What makes the perfect site? In real estate, the old adage of “Location, Location, Location,” is still true but the locations are changing. You were considered golden if you secured a large undeveloped tract of land with proper zoning that could be developed relatively easily. The story is changing a bit.
Southview is a community I co-developed in 2007. I located the 62-acre site and, with the team, entitled the property for 143 lots with 3 dedicated out parcels for future commercial use. The entire property was zoned for a low-density residential use that would, after improvements, allow for 2-3 lots per acre. My partners in the project recently made an attempt to rezone the out parcels from their current residential designation to a commercial use. We did not anticipate any resistance from the city as the Comprehensive Plan (Comp Plan) designated this area as a gateway and our property for commercial use. The opposite was true – the city council was resistant to our proposal for rezoning so we resubmitted under a by-right scenario for another 22 residential lots. Southview is now a solely residential subdivision with 165 lots.
Southview is located in Franklin, VA and is part of the Hampton Roads region of Southeastern Virginia. We were convinced, at the time, there was a market for moderately-priced new homes in this market. Primary work centers were 30-45 minutes away and you really could not navigate anywhere without a car; public transportation was not an option. The neighboring city of Suffolk had several high profile projects under construction and the average home was being delivered in the $300-400,000s. Our product would be half that. Did they come? Did anybody come? No.
Ten years ago this project would have been considered the goose’s golden egg: zoning in place, utilities on site, and a seller who wanted to sell. It seemed as if the stars were aligned, but actually a storm was brewing. My former employer’s business model identified land that could be developed, solve the problems (entitlements) and secure development plan approval. Once the approvals were in place, we’d then sell the property to a regional or national builder. 2008 rolls around and the bottom falls out.
We initially began marketing the property in the three million dollar range. It was not a huge a project but potentially a profitable one if all went well; but things did not all go well. Our primary builder had entitled 209 lots immediately across the street and had another 360-home community under construction in the northern part of the city. Main customer – out. The next client we introduced the property to pulled back. This cycle looped continuously for the next 2 years. I spoke about that outcome here in an earlier post. As of today, we are still marketing this property – for a million less – at two million dollars. You can bet this negatively impacts my level of interest as well.
Southview’s Location, Location, Location did not equate to the ‘opportunity’ we thought it once presented. I’m not saying this model doesn’t work - it’s economically beneficial for developers of conventional subdivisions. It’s been proven that homebuyers are willing to pay more for a walkable environment close to services, their employer, and venues of entertainment. Southview did not allow that. It was simply more of the same and we’re paying for it. What do you think, is this part of the reason suburbia isn’t sustainable?