Housing Giants - September 10, 2008 - (Page 28) f e at u r e “It’s a long journey from initial project to closing homes in a mid-rise.” — John Rymer 2007 housing revenues — all from single-family homes and townhouses. “And we had some mid-rise sites under contract, but the market weakened and we lost our nerve. “We’d gone all the way through design on some of those deals, but mid-rises are a risky proposition in a bad market,” Weekley notes. “Once you start construction, there’s no turning back. You don’t have the flexibility that’s there in single-family to change a floor plan.” Weekley will do high-density townhouses on one site and sell another to an apartment builder. All across America, as the housing downturn deepened, condo builders felt the pain. If the builder paid too much for a mid-rise site, there was nothing to do but deep-six the project as housing prices spiraled down. If the builder didn’t pull the plug, his lender did. And those problems persist to this day. “It’s a long journey from initial project concept and land purchase to closing homes in a midrise,” says Tampa, Fla.-based builder marketing consultant John Rymer. “I don’t know any lenders, or builders, who have an appetite for that journey in the near term.” Mid-rise development is in a state of limbo as changing land prices reshape the competitive landscape. “The problem for mid-rises is the surplus of vacant, developed lots in the suburbs,” says South Florida builder Tim Hernandez of New Urban Communities. “They’re cheap, and that means single-family builders in the suburbs will soon be offering detached homes at very attractive prices. “Meanwhile, the mid-rise builders still face high land prices for urban infill sites. Those density-zoned sites will never go for less than the apartment builders are willing to pay for them, and the apartment market is still pretty healthy,” he says. “Then there are the hard costs for building mid-rises, which have been going up exponentially the last few years, especially for structured parking. We looked at deals with densities as high as 60 units per acre, but when you have to 28 HOUSING GIANTS.9.10.08 www.HOUSINGGIANTS.cOm http://www.newurbancommunities.com http://www.Housinggiants.com
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