How One Developer Is Delivering Urban Infill
Urban infill is trending again. In fact, most of the housing industry's largest builders now operate urban divisions, allowing builders and customers new access to urbanized, walkable communities.
"We're seeing more demand for closer-in living and urban revitalization, as well as a general trend towards higher-density housing," observes Edward McMahon, senior resident fellow with the Urban Land Institute.
To illustrate his point, McMahon notes that eight of Denver's 13 regional shopping malls have been torn down and are being replaced by mixed-use developments. In Washington, D.C., there's a Walmart with apartments on its roof; in Vancouver, B.C., a Home Depot takes up the ground floor of a building with five stories of housing. McMahon also sees infill opportunities in lower-density corridors to replace underperforming strip malls and their large parking lots. He points specifically to Los Angeles County, where the majority of housing being built is on land that previously had been zoned commercial.
Developers and builders are also stemming opposition to urban infill with higher-quality design and by emphasizing access to green spaces and other amenities. McMahon singles out one waterfront project in Port Royal, S.C., where the developer extended the downtown street grid into his community and built old-style houses with high-end kitchens. All 41 homes there sold within six months of being put on the market.
Urban infill isn't for the faint hearted, however. Assembling parcels into a cohesive whole is always a challenge, as is the complexity of financing and building mixed-use projects. As one of the top 10 largest public homebuilders by equity market capitalization in the United States, TRI Pointe Group maintains an enviable land position controlling 27,000 lots across eight states. A key part of TRI Pointe Group's land strategy is urban infill development. A few notable projects by TRI Pointe Group's regional homebuilders in California, Colorado, and Maryland represent the types of urban infill projects the local brands will continue to pursue moving forward.
The challenge for TRI Pointe Group, as for any expansion-minded builder, is the availability and cost of land where people most want to live. Development and construction opportunities within sprawling master-planned communities are getting harder to come by, particularly closer to job centers. The regulatory climate and opposition to development are also contributing to the challenges faced by builders and developers. These and other factors are driving TRI Pointe Group to pursue urban infill opportunities more assertively.
TRI Pointe Group and its six regional homebuilding brands have urban infill projects in various stages of development and sale across the country. Following are four such projects that illustrate the challenges and rewards of this kind of housing.
Truewind and Fairwind, Huntington Beach, California
In October 2010, TRI Pointe Homes Southern California agreed to pay the Fountain Valley School District $35 million for two parcels, both in the middle of residential neighborhoods and each with a shuttered elementary school on site.
At the smaller 8.65-acre Wardlow School site, TRI Pointe Homes "found evidence of nearly every conceivable bad thing that could have gone on there," says Tom Grable, President for TRI Pointe Homes' Southern California division. The derelict buildings had become a hangout for transients and teenagers. And one side of the school was once a playground area with open space that neighbors assumed they could use as an extension of their own yards.
TRI Pointe Homes established a community outreach program for each site and designed its site plan and home products to address residents' concerns and issues. Specifically, TRI Pointe had to show the community how it would benefit from allowing these properties to be re-zoned for single-family detached housing and letting the builder create more density and smaller lots. TRI Pointe Homes built 49 homes, or about six to the acre, at the Wardlow site, whose community name is now "Truewind." At the 11.65-acre Lamb School site, now called "Fairwind," TRI Pointe is building 80 homes, or nearly seven units to the acre.
To meet the and exceed the expectation of all stakeholders, TRI Pointe Homes delivered the following:
- At Wardlow, it donated additional land and installed an 80-space parking lot for adjacent baseball fields, which will keep cars from parking on the streets in the nearby neighborhoods on weekends. TRI Pointe Homes also built several hundred feet of storm drains for the city, and voluntarily put together a green-building program that includes a "starter" photovoltaic system for each house and water conserving irrigation systems for landscaping.
- At Lamb, where local opposition has been a bit more challenging, TRI Pointe Homes improved 2.5 acres of land adjacent to the former school site for the city as a park and sports field and built a half-mile of public storm drains to alleviate regular flooding issues in the adjacent neighborhoods.
