a little bit. The two go back and forth.”

A similar situation occurred at the 1200 block of East West Highway in Silver Spring, where Centex sold property that originally was slated for its brand of CityHomes, of which The Takoma Pavilions was also a part, Salameh said.

Al Cissel, Bethesda-based co-director of the national commercial real estate firm Transwestern Commercial Services, said it is common all over the area for developments primed for condominium development to be turned over to rentals. The rental market is ‘‘very, very strong,” he said, and condo developers who would rather not wait for the market to pick up in their favor are looking at the rental option to recoup costs as a ‘‘way to get some cash flow in,” he said.

Yet not all condo developments in the area are faltering. The Carroll Avenue Ecco Park condo community, planned for construction in the spring by Bethesda-based SGA Companies Inc., is the company’s fastest-selling group of buildings, said sales director Neil Xing. Thirty percent of the ‘‘green” community’s 85 units have been sold in three months, despite a usually slow winter season. Plans for the building include green roofs and recycled materials, making the project more environmentally friendly.

‘‘It’s not slowing for us,” Xing said when asked about a sluggish condo market. ‘‘This has been selling better than expected. ... Interest rates are up, there’s the green aspect that sets us apart. ... We’re right next to the Metro.”

The Centex project had both those points going for it as well: proximity to the Metro while being billed as energy-efficient and environmentally friendly. Centex still has plans to continue with a similar CityHomes project in Old Town Alexandria, Va., and Salameh said Centex is still excited to see the finished product at the Takoma site, despite the change in ownership.

Residents in the area, however, wonder how yet another development in an already congested area will affect traffic.

‘‘As I see it, yes we definitely want this neighborhood to look better, and to work better, to be really vibrant,” said Faith Wheeler, an Advisory Neighborhood Commissioner in Takoma, D.C. ‘‘Different people have different ideas of what that means, on paper.”

Al Salvaterro, who lives on Cedar Street down the street from The Takoma Pavilions site, said cars along Blair Road in the morning are already bumper-to-bumper. And more development in the area, although it has increased property values around the Metro said, he said, makes it difficult for people like him to move into the neighborhood.

‘‘This used to be the cheapest neighborhood in town,” said Salvaterro, who has lived in Takoma, D.C., for four years. ‘‘That’s not so anymore. Everything costs more now, because of all the development.”

The most contentious project in the area has been led by Arlington, Va.,-based development firm EYA. That development, 86 townhouses on 6.8 acres of WMATA-owned land at the Takoma Metro, has been put on hold as the WMATA Board examines testimony of residents and organizations from Takoma, D.C., and Takoma Park. EYA staff is ready to look at the project again if need be, and to address concerns raised by citizens at a compact hearing last October, said EYA vice president Jack Lester. An overwhelming number of those who testified then were opposed to the development as it has been presented, mostly due to traffic and safety concerns.

While the revamped Takoma Pavilions project seems to be ready for its share of business around the Takoma Metro despite the change in ownership, residents are still left wondering how much more their landscape is going to change.

‘‘Things around here have changed significantly since I’ve been here,” Salvaterro said. ‘‘You can feel the change, especially on the roads.”