I've said it before and I'll say it again. The Height Act limits available units and artificially drives up prices of housing within DC. Raising the limit, both outside the CBD and in Anacostia could bring down unit pricing, which currently prices out many federal employees, and ultimately crime through gentrification.

by Redline SOS on Jul 17, 2012 8:33 am • link • report

Go I feel dirty after clicking that Examiner.com link. What a sewer that site is.

by TM on Jul 17, 2012 8:52 am • link • report

Redline, you've said it before and you were wrong then, as you are now. The issue, especially in DC is far more naunced than that.

If DC was manhattan, with every scrap of downtown developable area at the limit of its zoning and FAR, then fine. But the District is tiny, and it currently has enormous swaths of land in NE that are still in their post 60's race riot stage, let alone maxed out in its allowable denisty. Same for large swaths of SE.

Had no limit existed, NOMA would still be the run down parking lots and dilapidated buildings it was circa 2002 because developers would have simply built 40 story skyscrapers in the "nice" parts of town (K street, PennQtr etc).

The height limitation in our case "forces" re-development in low denisty under used areas of DC, of which there are plenty.

The District has seen nearly 60 billion dollars worth of commercial and residential development in the past 14 years, most of which was during the biggest RE boom DC has ever seen and DC still has large tracts of low density or unused land. Even if we were somehow able to maintain that level of development in DC it would be another 25-30 years before all the available low density areas of NW, NE and SE were maxed out.

Then we can have a legitimate discussion as to the effect of DC's height limit.

by notredline on Jul 17, 2012 9:17 am • link • report

Re a DC United stadium, Pentagon City would be an ideal location for all of the reasons described, but isn't there a strong strain of NIMBYism in Arlington County that would make approval difficult?

The team's preference is to stay in the District, but would likely view Pentagon City as a 99.9% solution -- it would remain accessible on the Metro system, a key consideration for many of its fans.

by JJ on Jul 17, 2012 9:29 am • link • report

The chatter with the D.C. United link is pretty misleading. The author of the Examiner story is merely saying that there's land available near Pentagon City. The way it's described in the roundup, it's as if the team has had discussions about moving there. It hasn't. "Examiner writer says United should build its stadium in Pentagon City" is much more accurate.

by anon on Jul 17, 2012 9:35 am • link • report

As anon said, there isn't much to the Pentagon City location other than the author speculating that it could happen since it was considered by MLB and it's still an empty lot that Arlington hasn't been able to move forward with. I'm not sure who the primary NIMBY would be at that location, JJ.

by selxic on Jul 17, 2012 9:43 am • link • report

DC United could find a home in Pentagon City.

Why is there a picture of a baseball stadium in an article about a soccer stadium?

by Jasper on Jul 17, 2012 9:51 am • link • report

@Jasper:
Don't be silly. This is American Soccer, not European Soccer. We play American Soccer on a baseball field.

by Matt Johnson on Jul 17, 2012 9:56 am • link • report

As a former DCU season ticket holder, I am well aware of the current situation and agree that DCU is not seriously looking at Northern Virginia today. Their focus is on the Buzzard Point location. That said, a year ago, when things were looking very bad for the team, no one raised Pentagon City, despite its multiple advantages. There is a reason for that, selxic. Arlington County is viewed as hostile to large scale development such as this.

by JJ on Jul 17, 2012 10:00 am • link • report

theres no actual proposal for a soccer stadium there. There was one a few years ago for a baseball park - arlington opposed it, and the park ended up in SE DC. I think we can all agree that worked out pretty well for the region.

The site in question would be perfect for high density mixed use (which is already happening nearby). It does not need a sports venue to kick start it, so to speak. Buzzards Point in DC, OTOH, would seem to be a place that could use a jumpstart (AFAIK). I think the best site, from a regional perspective, is going to be in DC. The only really unique positive about the site, is the suggestion to share pentagon parking. However I am dubious DoD would agree to that on a regular basis.

by AWalkerInTheCity on Jul 17, 2012 10:04 am • link • report

"There is a reason for that, selxic. Arlington County is viewed as hostile to large scale development "

I'm not getting this. Arlington is as friendly to large scale development in general as any jurisdiction in the region, with the possible exception of the District itself (which IS, after all, the center of the region). What they are not friendly to is sports arenas in the Pentagon City area. Which, I think, is pretty reasonable from an urban development perspective.

