The Monterey: A Condo Odyssey Ends

The Monterey, which once threatened to add 432 condo units in North Bethesda, has been passed on to a fourth owner this week, to a team comprised of DC-based Federal Capital Partners and New York-based Angelo, Gordon & Co. The team purchased the site for $97 million, or roughly $225,000 per unit, from CBRE Realty Finance.

The 550,000-s.f. building, originally dating from the '60s as the Pavilion Apartments, underwent a condo conversion and began selling units in early 2006, under the leadership of Annapolis-based Triton Real Estate Partners, which purchased the 16-story property in 2005. But in 2007, before having settled any of the condominium sales, Triton defaulted on their loan and CBRE obtained full ownership. After getting the 40-something condo buyers to relinquish their contracts, CBRE's Paul Martin told DCMud last December that his plan was to position the building as a rental property and eventually sell it.

Now, with the title in hand, Federal Capital Partners is planning to complete the unfinished renovation work that Triton began in its attempt to pitch the building as a condo, and convert the building back to apartments. Triton's addition of granite countertops, hardwood floors and stainless steel appliances obviously weren't enough, so FCP and Angelo Gordon, plan to "re-establish The Monterey as the premier Class-A apartment community on Rockville Pike." Prices initially ranged from the low $300's to the mid $800's, and together with the planned facade renovation reportedly drove the price tag of the whole project up to $45m the last time around. In its current incarnation, the new owners will add a slew of "luxury" finishes, including upgrades to common areas and a host of other "Class A amenities." The developers plan to finish within a year. “The Monterey is an outstanding asset in a proven location. Access to capital and experience repositioning high-rise apartments allowed us to structure a deal that appealed to the senior lender, the mezzanine lender, and contractors left stranded by a failed condo conversion. It helped that none of the apartments ever sold as condominiums and that a substantial part of the property was renovated to Class-A condo standards," said Lacy Rice, a partner at FCP. 

North Bethesda real estate development news

Monterey's Metamorphosis Ends Where it Began

The Monterey, a 434-unit condo-conversion project developed by Annapolis-based Triton Real Estate Partners, is officially being re-converted back to apartments. The project, located at 5901 Montrose Road in North Bethesda, was originally stalled when Triton defaulted on their mezzanine loan and CBRE Realty Finance became full owner. Triton did begin selling condos in March of 2006 before defaulting, hawking one-bedroom units from the low $300s and three-bedroom units up to the mid $800s, but now CBRE is releasing contract owners from their obligations and refunding deposits, rescinding just over 40 of Triton's contracts-to-purchase in the months to come in an effort to facilitate the property's eventual sale on the open market.

"After substantial analysis of the marketplace and viability of the condo market right now, it was determined that the property is most suited to the rental market," said Paul Martin, Executive Vice President of Portfolio and CDO Management at CBRE. "We've revalued our interest in the property, and determined that the best course of action is for CBRE to sell."

This particular property has changed hands three times in only two years. It originally began as the 432-unit Pavilion Apartment building, owned by Home Properties LLC. Triton purchased it from Home Properties in November, 2005, much to the dismay of the Pavilion's tenants, and reportedly planned to spend $45 million on renovation efforts for the newly christened Monterey condominiums (concept pictured). CBRE assumed its role as full owner of the project in May of 2007 when Triton was foreclosed on, both at the Monterey and at a second condo conversion project, the Rodgers Forge in Towson.

The fate of the 16-story, three-tower complex will ultimately be an upscale apartment community; the north tower currently has more than 50 units that are completely gutted, remnants of Triton's unfinished business, along with 143 units that need minor refurbishment. The south tower holds 228 units that are nearly-completed condo units, which will be going for much higher rates since they provide upgrades like granite counter-tops, hardwood floors and other indicia of condo conversion that the aforementioned units lack.

