COVER STORY, JULY 2004

Leading the Multifamily Pack
Developers are bringing new projects to the market, many with mixed-use components.
Susan Fishman

Southeast Real Estate Business recently talked with a few leading multifamily developers to get a rundown of recent activity and notable trends in the industry.

Crosland

Oberlin Court, a mixed-use development by Crosland in downtown Raleigh, North Carolina, is currently under construction. The first apartment units are scheduled to come on line this fall.

One of the Southeast’s leading, diversified developers, Crosland has a portfolio that includes luxury and moderately priced apartments, special apartment homes serving the elderly and affordable housing for low-income households. The company has a special emphasis on mixed-use properties and has developed, built or managed more than 20,000 multifamily residential units, more than 13,500 single-family homes, 35 retail centers, 25 commercial buildings, more than 2,000 acres of commercial property and 110 residential communities in the Carolinas, Florida, Georgia, Tennessee and Virginia.

The most exciting multifamily project Crosland has going right now is Oberlin Court, a mixed-use development in the heart of downtown Raleigh, North Carolina. Part of the excitement stems from the project’s location “inside the belt.”

“There are always huge premiums associated with housing inside the belt, and that has to do with a sense of place,” says David Ravin, vice president of multifamily development for Crosland. “It has its own niche shopping and is close to its own entertainment centers and parks.”

Oberlin Court was the result of a 3.5-year zoning battle that ended up with 370 apartment units and 30,000 square feet of retail and office space, including the renovation of a historical mid-rise office building once occupied by Occidental Life Insurance. Currently under construction with the first units to come on line this fall, the development will be built in two phases. Phase II will commence at the end of 2005, and the entire project is expected to wrap up by early 2007.

Another current Crosland project is Southpoint Village, located across from Nordstrom in The Streets of Southpoint in Durham, North Carolina. The project, which will include 20,000 square feet of retail and 289 luxury apartment homes and townhouses, will have a three-and-a-half-story, 55-unit clubhouse that will surround a private resident courtyard and garden. The clubhouse will have elevator access and will house an entertainment room, business center, media room, exercise facility and resident lounge.

“It’s pretty unique in that all of the available land in that area has been converted to retail, and we have proposed putting in residential that’s within walking distance to all of that retail and office,” notes Ravin.

Southpoint Village is currently under construction with an anticipated delivery of spring 2005.

Crosland developed the 258-unit Meadowmont Apartments, part of a planned unit development called Meadowmont in Chapel Hill, North Carolina.

In the past few years, Crosland has also completed Meadowmont Apartments, 258 units in a planned development in Chapel Hill, North Carolina, and Wakefield Glen, a 246-unit development in Raleigh. The apartments at Meadowmont are part of the overall planned-unit development (PUD) called Meadowmont, which has a village center, single-family homes and a retirement community. With convenient access to the area’s universities and Research Triangle Park, Meadowmont has a unique village setting.

Wakefield Glen is part of a much larger PUD with three schools. It is located in the distinguished north Raleigh master-planned golf community of Wakefield Plantation and is the highest grossing single-family sales community in the Triangle. The community offers a number of unique amenities, including a community business center, playground and car care center.

As far as multifamily trends in Crosland markets, Ravin says they are similar to what you’re seeing in other markets.

“I think the general feeling is that we’ve gone through some pretty rough times,” he notes. “You have the combination of no real net increases in jobs and low interest rates, which are driving people out of the for-rent market into the for-sale market. And development, rightfully so, has sort of dropped off a cliff in the Triangle and, as a result, we started to see vacancies recover.”

Ravin also notes that the latest reports have shown an increase in jobs in the Triangle. “That’s started to move forward some of the things that have been put on hold in terms of new development,” he says. “Hopefully, it will be kept in check and we’re not going to put ourselves right back in the hole by oversupplying the market. There’s a lot of in-fill, niche-market supply coming on line, and I think there’s going to continue to be a demand for those areas, but I think you’ll see some of the things that are out on the periphery struggle until the job market really picks up.”

The Related Group

The Related Group is developing ICON, a 289-unit residential bayfront tower in Miami Beach.

The Related Group has prided itself on pioneering and changing the cityscape of Miami and areas as far north as Palm Beach, Florida. The firm was the first development company to create a downtown project in Miami. Called One Miami, the live/work/play concept met with tremendous success and sold off quite quickly. Related was also the first to redevelop other downtown areas, including City Place in West Palm Beach; Boca Grand in downtown Boca Raton; Moorings of Lantana in Lantana; and Marina Village in Boynton Beach.

“Because of the scarcity of land, everyone is migrating toward the in-fill sites to the urban cores of all the towns throughout South Florida,” notes Roberto Rocha, vice president of The Related Group.

“You have your employment centers there, and there are more amenities near the water,” he says. “So a lot of people stay in town and, obviously, all of the development has to be high-rise.”

Florida’s largest developer of high-end apartments and condominiums, The Related Group features a portfolio that has recently shifted to the for-sale market (with 99 percent condominiums) due to economic conditions. One example is City Place Tower, a 128-unit residential rental tower that has become a condo conversion for The Related Group. Completely sold out, City Place Tower offers such amenities as a swimming pool, spa, fitness center, valet, concierge, and pre-wired high-speed Internet and cable access.

One of Related’s brand new condominium developments is the Slade, a 194-unit building located on Flagler Drive, fronting the Intercoastal in Palm Beach County. Currently under construction, the Slade is already sold out and is expected to deliver later this year. Just across the street from the Slade is a smaller development by The Related Group, called Villa Lofts, which has 38 units and is projected to be completed in 2005.