Folks here have suggested its a bad idea to keep part of Reservation 13 for a sports venue. Pentagon City is at least as prime real estate. Its in the midst of transformation to more intensive development. NotInMyBackYard in this case, means "because I want a more intensive use in my back yard instead"

by AWalkerInTheCity on Jul 17, 2012 10:09 am • link • report

Folks here have suggested its a bad idea to keep part of Reservation 13 for a sports venue.

Biiiig difference between a stadium and a private football practice facility.

by Alex B. on Jul 17, 2012 10:32 am • link • report

@ David Alpert

Your comment about the need to coordinate planning early is spot on. The Tysons Land Use Task Force did not even bother to discuss the impact of added density on the Dulles Toll Road with MWAA. And Fairfax County did little better. When the County announced the need to expand the DTR by as many as three-to-five lanes, I asked an MWAA executive about this proposal and was told MWAA was not even aware of it. There must be better communication among all stakeholders. Hopefully, this D.C. effort can do much better than Fairfax on coordinating planning.

by tmtfairfax on Jul 17, 2012 10:37 am • link • report

Having lived through the baseball stadium site selection, I believe that Arlington is not NIMBY when it comes to development, but it is NIMBY when tax dollars would be used to pay for or guarantee funding for facilities to be used by for-profit entities where the jury is still out on whether or not there is a positive ROI generated by those facilities for the people who paid for the funding.

by ksu499 on Jul 17, 2012 10:51 am • link • report

@alex b

While the recent discussion focused on the practice facility, my impression was that many commentors (and most of the community) were cool to a new stadium on reservation 13. Perhaps I misremember.

by AWalkerInTheCity on Jul 17, 2012 10:54 am • link • report

+1 notredline

by Tom Coumaris on Jul 17, 2012 10:55 am • link • report

@ Matt Johnson:Don't be silly.

I forgot. Being Dutch I should keep my mouth shut about soccer. After all, the orange team is the biggest looser from Euro2012 defending wold-cup runner up!

by Jasper on Jul 17, 2012 11:09 am • link • report

I'm confused about what these neighbors would actually accept for development of the McMillan site if leaving a third of it as park isn't acceptable. Something is going to happen to allow people to access this parkland, and the only feasible way to do that is to pair it with development of the site.

Would they be willing to allow any of it to be developed?

by Gray on Jul 17, 2012 11:09 am • link • report

While the recent discussion focused on the practice facility, my impression was that many commentors (and most of the community) were cool to a new stadium on reservation 13.

Nope. Most people were against ANY sort of stadium because there's so much more that could be erected which would benefit the community. Also of concern was the fact that so many residents had worked so long and hard developing a master plan for the site and thought it would be a slap in the face to those diligent residents involved in the planning.

Soccer Stadium at Pentagon City. Do we really want a stadium that close to the Pentagon? It is the Pentagon you know.

by HogWash on Jul 17, 2012 11:18 am • link • report

Perhaps I misremember.

Likewise, there is a biiiig difference between a Dan Snyder http://en.wikipedia.org/wiki/Cowboys_Stadium">wannabe-Jerryworld stadium seating 100,000 and a DC United stadium seating ~25,000.

by Alex B. on Jul 17, 2012 11:25 am • link • report

@notredline

Why must we insist that every square inch of the city is built-out before we decide on what to do with the height limit? That would act as an unnecessary constraint to residents and businesses who might want to locate themselves in the District.

And your assumption that NoMa would be dilapidated is false. It may not be as developed as it is now, but you're basically saying that denser growth in the CBD wouldn't induce some sort of demand for NoMa which is still pretty centrally located, relatively speaking.

We don't need the entire city to be built-out. Some areas probably should keep the character they have or at most become a bit more dense. The run down areas that are far away from the CBD and have limited transit and other infrastructure, we should develop, but I'd be more conscious of the scale of developments in those areas than maxed-out areas of the CBD. And while I haven't done any in-depth analysis or modeling, I'd think that allowing higher growth in the high-demand areas would induce growth to under-utilized areas anyway, because you are stunting growth in the District with the height limit. Whether it's a lot of growth or a little bit, you are constraining it and it'll only get worse if we don't do something.

by Vik on Jul 17, 2012 11:28 am • link • report

so do you think DC United stadium at Reservation 13 makes sense?