North Bethesda Square's First Building Tops Out

The nearly $900m North Bethesda Town Center project saw its first building topped out this week as the Wentworth House, an 18-story, 312-unit apartment building, reached its full height last week. The apartment building will house a swimming pool deck above the 18-story-wing and a “sunset” terrace above the 15-story wing, green roof, and 65,000 s.f. Harris Teeter for the "Whole Foods effect" on the neighborhood. Construction on the building began in June 2006, completion on both the supermarket and apartment is scheduled for July of next year.

LCOR, a large east coast development team headquartered in Pennsylvania, was chosen by WMATA as the master developer for the 32-acre North Bethesda Town Center Project, developing a master plan that includes approximately 930,000 s.f. of office space, 1,275 residential units, a 320-room full-service hotel, and 202,000 square feet of retail space at the White Flint Metro station. LCOR anticipates this project will generate 5,400 new jobs and almost 6,500 additional daily Metro trips, citing it as "the largest joint development project ever approved by WMATA." The project received a "Smart Growth" award from the D.C. chapter of the Urban Land Institute and The Smart Growth Alliance.

The Wentworth House was designed by Dorsky Hodgson Parrish Yue Architects (DHPY), with offices in DC, Cleveland and Fort Lauderdale. DHPY is also designing the Midtown Bethesda North condo project by Kettler.

White Flint View Moves Forward

On July 12, the Montgomery County Planning Board approved the preliminary plan submitted by builder Naples Commercial LLP for White Flint View, its proposed development for the 1.87 acres located at 5511 Nicholson Lane (at the north end of Huff Court) in North Bethesda, just east of Rockville Pike and the White Flint Metro station. Naples intends to construct a 16-story tower with underground parking containing 183 residential units (about 23 units will be reserved as moderately priced dwelling units), as well as 29,500 sf of retail, including a sit-down restaurant. The plumbing supply store now on the lot will be torn down. In addition, Naples will contribute to the County’s planned extension of Citadel Avenue from Marinelli Road south to Nicholson Lane, where it will connect with Huff Court. No timeline is yet known for this project.

Canyon Ranch Living Project in Bethesda on Hold

The Canyon Ranch concept may have hit a snag in its march into Maryland. A combination of increased mortgage rates, and increased construction costs have caused the $1 billion dollar project in Bethesda to be put on hold for 30 days.

But is there more to it? Canyon Ranch Living aims to provide a kind of hermetically sealed environment in which residents live in condominiums, above dietetically-correct restaurants and health spas.

As the company webpage says about its on-hold Maryland project: "Imagine a spectacular home that’s also an experience. At Canyon Ranch Living – Bethesda, everything comes together to bring out the best in you – the all-healthy environment of renowned Canyon Ranch, luxuries at every turn, and the nation’s finest urban village."

In other words – imagine the experience of what Canyon Ranch calls an "urban village" - right off of I-270 and Old Georgetown Road on 53 acres owned by the Camalier family, one of the largest private development companies in the region.

Imagine feeling just like you really do live in a city; without ever having to bother with actually living in a city.

As one analyst, familiar with the real estate market on the east coast put it: "This isn’t California or Florida; status in the DC area is driven by your connection to the government or wonky group, not really where or how well you live. There is a market for holistic living as a social status symbol – it just isn’t the DC region."

The Canyon Ranch Project is part of a partnership arrangement between Canyon Ranch and the Penrose Group, of Tysons Corner. Canyon Ranch would receive up front payments and management fees to run the development.

Jan McIntire, Senior Director of Corporate Communications for Canyon Ranch has a different view and says the feedback they’ve received from their guests confirms a viable market in the Bethesda area.

"Knowledge of what our guests who live in and around Bethesda want and expect from Canyon Ranch Living makes us feel confident we’re on the right track."

That view is supported by a veteran real estate agent of the DC-area development boom who sees the Canyon Ranch project as a potential success based on the demographics of the area, but possibly a victim of rising costs in construction and the rise in mortgage rates.

"It’s a successful model," said the agent, "there are a lot of people who do want that feeling of being in an urban environment but without the hassle and they want the amenities; the spas, the holistic approach, the restaurants."