- In laying out its homes, TRI Pointe Homes doubled the required City setback to 20 feet, and created a further setback, to 30 feet, for the second floors when adjacent to the existing neighborhood. It positioned its homes so that only a few would be back-to-back with existing houses. It also positioned certain floor plans with less second floor massing against existing houses with shallower rear yards.
These accommodations, says Grable, were all made to garner community support and reduce opposition from neighbors. For any urban infill project, says Grable, "our job is to create more solutions than impacts." That included finding an alternative response to the city's affordability requirements. Given that TRI Pointe Homes' houses at Truewind started at $1.1 million, TRI Pointe identified a partner that specializes in affordable housing and helped subsidize another project to build affordable homes elsewhere in the city.
Despite the hurdles to get these projects approved, Grable foresees more urban infill in his division's future. For example, TRI Pointe Homes is converting an old retail center in Oxnard, Calif., into a residential community. "The needs of these communities are changing, and that's opening up infill opportunities."
Platt Park North, Denver, Colorado
Denver is a tough market for any new housing project, with an anti-development political climate, remarks TRI Pointe Homes' Colorado Division President Matt Osborn. The threat of construction defect litigation, filed by homeowners associations to mitigate future claims, always looms, especially after lawmakers recently failed to strengthen builders' right-to-repair remedies.
Some builders, facing these roadblocks, turned toward rental. But TRI Pointe Homes chose an alternate route: to create for-sale neighborhoods and pursue infill opportunities with limited common elements "so that an HOA established to maintain the exterior of the home is not necessary," explains Osborn.
Platt Park North, TRI Pointe Homes' first urban infill project in Colorado, put that strategy to the test. Located just east of a former rubber factory that was razed for a massive mixed-use redevelopment, Platt Park North opened its models last July, offering two house plans, each with three elevations.
Now sold out, the neighborhood consists of 29 detached single-family homes in addition to 54 rental townhouses by another builder that bookend a half-acre open space area.
In designing the homes, TRI Pointe Homes focused on how the interiors would be positioned vis-à-vis the open space, "and how the windows and doors relate to open areas," says Osborn. He elaborates that the "active" side of the houses faces a private courtyard, while the passive side "is more like a zero-lot wall."
Osborn concedes that the space separating the houses is very tight—houses are only 21.5 feet wide. But, he explains, this neighborhood is being developed as an alternative to townhouse living, with glass on all sides and usable outdoor space. The narrow architecture, however, compelled TRI Pointe Homes to pay closer attention to fire ratings, the orientation of rooms, and, particularly, the locations of the master bedrooms for the sake of owners' privacy.
Interestingly, Platt Park North's first buyer was an active adult, which confirms for Osborn and the company that urban infill will attract a broad cross-section of buyers. "It's not just for Millennials," he proclaims.
TRI Pointe Homes' Colorado division owns or controls 658 lots as of June 30,2015 with a goal for this market to grow to at least 350 annual closings, and Osborn predicts that up to 10 percent of those closings could be infill.
Alameda Landing, Alameda, California
In 2012, TRI Pointe Homes Northern California set a goal to build at least 300 new homes every year for the following five years in the East and South Bay areas near San Francisco and Oakland. The goal for those markets has already increased significantly, and that 300-homes-per-year target will represent "the core infill portion of our portfolio" going forward, says Jeff Frankel, president of TRI Pointe Homes' Northern California division.
Catellus Alameda Development chose TRI Pointe Homes as its preferred builder for a 72-acre redevelopment infill project called Alameda Landing, about four miles from Oakland. Thirty acres are earmarked for housing, and TRI Pointe is building 255 homes in three phases, including 91 two- and three-story single-family detached homes in a community called Cadence; 108 condos and flats in a community called Linear; and 56 townhomes in a community called Symmetry.