@hog = theres a mall right there, a lifestyle center, a bunch of hotels, office buildings, and apartment buildings. Theres really no security issue with the stadium at that location. There COULD be traffic issues - I dont know the soccer schedule, or the proportion of attendees that could reasonably be expected to use metro.

by AWalkerInTheCity on Jul 17, 2012 11:29 am • link • report

@ksu499

I think you're right. It seems like Virginia jurisdictions in general are more hostile to the idea of public financing for sports facilities. I do think that a civic component is important to a publicly-financed sports facility deal in most Virginia jurisdictions. Northern Virginia needs convention space, though, which is why an Arlington project with a convention center is an interesting proposition.

by Vik on Jul 17, 2012 11:35 am • link • report

@Gray

Spot on. This reminds me of the Alexandria Waterfront Plan, where opponents wanted more parks, open areas, a museum, etc. Problem is: all of that costs money.

We're experiencing the same problem here with people who have a pie-in-the-sky vision for what to do with the space that costs millions and generates minimal additional revenues. The city doesn't have the money and the developer certainly isn't going to develop something unless there's profit in it. Period.

On top of that, the Sand Filtration site has the added problem of being structurally deficient. It's not like this is just a big piece of open land; it will cost just to make the site structurally sound and then be just that: a park with some minimal development on each end. While parks are beneficial, there's a point at which spending millions to build and maintain a park the size of 20 football fields becomes a losing proposition and not worth the public investment.

by Adam L on Jul 17, 2012 11:54 am • link • report

so do you think DC United stadium at Reservation 13 makes sense?

At Reservation 13 specifically? No. At the greater RFK site? Yes.

Remember that the two are not interchangeable.

Even with private payment, something like a stadium needs local government support. Arlington did not support the baseball stadium in Pentagon City the last time, there's no reason to think that would change now. Likewise, no matter how much sense the greater RFK site might make, the Feds and the lease terms for the site to DC do not necessarily permit that kind of local government champion of the project.

by Alex B. on Jul 17, 2012 12:03 pm • link • report

Several sites in Arlington were looked at, JJ. Likewise, the team actually does have some support in Arlington, Alex B..

by selxic on Jul 17, 2012 12:17 pm • link • report

selxic: define 'support.'

by Alex B. on Jul 17, 2012 12:22 pm • link • report

Isn't the issue in Arlington a more limited ability to raise debt for sports venues?

by charlie on Jul 17, 2012 12:26 pm • link • report

While I would love DC United to move to Arlington, the Pentagon City site will be taken shortly:

http://www.arlnow.com/2011/07/21/new-office-complex-under-consideration-for-pentagon-city/

by JohnB on Jul 17, 2012 12:28 pm • link • report

Your strawman is just that...a strawman. Neither of us truly know what would happen...but the Rosslyn comparison is apt for Anacostia and outside the CBD, developers would likely build higher...it's simply more profits for them and in so doing, creating more density and more units would in theory bring down rents. There's also the problem of "luxury" development, despite developers fully realizing what the federal government pay rates are. So while there are numerous factors at play, I believe the Height limit artificially caps available units. It's a reasonable economic assumption.

by Redline SOS on Jul 17, 2012 12:44 pm • link • report

There have been instances of board members being supportive of a stadium in the County although I don't believe there were any public specifics from Tejada or anyone else who said anything, Alex B..

by selxic on Jul 17, 2012 1:08 pm • link • report

It must be remembered that the Arlington board was being asked to greenlight the site for a ballpark/conference center without a team in hand. It was not nimby ism but Bud Selig's refusal to announce a move by the 2003 All-Star Break that prompted the board to set aside the ballpark matter and pursue the conference center at that site (only to later have the downturn in late 2004 cool the engines on that). Also, the Vornado plans are not etched in stone, especially if both United and Arlington officials form a mutual admiration society. I think the speculation that that could occur sprang from the re-capitalized ownership group just announced, combined with the mayor's troubles emerging days later. You'd have to think the new owners won't want to wait in a holding pattern forever, thus the remembrance of Arlington's conference center plans and so on. It'd be strange if this wasn't at least being kicked around by both sides in the 'run it up the flagpole' stage.

by Pat on Jul 17, 2012 2:01 pm • link • report

Sad day when USM says all Maryland campuses must forgo smoking. There were already rules in place barring smoking within 25 feet of all building entrances and it really wasn't deemed a problem by the students or faculty, yet an overzealous school continues to deal with problems that don't exist. Meanwhile they sign [Deleted for violating the comment policy.] Randy Edsall to long expensive contracts. Oh well, when the next give us money letter comes I will kindly write back, sure, if I can smoke a cigar on campus to celebrate.

by Terp Fan on Jul 17, 2012 2:22 pm • link • report

The best spot for the new United stadium is on the UMD campus. It's Metro/Purple Line/MARC accessible and it could double as the stadium for UMD's very successful club.

by King Terrapin on Jul 17, 2012 2:29 pm • link • report

The assumption that lifting the height limit would lead to a great drop in the home/rental unit prices is ridiculous. The fact is DC is a geographically small and economically prosperous city, the District limits are not the actually borders for the housing market of the metro area (the actual metro area not some huge area stretching to Baltimore.)