The Related Group’s Moorings at Lantana in Palm Beach County, Florida, will include residential units as well as 20,000 square feet of retail space with two restaurant pads.

Also in Palm Beach County, Related has the Moorings at Lantana, a 378-unit development, which consists of three mid-rise buildings and 21 townhomes as well as approximately 20,000 square feet of retail space with two restaurant pads. The site is located between A1A and the Intercoastal and will have a brand new 70-slip marina.

Another current Related project is a two-tiered, 289-unit residential bayfront tower, called ICON, situated next to Murano Grande on the shores of Miami Beach. It’s the product of world-renowned designer Philippe Starck and Jorge Perez, chairman of The Related Group. The concept of the high-rise originated from Starck’s “Yoo” concept, which he created alongside London-based real estate entrepreneur John Hitchcox, and offers the choice between four different styles of residential apartments: nature, classic, culture and minimal. The ICON will have 289 residences, a health spa and fitness center, heated lap pool and whirlpool spa, pool bar and grill, and a resident café overlooking the bay.

Novare Group and Wood Partners

Novare Group and Wood Partners have joined forces to develop a number of highly successful urban multifamily developments in Atlanta’s intown neighborhoods.

Novare Group and Wood Partners are developing Twelve at Atlantic Station in Midtown Atlanta.

“We had a piece of property that Wood Partners wanted to buy and develop, and when we both looked at what made the most sense, we decided that we could complement each other very well and we should just co-develop it,” says John Long, a senior vice president at Novare Group. “We wanted to continue to work together because it is very much a give-and-take relationship, and it gets great buildings built — we both bring a lot to the equation.”

The primary focus of the development team of Novare Group and Wood Partners is newly constructed residential high-rise communities with distinctive urban architecture, rich amenities and quality construction at attractive price points. The team’s first development together, Metropolis, is a 498-unit, mixed-use project in Midtown Atlanta that has met with outstanding market acceptance.

The partners’ new Atlanta Buckhead condominium, Eclipse, is already outpacing the rate at which Metropolis sold last year. The highly successful Buckhead condominium is seeing brisk sales, thanks to building amenities and an innovative sales center. The sales center is designed like a high-end retail boutique in this 21-story, 358-unit high-rise condominium that sits atop 14,000 square feet of space for retail and restaurants. Residences include studio and one- and two-bedroom units, with amenities such as granite countertops, stainless steel appliances, pre-wired surround sound and ultra high-speed Internet access. Along with a fitness center and concierge service, the building features a contemporary lobby, which includes a virtual art gallery, the first of its kind in Atlanta. The first phase of the project is scheduled for completion in November.

In March of this year, the development team broke ground on Spire, a 28-story, 393-unit condominium building at 860 Peachtree St. in Midtown Atlanta. The project includes 21,500 square feet of retail and restaurant space and is designed to address the street with a park-like setting of terraced landscape that transitions the street level to the condominium tower. Construction is expected to conclude in September 2005.

“It’s in the middle of Midtown Atlanta, which is where you’re seeing a lot of high-density urban residential development because you have the arts, restaurants and shops and all the things that make it a fun place to live,” says Long. “We’re really focused on the 25- to 40-year-old homebuyer, a large percentage of which are first-time home buyers, so units are priced in the mid $150s to low $300s.”

Novare Group and Wood Partners are developing a 29-story, mixed-use high-rise in a plot known as City Center in the Buckhead area of Atlanta. Geared toward a slightly older audience, plans call for the building to include 406 high-rise condominiums with 13,000 square feet of street-level retail space and 16,000 square feet of office space.

Another exciting project underway for Novare Group and Wood Partners is a yet-unnamed 29-story, mixed-use high-rise in Buckhead in a plot known as City Center. Similar to the partners’ other products, the City Center property is geared toward a slightly older audience. Plans call for the building to include 406 high-rise condominiums with 13,000 square feet of street-level retail space and 16,000 square feet of office space. A tenant has tentatively reserved 8,000 square feet of office space. Groundbreaking is scheduled for September, and construction is expected to take 18 months.

Another prominent upcoming project is Twelve, which will be the first high-rise residential component in Atlanta’s high-profile mixed-use Atlantic Station development. The project will include 505 units, 101 of which will be part of a boutique hotel. The hybrid hotel/condominium will include amenities such as housekeeping and room service that will be available to hotel guests and condominium residents. The hotel will be an all suites/boutique hotel featuring large, 750-square-foot rooms with living room-style furnishings, cutting edge technological appliances and floor-to-ceiling windows.

Such lifestyle amenities are key to being successful in today’s multifamily industry, according to Long.

“Certainly, we’ve been the benefactor of low interest rates, but I think that what we’re doing is about more than just low interest rates,” he says. “I think it’s a real life choice for the demographic that we’re after, which is really an entry level product for 25- to 40-year-olds with all the great stuff your parents wish they had. It’s a real lock-and-leave lifestyle.”

Another key trend in the industry, according to Long, is that more women are buying homes than they were 20 years ago, dramatically increasing the number of buyers at this point in their lives.

“People want to live in the city because they’ve figured out that it’s just as safe, if not more so, than living in the suburbs, and it’s a whole lot more fun because you’re with a lot of like-minded young people,” he says. “And it’s a simple lifestyle. You’ve got the 24/7 concierge, and you pay nominal condominium dues that provide all these great services because of the scale of the projects we build. It’s a great lifestyle for young people making $30,000 to $40,000 and up.”

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