The 1901 West development has never quite gone according to plan. Technically referred to as "that monstrosity out there on the Johnson Lumber site", 1901 West had to scrap its initial plans to sell condominium units, _
In January, a spokesman for the development
predicted that all retail space would be filled in 6 months. Now nearly a year later, plans have just been announced for merely the 3rd retail tenant:
predicted that all retail space would be filled in 6 months. Now nearly a year later, plans have just been announced for merely the 3rd retail tenant:
Modern Carpet One Floor and Home, a regional carpet and flooring company
with locations in Prince George's and Calvert counties, plans to open its third
store in February at 1901 West, a mixed-use complex in Annapolis.
The carpet company will be the third business to open in the vacant 1901
West space at the corner of West Street and Chinquapin Round Road in Annapolis. Manpower, a national staffing firm, recently moved its Annapolis office into a
1,653-square-foot space at 1901. Starbucks opened last year.
Residential occupancy, level at 40% at this time last year, has doubled to 80%.
The fate of the residential apartments makes an interesting study. To be honest, I am surprised that the occupancy rate has doubled in the past year. The housing market today heavily favors buyers, with prices being slashed as much as 25%, perhaps even more. Applying the same interest rate that I just got on my mortgage, the cost of monthly rent at 1901 ($1300 or so) would buy you a $225,000 house, which could somewhat easily put a person in a decent townhouse.
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If apartment demand in Annapolis is driven by tenants who do not have permanence in the city, then it would be less affected by the mortgage market. However, if renters are saving money or building credit for a home purchase in the near future, the apartment market may be set to take a hit. And since 1901 represents some of the most expensive apartments in the city, it would be one of the first to go.
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Given a bad rental market, don't be surprised if 1901 switches to Section 8 housing. Any owner can elect to participate in the Section 8 program, which would make the unit(s) affordable to lower income families who would otherwise not qualify. The owner would receive a reduced rent from the tenants, along with a matching payment of some proportion from the government. I would guess that market-rate rent would be higher than rental income from Section 8 properties, but if you can't lease at market-rate, some money is better than nothing.
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This phenomenon can already be seen in the MPDU (Moderately Priced Development Unit) program at 1901. A couple of years ago, the city passed the MPDU ordinance, requiring builders of rental units to avail 6% of all space to moderate pricing parameters. All such units at 1901 are leased, with market-rate units struggling to keep pace.
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The back-of-your-mind question should be: is Annapolis prepared to envelop even more subsidized housing than it already has?