Talking about "affordable housing" in DC-only ignores the fact that DC does not have large outer bouroughs to house lower and middle income residents the way NYC does. Dc can either be home (and get the tax revenues) from increasingly higher income residents, or implement policies that shut out any development in order to protect "affordable housing" units.

That was how Arlington and Bethesda became affluent communities, because the high income population left the city. DC was very "affordable" in the 80's-90's.

The choice is up to what the future of the city should be, in one's personal opinion.

by PGC on Jul 17, 2012 2:53 pm • link • report

The goals of the height limit opponents (cheaper housing) would be better served through metrorail expansion.

What they really want is affordable housing near the Metro. Since that is now a luxury good, I doubt building more of it will help reduce the price.

by charlie on Jul 17, 2012 2:59 pm • link • report

I honestly have no idea if you are serious or not, King Terp. I always enjoy your strictly pro-Maryland posts. There's no way that would be the best spot for United though especially considering the majority of the fans come from Virginia. UMD would be good for UMD if United paid for the stadium and good for United only if Maryland paid for it. Horrible traffic planning make it hard enough to get off campus for basketball games. This may not be quite as bad if on the Ludwig Field site (a new track would need to be built), but it could be horrible if it was built on any other location in the Master plan. Getting to College Park would be an additional 30-40 minutes for many Virginia fans. Likewise, fans would be relying on a bus to get to the stadium from Metro or some parking locations. More importantly, United's owners/operators would like to have some development with the stadium. If they don't own the stadium, they aren't in a much greater situation than they are in now. Most importantly, beer would be a hotly debated issue. Poplar Point, Buzzard Point, Reservation 13 and Pentagon City are all better locations than College Park. I'm sure the Terps will play some exhibitions, regular season matches and ACC tournament games at a new stadium wherever it is.

by selxic on Jul 17, 2012 3:15 pm • link • report

"The goals of the height limit opponents (cheaper housing) would be better served through metrorail expansion. "

Silver line is gonna cost over 5 billion dollars to create TOD possibilities at 11 stations - so close to half a billion a station - and thats with a highway median available for ROW. Infill stations at Potomac Yards and NoMa are running in the quarter billion dollar range, for basically the station alone. And some of those silver line stations are too far out to really impact the core RE market. There WILL be more heavy rail metro, but probably not enough to really meet demand. DC, Arlington, Alex, and MoCo are looking to less expensive transit modes - street cars or BRT transitways - to create more TOD. The jury is still out on how successful that will be.

"What they really want is affordable housing near the Metro. Since that is now a luxury good, I doubt building more of it will help reduce the price."

supply and demand does not apply to luxury goods?

by AWalkerInTheCity on Jul 17, 2012 3:18 pm • link • report

High rises don't seem to help with pricing anywhere and can be deadening to places. The deadest parts of Bethesda are right around thehigh rises. Rosslyn: Dead. The much ballyhooed White Flint developments: dead. All of them dull to ugly. High rises have a long history in Silver Spring. Ugly and dead.

by Rich on Jul 17, 2012 4:38 pm • link • report

I was in Rosslyn this past Sunday and it was NOT dead - folks eating at sidewalk tables in front of Cosi, folks waiting for the bus to NYC, folks walking around - and it was a sunday, and a pretty warm humid day at that. Rosslyn could be better (and ArlCo is trying to get there) but its far from dead.

I havent spent that much time in the MoCo hirise areas lately. I suspect it mostly has to do with design and mixed use, rather than height.

as for helping with pricing, they seem to in Chicago.

by AWalkerInTheCity on Jul 17, 2012 4:47 pm • link • report

"High rises don't seem to help with pricing anywhere and can be deadening to places. The deadest parts of Bethesda are right around thehigh rises. Rosslyn: Dead. The much ballyhooed White Flint developments: dead. All of them dull to ugly. High rises have a long history in Silver Spring. Ugly and dead."
----

So all those restaurants, bars, shops, pedestrians, and traffic in Bethesda and Silver Spring are actually cartoons.

And the "much ballyhood" upcoming re-development of the White Flint Mall and the surrounding in Rockville is a big fat lie.

