COVER STORY, JULY 2007

MULTI MULTIFAMILY
The range of multifamily developers is vast.
Daniel Beaird

Multifamily developers come in unique shapes and sizes ranging from affordable housing to luxury condominiums to senior living communities. In this issue, Southeast Real Estate Business has covered three multifamily developers in the Southeast that develop very different projects. 

CARLISLE DEVELOPMENT GROUP
Affordable Housing

While the need for affordable housing has caused much debate in many different communities in the past, it's receiving special attention as speculation about the housing market’s bursting bubble has hit home, especially in desirable markets like South Florida, recently. 

The real estate economy has boomed in these large markets causing land and construction costs to increase dramatically. In turn, rising housing costs have priced many people back into the renters market. Naturally, this phenomenon has had a trickle down effect from high-priced renters down to minimum wage workers.

That’s where developers like Carlisle Development Group come into play. An affordable housing developer in South Florida, Carlisle’s goal is to help working families save for the future by providing them a good home. But, these affordable housing units aren’t always met with the grandest of welcomes by communities that sometimes confuse affordable housing with public housing.

“There’s a stigma between affordable housing and public housing,” says Lloyd Boggio, chief executive officer of Carlisle Development Group. “Affordable housing is not public housing.”

Most public housing is built by the federal government, while affordable housing is developed and owned by partnerships that involve private developers like Carlisle. Many private developers shy away from building affordable housing due to the much larger profit margins in other commercial developments.

“In Florida’s recent hot market, a developer of a successful condominium development could often make in profits on 10 units more than what we might make on 100 units if they were waterfront units,” Boggio says.

Carlisle operates on a very thin profit margin due to restricted rents for their tenants, a reason why some developers cannot survive the affordable housing game.

“Affordable housing units have to be operated well enough so that the developer’s operating expenses are kept in line with those restricted rents,” Boggio says. “A developer that cannot do that is only in the business for a very short period of time. There are very few people in our business because of the thin profit margins.”

But, Carlisle is focused on the working class families that need affordable housing in the communities in which they work.

“The difference between affordable housing and public housing is that our tenants in affordable housing have to qualify,” Boggio says. “They have to have good credit or else we won’t rent to them.”

“People worry about housing for our hospital nurses, but we say what about the orderlies, the cooks in the hospital cafeterias and the hospital janitorial staffs,” Boggio says. “They need a place to live in the community that they work in too.”

According to Boggio, at least 30 percent of the families living in family affordable housing in Florida are divorced women with children without a father present. “I’ve never spoken in front of a crowd that doesn’t know a divorced woman with children,” Boggio says. “It’s a very common phenomenon.”

As rising housing costs affect the working class, the demand for affordable housing becomes stronger. But, the ability to develop affordable housing in dense areas like South Florida has gotten tougher. Tax credits, the main source of financing for affordable housing are tied into an area’s population, and as dense as South Florida is, the population hasn’t risen as significantly in the past 3 years.

Since population numbers have remained relatively static in South Florida, the restricted rents for affordable housing in the area have remained static as well. In the same time period, land and construction costs have increased tremendously, making it difficult for affordable housing developers to turn a profit at all.

“The same factors that made it hard to build drove the cost of housing up, so the need for affordable housing is skyrocketing while the ability to develop it is dropping,” Boggio says.

“Personal incomes aren’t rising as fast as the cost of housing is so more people are falling into the affordable housing realm,” Boggio says. “The same thing that’s driving up the cost of a larger house in the suburbs is driving up the cost of my apartments in the urban areas, so we have a crisis of affordable housing.”

Boggio feels that affordable housing should be labeled as infrastructure such as roads, schools and parks. “Affordable housing is infrastructure because an economy of a community cannot work if the working people of that community cannot live there,” Boggio says. “You cannot have an economic system based on people commuting from some place else.”

“The endless increase in the standard of living in Florida is not endless,” Boggio says. “It can and will end because housing is so expensive that people cannot afford it.”

PATRINELY GROUP
Luxury Condominiums

The Patrinely Group, which has Southeast regional offices in South Florida as well as Bethesda, Maryland, has been developing luxury residential condominiums across the country since 1983. Patrinely aims for its condominiums to be located in what it calls 18-hour mixed-use locations in which the residents can live, work and play within a short walking distance. Patrinely focuses on cities that are ripe for luxury residential units and understand the luxury concept. That’s what makes South Florida and the Mid-Atlantic so appealing to Patrinely.

