Housing Giants - September 10, 2008 - (Page 31) investment on a 60- or 80-unit building,” he says. “Even with a 50 percent presales requirement to start construction, you’re putting 40 specs on the ground all at once, and you don’t want to have them for long, so you need velocity.” tHe silver lining Not all the news is bad. Krobot believes it may take until 2010 for his housing markets to return to some semblance of normality, so he’ll wait a while to pull the trigger on purchasing any new mid-rise sites. But he doesn’t plan to abandon the business. “We don’t need a hot market,” he says, “just a normal one.” It would help if the apartment builders ran into enough trouble to slow down their aggressive bidding for “A+” infill sites, but even that may not be necessary to jump-start demand for this product. “Mid-rise will have a place in the emerging market,” says Charlotte, N.C.based management consultant Chuck Graham, “the only question is, when?” Timing is the critical issue. It’s dicey to fathom when the right time will be to buy sites, especially with inventory issues and impaired land and lots still littering the markets. “For newcomers, the trouble with waiting too long is that, until you get into it, you don’t know how long it will take to learn how to do it well. And the right time will be different in every market. In New York and Philadelphia, it may have already passed.” Housing has always been resistant to change. “But we’ve never had $4 (a gallon) gas before,” says Ken Love, president of suburban Chicago-based giant Kimball Hill Homes, which hopes to emerge from Chapter 11 court protection by the end of this year. The firm has already built condos in 10- and 12-story buildings in Chicago. “Walking to the train station to commute and to restaurants for dinner is a lifestyle that appeals to a lot of people right now,” says Love. “And that number will go up if we ever hit $5 (a gallon) gas. We’re not doing any mid-rise projects now, but I can tell you that the bestselling project we have in Sacramento (Calif.) is also the densest. When you look at the success Toll has had with condo product in the New York City market, you can see the forces that drive success in this niche.” toll stars The 800-pound gorilla of traditional home builders making the move into mid-rise www.Housinggiants.com 9.10.08.Housing giants 31 http://www.kimballhillhomes.com http://www.Housinggiants.com
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