Thanks for clearing that up.

by ceefer66 on Jul 17, 2012 5:59 pm • link • report

Except for affordable units required under inclusionary zoning, I can't think of any multistory housing in this city built since urban renewal that has been "affordable". Affordable housing is usually older housing. New housing is expensive to build and new, high-rise housing is the most expensive of all. Can somebody please explain why they think new, high rise housing is going to be affordable?

And if you think it is, why aren't you bugging the city to upzone all the areas where zoning is more restrictive than the height act (which is basically everywhere outside of downtown)?

by Christine on Jul 17, 2012 6:39 pm • link • report

I can't think of any multistory housing in this city built since urban renewal that has been "affordable". Affordable housing is usually older housing.

Yes, older housing is, all else being equal, more affordable. And there are plenty of examples of that, relatively speaking. SW DC has lots of 60s era high rise apts that are quite affordable now by DC's price standards.

New housing is expensive to build and new, high-rise housing is the most expensive of all. Can somebody please explain why they think new, high rise housing is going to be affordable?

It's not about the new housing stock being affordable, it's about the new housing representing new supply, allowing the city's overall supply to grow in the face of very strong demand. This will take time for the new supply to match demand.

The second part is that the price of housing right now greatly exceeds the cost of construction. Yes, high rise construction is more expensive, but the price could still come down a great deal while remaining above the cost of construction.

The third part is that we should be focused on the affordability of all units, not just the new units.

And if you think it is, why aren't you bugging the city to upzone all the areas where zoning is more restrictive than the height act (which is basically everywhere outside of downtown)?

For the most part, I see people doing just this - within reason.

There are other constraints, as well. Some of DC's historic, downtown-adjacent neighborhoods are quite dense and also quite charming. There are great infill opportunities that are being snapped up, but I don't think anyone is advocating for wholesale razing and redevelopment of DC's rowhouse 'hoods. Plus, there is the desire to focus development around transit.

So, given that constraint, and given other political constraints (e.g. NIMBYs), and given the need to grow, that leaves one direction - up.

It's all about understanding the tradeoffs.

by Alex B. on Jul 17, 2012 6:50 pm • link • report

Again, housing prices could be dealt with more effectively by significantly upzoning undistinguished residential areas around the city. Not to 14 stories, but to townhouses and 6 story buildings.

by Neil Flanagan on Jul 17, 2012 7:19 pm • link • report

If the housing and apartment stock wasn't "affordable" they wouldnt have sold in less than a week or be fully rented. The point of economic development is not to ensure that you can live in the heart of the city on a $30,000 salary.

by PGC on Jul 17, 2012 7:29 pm • link • report

AlexB,

The second part is that the price of housing right now greatly exceeds the cost of construction.

How do you know this? Can you show us the data, or are you just guessing?

by Bertie on Jul 17, 2012 7:50 pm • link • report

Bertie,

Call it an educated guess. The review of the data isn't systematic. However, some anecdata points:

Construction costs: 11-20 story office building in DC, ~170/sf
http://www.reedconstructiondata.com/construction-forecast/news/2012/02/rsmeans-dollar-per-square-foot-construction-costs-four-types-of-office-buil/

From 2010, 'prime' office construction in DC, ranging from 175-240/sf:
http://mu.oregonstate.edu/studentexperiencecenter/sites/default/files/RLBQCR_0.pdf

Office sales prices:
A 2008 sale set the record at $876 per sf:
http://www.rebusinessonline.com/main.cfm?id=22040

Other sales are obviously lower, but not by much. This CoStar report (page 28) shows office sales into the 900s on some properties:
http://www.scribd.com/doc/50616227/Costar-DC-office-market-report-2010

So, sales prices clearly outstrip construction costs. What about land?

That same CoStar report shows land sales (page 29). One record shows a commercially zoned property selling for 185/sf of land, zoned C2B which allows FAR of 5... So, to put it on a per built SF basis, it's more like ~40/sf.

Etc, etc. None of it is an apples to apples comparison, but there's clearly a big gap.

by Alex B. on Jul 18, 2012 9:41 am • link • report

So you're proving that developers only sell real estate for more than it costs to build it?

Thanks for the hard hitting detective work. But why would you build something and then sell it for less money than the cost to build?

by PGC on Jul 18, 2012 9:47 am • link • report

Not for less, but for precisely the cost to build, including a "normal" risk adjust returning on capital. IE as a commodity - like selling corn, or PC's or whatever. The high rents reflect a scarcity of land for development. This is basic econ, pioneered by David Ricardo in the early 19th century (though he applied it to agriculture, not to urban economics, IIUC)

by AWalkerInTheCity on Jul 18, 2012 9:53 am • link • report

Thanks for the hard hitting detective work. But why would you build something and then sell it for less money than the cost to build?