“The nature of the product that is delivered is the very highest end in terms of luxury and finishes, and there’s only a handful of condominium markets in the country that have matured to the point of receiving the luxury product,” says Len O’Donnell of The Patrinely Group. “South Florida and the Mid-Atlantic region are good examples of markets that can receive this product much like New York, Chicago and San Francisco.”

The typical residential product for Patrinely consists of 100 to 200 units. “We typically don’t build larger projects because that isn’t consistent with the true luxury in which we are trying to deliver for people,” O’Donnell says.  

Patrinely Group's Trillium at Bethesda in Bethesda, Maryland.

In Bethesda, Maryland, Patrinely will begin development on Trillium at Bethesda this fall. 

“Bethesda has matured into a really wonderful downtown environment with an abundance of restaurants, movie theaters, shopping, arts and mass transit,” O’Donnell says. “Trillium at Bethesda will be within walking distance of two Metro stations (Washington, D.C.’s mass transit system).”

Patrinely’s Trillium at Bethesda, which began sales last fall, will feature 173 residences in three residential towers. The luxury condominiums will include one-, two- and three-bedroom units ranging in size from 900 to 2,850 square feet. The residences will feature 9-foot ceilings in the main living areas, deluxe woodworking and state-of-the-art kitchens and bathrooms.

Trillium at Bethesda will offer on-site amenities including valet parking, a concierge service, an indoor pool and a fitness center. The courtyard and plaza will include a 2,000-square-foot artist workspace as well as a water feature.

“The site sits immediately south of a large urban park and enjoys spectacular views of the National Institute of Health and the Bethesda Naval Medical Center,” O’Donnell says. “And the buildings’ amenities include all that you would expect in that type of development.”

Trillium at Bethesda will be complete in fall 2009. The project architect is Davis Carter Scott, Ltd., and the interior designer is Jeffrey Howard of The Howard Design Group. 

BANYAN SENIOR LIVING

Banyan Senior Living's The Cascades at Verdae in Greenville, South Carolina.

With the Baby Boomers generation entering their 60s, senior living communities have become a hot topic in commercial real estate realms. And with more retirees moving to the Southeast, that form of multifamily housing is even more important in this region. It’s not just Florida anymore, either. North Carolina and South Carolina are experiencing an influx of retirees, or halfbacks, those retirees that have moved “halfway” back to the Northeast from Florida.

With so many retirees enjoying the lifestyle of the Southeast, the region has become popular for senior housing and the Baby Boomers might just change the face of the industry. Known for never slowing down, the Baby Boomers are not about to slow down in retirement, so senior living communities have to offer more to their residents.

Greenville, S.C.-based Banyan Senior Living knows that. Founded in 1987 by Ken Bolt, Banyan is still going strong in the Carolinas, Virginia and Georgia a full generation later. The company has been involved in 36 senior living communities, comprised of 1,800 independent living units, 750 assisted living units, 175 special care units and 150 patio homes, in the Southeast during the past 20 years.

“It’s exponentially easier today to receive financing for a senior housing project because of the aging population,” Bolt says. “People are recognizing the need.”

Banyan currently has four communities under development, including The Cascades at Verdae. Located in Banyan’s hometown of Greenville, The Cascades at Verdae is an upscale senior living community within the Verdae master-planned development. Scheduled for occupancy in November 2008, it will be a luxury retirement community dedicated to maintaining wellness and independence for active retirees seeking a high standard of living.

The Cascades at Verdae will be comprised of 43 single-family, cottage-style residences with two to three bedrooms; 166 independent living apartment homes with one to three bedrooms; a 116-unit health care center with 48 assisted living apartments, 44 private skilled nursing and 24 private memory-loss suites in a secured wing; and a 52,000-square-foot clubhouse. Golf carts will be the primary mode of transportation within the community’s 40 acres.  

Located in the 1,100-acre Verdae development at the intersection of Interstates 85 and 385, the $100 million senior living project is being built by Greenville-based Triangle Construction and Greenville-based Creative Builders. Residents must be at least 62 years of age, or couples must have one spouse who is at least 62 years of age.

“Being based in Greenville, we knew what we wanted here and we waited for the right time, opportunity and piece of land,” Bolt says. “The Cascades at Verdae will be our flagship community.”