Nosedive in Residential Condo Market Stalls F.C. City Center

Top City Hall Brass Fearing For Project

By Nicholas F. Benton

Grave concerns for the future of Falls Church’s City Center project are being voiced at the highest levels of City Hall, the News-Press has learned, given the precipitous collapse of the residential condominium market throughout the Washington D.C. region and the nation.

Land assembly and development prospects on both the northern and southern sides of the first 200 blocks of West Broad Street have run into serious roadblocks, as the combination of the high prices being asked for the land and the sudden downturn in the condo market has everyone involved giving pause, according to News-Press sources.

The long-discussed City Center plan had come to rely heavily on a robust condo market to be viable for developers asked to pay top dollar for small parcels of real estate in the area. While critics complained that the area would become a “condo canyon,” it was argued by developers and City officials that only construction of 1,000 to 1,500 high end residential condominiums in the commercially-zoned area would make it financially viable, overall.

However, the condo market, and the residential real estate market generally, began to cool off over the course of last summer, and began to nosedive in the fall. That reality, while always slow to translate into policy and planning shifts, has now caused at least one major developer in the City to revise original plans for a major mixed use project further west on Broad Street into a “by right” office building, instead.

Major mixed-use projects now under construction in Falls Church, including the Bryon, nearest to completion, and the Spectrum in the 400 block of W. Broad and Pearson Square on S. Maple, are now struggling to sell units.

One developer told the News-Press that with the glut in the condo market now, prospective buyers are weighing other factors more carefully, and he said he was particularly troubled to hear some commenting that the relatively high residential real estate tax rate in the City of Falls Church, set at $1.02 per $100 assessed valuation by the City Council two weeks ago, could deter them from buying here.

“I’ve heard more than one or two comment that it wouldn’t make sense for them to pay 10% to 20% more in taxes on an expensive condo in Falls Church if there are plenty of options available now in surrounding jurisdictions where the tax rate is markedly lower,” he said.

They also expressed concern, he said, that their properties will be assessed at the peak of their value and they will be stuck with paying those taxes even if their market values decline.

“I have never heard the issue of taxes enter into a discussion before of whether or not to buy real estate in Falls Church,” he said. “It is a troubling new development.”

On the record, as expected, no one at City Hall or among the developers the City has chosen to spearhead the City Center plan on the two sides of W. Broad, is talking about the actual progress of their efforts, except to say that things are “moving ahead.”

However, some among existing business owners in the targeted City Center area are complaining that “stonewalling” by City Hall on the actual state of affairs is hurting them, making it harder for them to plan on what to expect.

A new restaurant owner has moved into the targeted area, taking over the Broad Street Grill and converting it into the Broad Street Tavern. Remodeling is now underway, and yet the tentative nature of the future of the 100 and 200 blocks of West Broad may be limiting his commitment.

Further evidence of the cooling off of the development push in the area has been the Falls Church Housing Corporation’s experience of what has been reported as a diminished interest by Atlantic Realty in the acquisition of its Gibson Place four-plex apartment buildings on S. Maple.

Atlantic Realty, builders of the giant Pearson Square project on S. Maple, is also in charge of the development of the City Center on the south side of W. Broad. Gibson Place sits between the area targeted for City Center redevelopment and Pearson Square, and earlier talks between Atlantic and the Housing Corporation centered on the developers’ desire to acquire the Gibson land to, essentially, extend the City Center down to Pearson Square.

One source told the News-Press that prospects for moving ahead with the south side of West Broad are as muddled now as on the north side, where one property owner has reportedly decided not to sell for any price.

The south side plan called for a Whole Foods supermarket to anchor an assembled parcel extending from the present Burke and Herbert Bank to Anthony’s Restaurant. However, the construction of a large number of condos had been considered essential to make the project viable, but that is now considered untenable.

The only new project that is now before the City of Falls Church is a mixed use plan put forth by the Hekemian Company on N. Washington St. whose residential component is strictly rental apartments, and not condos.

The price range of the rental units would provide the City with a more moderate housing option currently unavailable, and while the City Council will consider the plan later this month, it has not been favorably received to date, and neighbors to the site are gearing up for a major push to stop it.