Homebuyers seeking mass-transit options have access to AC Transit, including express bus service to and from San Francisco, BART shuttle service and two ferry systems to Oakland and San Francisco. Alameda Landing's other components include approvals for 400,000 square feet of office space, 300,000 square feet of retail, and eight acres of open space. A new Super Target and Safeway have already opened.
Frankel says that one of the challenges for the project has been tying the architecture of TRI Pointe's homes with the project's commercial elements. ULI's research on mixed-use finds that people prefer smaller-lot buildings that blend into the larger community. "The size of the lot is not as important as the character of the neighborhood," says McMahon.
The city of Alameda is currently "a hot spot" for development, and Frankel says the Alameda Landing site, which used to be the U.S. Navy's Fleet Industrial Supply Center, went through an intensive approval process, partly because it is so close to the water and because of its size.
On the flip side, working with the city and navigating its environmental shoals "went surprisingly smoothly," says Frankel. And the building and noise restrictions that can make urban infill onerous aren't an issue in this project because it's separated from existing neighborhoods by retail on one side and the bay on the others. TRI Pointe's homes at Alameda Landing are priced from the $600s to more than $1 million. To address the city's affordability quotas, TRI Pointe Homes agreed to build 16 affordably priced homes and has agreed to donate an acre to the city along with providing capital to help pay for construction of another 23 affordable units.
Glenmont, Silver Spring, Maryland
Another example of urban infill is a redevelopment project in Silver Spring, MD, where Winchester Homes, a member of the TRI Pointe Group, has been demolishing older garden-style apartments on 28 acres to make room for 171 townhouses, which Winchester will build, and a high rise with 1,500 rental units being developed by another builder.
Vice President of Land Development Michael Conley recalls that several components attracted Winchester Homes to this site. The property abuts Glenmont Metrocenter, a terminal for a subway artery into Washington, D.C. This area was also underserved for housing: The only other project of any scale aside from the Glenmont redevelopment is Poplar Run, a 36-hole golf course acquired by Winchester two miles from the Metro where it is building 773 homes.
Conley explains that what Winchester Homes intends to deliver to buyers at Glenmont is "maximized square footage," by building townhouses that are narrower—either 16- by 38-foot or 20- by 38-foot—but also taller—four stories—than Winchester's typical homes.
"There's not a market in D.C. that we'd exclude when it comes to building our townhouse product," says Conley. "Our appetite is huge for this type of development opportunity." Conley expects infill to play a bigger role in Winchester's future construction and marketing plans, as "greenfield development for subdivisions is going to come to an end eventually, and I don't see municipalities freeing up land for housing."
The right fit
When it comes to urban infill development, Frankel identifies three factors—livability, practicality, and proximity to economic drivers—as the keys to any winning project. "It's a blend of finding the right locations and where people want to live instead of just tolerate," he says.
Those keys might also serve as guideposts for TRI Pointe Group as it explores growth opportunities in both existing and new markets. TRI Pointe Group’s local homebuilding brands will continue to primarily focus on single-family homes, for-sale attached homes and condominiums. Inevitably, the company will sometimes want to build where land is constrained or where conventional master-planned communities aren't feasible. In those places—which can be as different as Houston is to Seattle—urban infill will be an important part of the overall product mix.
Doug Bauer serves as Chief Executive Officer and as a member of the board of directors at TRI Pointe Group. Headquartered in Irvine, Calif., TRI Pointe Group (NYSE: TPH) is one of the top 10 largest public homebuilders by equity market capitalization in the United States. The company designs, constructs and sells innovative single-family homes and townhomes through its portfolio of six quality brands, which include Maracay Homes of Arizona; Pardee Homes of California and Nevada; Quadrant Homes of Washington; Trendmaker Homes of Texas; TRI Pointe Homes of California and Colorado; and Winchester Homes of Washington DC and Virginia. TRI Pointe Group was honored to receive the 2015 Builder of the Year Award by BUILDER magazine and was named the fastest-growing public homebuilder in the country. In 2014 TRI Pointe Group was awarded Developer of the Year by Builder & Developer magazine. Additional information is available at www.tripointegroup.com.