Slowdown in condo market prompts conversion of Rockville units to rentals

Friday, March 30, 2007

Slowdown in condo market prompts conversion of Rockville units to rentals

by Warren Parish | Staff Writer

E-mail this article \ Print this article

Citing sluggish sales, the residential developer in Rockville’s Town Square is shifting more than three-quarters of its units from condominiums to rentals, leaving some buyers to choose between switching buildings or tearing up their contracts.

Scott Ross, managing partner of RD Rockville LLC, the company developing the residential side of the $352 million mixed-use development in the heart of the city, said last week that all but one residential building would now be marketed as rental units.

Ross declined to disclose additional information, saying the press has been unfair in its coverage of the faulty sections of pavement on Maryland Avenue and Gibbs Street.

In February, RD Rockville scrapped a plan to sell all of its 644 Town Square units, deciding that more than one-third would be rented. According to numbers provided by company officials in February, RD Rockville had sold 77 condominium units in its other buildings now slated for rental.

Earlier this month, the company sent a letter to such purchasers, informing them of the decision.

Due to ‘‘very few sales,” states one letter, the developer decided that condominiums will ‘‘initially be rental units.”

The company is offering three options to buyers who purchased units in buildings now slated to open as rentals. They can either rent their selected units, buy a different unit in the Palladian — the one building still slated to go condominium — or walk away entirely.

‘‘We don’t like any of those options,” said C. Richard Lee of Rockville, whose mother, Pokuang, signed a purchase agreement for a unit in the Lunette building in October.

Speaking on behalf of his mother, who was out of the country on Monday, Lee said the company’s decision has left the family scrambling to find a home for her.

‘‘It’s not like we’re getting an incentive to move into another unit,” he said, pointing out that the Palladian space offered in exchange for the Lunette unit has a less attractive view and costs more.

Other buyers in the rental buildings who face the same dilemma have criticized the decision, saying lower rates of ownership could hurt their investment.

Admitting the market has slowed since the winter of 2005, city and company officials have predicted long-term success for the 12.5-acre residential and retail development that features a new county library and a public square.

RD Rockville’s original plan called for only rental units, city officials say. At the request of the city, and encouraged by a rising market, the company eventually shifted the plan to 100 percent ownership.

Just 152 out of 644 units are now slated to be owner-occupied. Residents began moving into the Palladian earlier this month.