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Is the market ripe for $2.5 million-plus condos in Bethesda?

Tuesday - 7/1/2014, 2:32pm  ET

D.C.-based developer 1788 Holdings is going big on Bethesda's high-end condo market, where it is planning to build 40 luxury residential units with an asking price in excess of $2.5 million.

The developer, teaming with Persimmon Capital Partners, has started work on The Lauren at 4901 Hampden Lane in Bethesda and plans to deliver the first of the condos in early spring 2016. The project is part of a continuing turnaround for the region's condo market, which bottomed out during the recession but is now coming back in select markets across Washington.

"It went from being a space that was universally despised by the debt and equity markets to one that is now coming back," said 1788 Holdings Principal Larry Goodwin. "We have had a tremendous amount of interest in The Lauren given it's a downtown location and it's urban."

Goodwin said 1788 and Persimmon decided to move forward with the project for several reasons — its location, a lack of other newly built, high-end condos in the area, and the strong interest he has seen in another project, The Estate Condominiums at Quarry Springs that 1788 is building on River Road near Seven Locks Road.

The developers recently landed financing for the project through a series of lenders, including mortgage real estate investment trust Apollo Commercial Real Estate Finance Inc. They plan to begin demolition this week in time to break ground on the project later this month.

That still begs the question of whether D.C.'s condo market has come back enough to support a condo project with units selling for in excess of $2.5 million.

Goodwin believes it has, or will have come 2016, especially considering that D.C. hasn't seen the kind of high-end condo development that have caught on in other major markets. Rather, he said, most of D.C.'s so-called condos are really just apartments dressed up with high-end amenities. Aside from the Parc Somerset, he added, there is not much to compare The Lauren to in the area, which will be more high end.

How so? Units in The Lauren will be between 2,500 and 3,500 square feet, bigger than the typical 1,300-square-foot unit in D.C. The ceiling heights will run between nine feet and 10 feet, compared with an average of eight feet or less. They'll include gas appliances, vented fireplaces, a home automation system and custom cabinetry. About 70 percent will have their own direct-entry elevators. The project, as well as The Quarry, was designed by Robert M. Swedroe Architects with interior designs by Akseizer Design Group. The developers have retained James G. Davis Construction as their general contractor.

The developers have also retained TTR Sotheby's International Realty to market units in The Lauren, with an asking price of between $2.5 million and $5 million. That does not include the penthouse suite, which will have 5,700 square feet of interior and an equal amount of exterior terrace space. That one, Goodwin said, "will be priced fairly dearly."

© 2014 American City Business Journals, Inc.