You wouldn't. That's the point.

The point is this: in an efficient market, you'd expect a new entrant to undercut some of those very high priced sales with somewhat comparable products. You'd expect over the long term that the sales price would roughly match the cost of construction (see Ed Glaeser's work on this). Except that's not what we see. Glaeser's hypothesis is that regulatory burdens (namely zoning) prevent the market from functioning efficiently.

See examples:
http://www.economics.harvard.edu/faculty/glaeser/files/Manhattan.pdf

http://depts.washington.edu/teclass/landuse/zoning.pdf

by Alex B. on Jul 18, 2012 9:54 am • link • report

Yes if this were a freshman year Econ exam question that is how the S/D cures would respond. In reality, there aren't small development firms entering the market with the capital, expertise, and institutional understanding of DC's crazy permitting process. The larger developers also buy up a much of the desirable land lots and sit on them until the rest of their buildings are approaching or at capacity so as not to saturate the market and thus drive rental prices down.

by PGC on Jul 18, 2012 10:14 am • link • report

Of course office construction costs in downtown DC are way lower than office sales/rental prices, that's why you see companies buy up older but decent buildings and gut it/tear it down and replace it with an identical 12-story new building.

@PGC
So you're proving that developers only sell real estate for more than it costs to build it?
Well that much is obvious but when sale prices are 4X construction cost they're not just selling it for a profit, they're selling for a HUGE profit. Demand is clearly outstripping supply by a big margin.

If the housing and apartment stock wasn't "affordable" they wouldnt have sold in less than a week or be fully rented. The point of economic development is not to ensure that you can live in the heart of the city on a $30,000 salary.

We should be concerned about it though; having varied incomes/classes in a city is important as it provides a diverse workforce for businesses.

by MLD on Jul 18, 2012 10:18 am • link • report

So, you're saying the market isn't efficient. I believe that was my point.

by Alex B. on Jul 18, 2012 10:22 am • link • report

Again, there is no reason that you must have "affordable" housing and varied incomes in the city in terms of the border of DC, that is an artificial boundry. I agree you must have housing and access to jobs for all workers and consumers in the DC area, but the shock and dispair surrounding each think tank report about DC's housing stock act as if there aren't any options or opportunities in PG county or other parts of MD/VA. The metro is the critical link to the city/jobs/economic opportunities; having a DC license plate is not.

by PGC on Jul 18, 2012 10:40 am • link • report

PGC

The same issues of limited land, high rent relative to construction cost, come up in the metro accessible closer in locations in places like Alexandria and Arlington as well. In many ways the dynamics there are the same as in the more peripheral neighborhoods in DC. Once you get to more distant metro stops (like Shady Grove in MoCo or the proposed LoCo stations on the Silver Line) cmmute times limits their role as substitutes for DC housing close to the core.

That leaves PG. While I do think more TOD in PG would be a good thing, and I could well understand why someone with a concern for PG's future would want that more than additional development in DC, its not at all clear to me that TOD in PG will relieve the problems presented by high rents in core areas.

by AWalkerInTheCity on Jul 18, 2012 10:59 am • link • report

"In reality, there aren't small development firms entering the market with the capital, expertise, and institutional understanding of DC's crazy permitting process. The larger developers also buy up a much of the desirable land lots and sit on them until the rest of their buildings are approaching or at capacity so as not to saturate the market and thus drive rental prices down. "

I knew a principal of small develpoment firm in Baltimore. The barriers to entry are not that high. one of his competitors in Baltimore, Streuver Brothers, started quite small, as did Abdo in DC. If the big developesr really are trying to not do projects to hold prices up, that would represnt a great opportunity for those small developers. I have seen the "its a developer cabal" but I just don't buy it. There are lots of industries were there are huge institutional pressures toward size and resulting abuses (I'm looking at you, money center banking) but AFAICT urban RE development just isn't one of them.

by AWalkerInTheCity on Jul 18, 2012 11:06 am • link • report

Alex B,

So, sales prices clearly outstrip construction costs.

But that doesn't support your claim. You're comparing the highest sales prices to the average construction cost. Apples and oranges. What's average sales price per square foot for buildings with construction costs in the range you cited (~$200 sq ft)?

by Bertie on Jul 18, 2012 10:45 pm • link • report