Feb. 20, 2008

DEVELOPERS SEE A LUCRATIVE MARKET IN GRAYING CITIZENS

Aiming for the sweet spot

To satisfy assertive empty nesters, downsized upscale housing heads toward established neighborhoods

DOUG SMITH

The Atlanta developer who partnered in the late 1990s with Bank of America to build Gateway Village in uptown Charlotte is back with a new project.

This time, Cousins Properties is partnering 50-50 with Charlotte's First LandMark, USA on Glenmore Garden Villas, townhomes targeting empty nesters at McKee and Kuykendall roads in south Charlotte.

It's not that urban redevelopment is cooling. It's just that major developers are confirming what smaller, niche builders have known for some time.

Empty nesters are a driving force and a lucrative market. And their numbers are growing.

The National Association of Home Builders says 40 percent of households will be led by someone 55 or older by 2012.

"It isn't any secret that the graying of America is upon us," said Max Williams, whose WKB Properties Inc. has developed six empty-nester condo projects in Charlotte over the past 14 years.

"The major players probably are going to start paying more attention to that market," he said.

In Charlotte, empty nesters are credited with helping start the uptown condo boom back in the mid-1990s, and they touched off a wave of infill development in neighborhoods such as Dilworth, Myers Park and Eastover.

The Next Big Thing for townhome and condo builders might well be determining what empty nesters want, finding an accommodating site and designing a home to suit their specific needs.

"If you have a master bedroom down and the luxury amenities to go along with it, you will get 75 to 80 percent empty nesters," said multifamily housing analyst Emma Littlejohn of The Littlejohn Group.

Location is important.

"Look around the city, and you will see that these projects are strategically placed near established neighborhoods where they have a built-in audience," Littlejohn said.

For example:

Providence Partners' high-density $400,000-range houses in Chardon Village are attracting attention at Boyce and Sardis roads; WKB Properties' The Village of St. Andrews is selling condos for $250,000 to $325,000 in Matthews near Glenmore Garden Villas; and an empty-nester product is planned at Harbour Place in Davidson.

Williams said WKB, which has sold 85 percent of its 114 condos at St. Andrews, has completed 700 units in south Charlotte.

But it's not just south Charlotte anymore.

"All around the perimeter you are going to see this continue as developers try to serve empty nesters," Littlejohn said.

The market has matured from the early days of primarily high-end condos, and sales are occurring in all price ranges as newcomers move to Charlotte for the lifestyle and proximity to family.

Glenmore Garden Villas is hitting today's prime empty nester niche -- the under $500,000 home, Littlejohn said.

"This is the real sweet spot -- the $350,000 to $450,000 price range," she said. "I call it the `boutique' market."

First LandMark and Cousins Properties' 2,899-square-foot, three-bedroom townhomes are priced from $389,900, definitely in that sweet spot.

And master bedroom suites are right where empty nesters prefer them: downstairs. The 16-acre community will include such lifestyle amenities as fountains, gardens, lounging areas, a pool and a cabana.

In such projects, it's important, analysts say, for empty nesters to feel like they are downsizing without downgrading.

Glenmore Garden Villas, for example, will include optional upgrades such as Viking and Bosch appliances and jetted garden tubs and frameless shower doors.

Of course, exterior and yard maintenance are included in home owners association dues.

"You might not want to leave your church, your friends and your lifestyle, but you do want to get out of the house and yard maintenance," said Charlotte real estate consultant Karla Knotts of Land Matters.

Williams said WKB's prime buyer lives within a five-mile radius of the condo and "wants to shop at the same Harris Teeter, bank at the same Bank of America and attend the same church they've been going to for 25 years."

First LandMark and Cousins Properties were confident enough in their $35 million project to start site work about two months ago on speculation without any signed contracts.

They plan to open sales Saturday and complete the 24-unit first phase this summer.

Speculative building is riskier, but it could work in the project's favor, Knotts said, by reducing the waiting time for buyers to move in.

Typically, developers presell units until they reach a specific number -- usually 50 percent or more -- required by their lenders to secure financing and start construction.

The empty-nester niche might be attracting more attention from large developers these days because empty nesters are more financially able to buy.

Many house hunt with savings nest eggs, inheritances and cash from the sale of a previous home.

And, too, said First LandMark President Tim Hose, a 1997 change in the capital gains tax law allows homeowners to sell their more expensive houses without having to "trade up."

The overall housing market could be better. Charlotte is reflecting a national downturn caused in part by the subprime lending crisis and tightening lending standards.

Empty nester buyers are affected, WKB's Williams said, if they are trying to sell a house in a city where the market is stagnant.

But conditions in Charlotte appear to be showing signs of improvement, according to analyst Knotts.

"I'm hearing from builders that January and February sales were good and inventory is declining," she said.

Hose said he and his associates at Cousins Properties believe their townhomes are poised to do well in what they see as an under-served market niche.

"If this were entry-level housing, we wouldn't be building it," he said.

Glenmore Garden Villas

Location: McKee and Kuykendall roads in south Charlotte, five minutes from Interstate 485, three minutes from Providence Road.

Size: 71 two-story townhomes in 21 buildings on 16 acres.

Prices: Starting at $389,900 for a three-bedroom, 2 1/2 bath, 2,899-square-foot unit including large downstairs master suite.

Features: 10-foot ceilings downstairs, flex room, upstairs office, 16-by-10 foot outdoor dining patio, two-car garage, granite counter tops in kitchen, 42-inch maple cabinets.

Options: Outdoor living package, ventless gas fireplace, Viking and Bosch appliances, wet bar in flex room.

Amenities: Pool, cabana, gardens, fountains, landscaped grounds.

Development team: First LandMark, USA, founded in 1971, has developed townhome communities such as Coventry Court in Ballantyne and the Park at Davidson in Davidson.

Cousins Properties Inc. has developed 3,000 multifamily residential homes and 60 single-family subdivisions over 49 years.

Other participants include Watts Leaf Architects, Cox & Schepp Construction Inc., and Design Resource Group. The developers consulted with Wendy Field, who runs Cottingham Chalk's Developer Services Division, to design and market the project.

Sales: Cottingham Chalk Developer Services, Martha Byers. Sales trailer opens Saturday at 3801 McKee Road.

Information: www.GlenmoreGarden

Villas.com. Empty nester trends

The National Association of Home Builders has identified these trends in housing for empty nesters:

• One-level living. Stairs and aging joints aren't exactly a match made in heaven, so homes geared toward empty nesters are either built on one level or keep the master bedroom and all the primary living areas on the main level.

• Reduced exterior maintenance. Many developers are luring empty nesters by including yard maintenance -- even with single-family homes -- and using building materials that require little to no maintenance.

• Turn-key lifestyles. Active empty nesters like to travel -- they have grandchildren to spoil and dream vacations to enjoy -- and want to be able to turn the key and leave without worrying about security or maintenance.

• Down-sizing doesn't mean skimping on amenities. Empty nesters who give up square footage still want open floor plans, gourmet kitchens and large master suites. Doug Smith