Ground-Level Opportunity

When Covenant Developments' construction manager went to get copies of the blueprints for its new condo community, The Villas at River-town, in the Grand Rapids, Mich., suburb of Wyoming, company president Peter Engles says the printer looked at the plans and said, “Can I give you some advice? I've been in this market for 30 years. Put a basement under [your units] or you won't sell a thing.”

Engles, an Epcon Communities franchisee, heard the same thing from other builders and real estate agents. They said it even when they were standing in his sales center looking at a site map showing 45 out of 70 available homes sold in the first year of sales, an absorption rate that is double the normal rate for the market.

“And we're doing it with a product that everybody told us no one would buy,” Engles says. “People told me it would absolutely never happen.”

Despite the insistence about the necessity of a basement, Engles says The Villas at Rivertown have sold so well that he's just bought 10 adjacent acres to bring the total number of homes to 114 on 30 acres. He's also scouting properties for new communities.

“It can be scary to delve into something that is so different for the market,” he says. “You're pretty deep into it by the time you buy land and start putting homes on it. But if someone comes here and sees our product and wants to shop it, they'll have to drive until they get to the next Epcon community. They can't drive down the street and get what we offer.”

The project did happen—and it did sell—because Engles researched the market to see what was offered and what was missing; saw a competitive advantage that allowed him to lower his costs; gave his target buyers something that no one else offered; priced it attractively; and aggressively marketed it with both traditional media and traffic-driving events.

It started with the research. In his price range, there are 14 actively selling condo communities within a 10-minute driving radius. Engles quickly discovered that all the available product was pretty much the same. “All that changed was exterior colors, location, and interior finishes,” he says. “It was all front-load garages and basements.”

CURB APPEAL: Recessed garages, street-side sunrooms, and upgraded exterior materials help make The Villas at Rivertown distinctive from the competition in the same price range in the Grand Rapids, Mich., area.

Basements are standard in Grand Rapids, even on houses and condos advertised as ranches. A 1,900-square-foot house will have 1,100 to 1,200 square feet on the main floor with the balance in a finished basement, he says.

By contrast, Epcon's most popular floor plans run from about 1,700 to 1,950 square feet on one floor with cathedral ceilings and verandas or sunrooms, giving them a much larger feel than the typical home with the same square footage in the market.

“The volume is dramatic,” Engles says. “Customers are mesmerized. The only place you can see 1,900 square feet with cathedral ceilings [on one floor] in this area is in a 3,800-square-foot home that costs $350,000 or more. We have people who come in and say they live in a 2,000-square-foot condo and are looking for a bigger one. They walk into my 1,718-square-foot model and say, ‘This is too big.'”

They also notice the openness that single-floor living offers. Customers accustomed to long, narrow units have commented that it's “so nice to see [a condo] that's not a bowling alley,” Engles says.

The four-unit buildings are configured to be attached at the garages, which are recessed, and have the look and feel of duplexes, Engles says

Sunrooms add another point of differentiation. Most homes that offer them in Grand Rapids have them on the back of the house on 4x4 posts, over a walk-out basement, he says. The two plans in his Cathedral line, the Abbey and the Canterbury, feature sunrooms just off the foyer, adding significantly to the curb appeal. Engles also studied the exterior features of homes selling for $700,000 to $800,000 and adopted both their color palette and their use of European country elevations.

With the cost savings that he achieved by not building basements, Engles was able to add another strong distinction from the competition. At his price point of $170,000 to $240,000, vinyl siding is standard in his market. He was able to upgrade to Hardiplank siding. With a target market of buyers ages 50 and older who have lived in their current homes for 20 years or more, it makes a big impression, he says.

ROOM TO SPARE: The single-level floor plans of the units at The Villas at Rivertown give buyers a much more open space than most condos in the market, which have nearly half their square footage in a finished basement.

“They want something solid and substantial,” he says. “Our buyers don't come up and look at it and say, ‘Ooh, Hardiplank siding.' People go up and push on it and say, ‘Ooh, nice. It doesn't move.'”

Other selling points for The Villas at Rivertown include:

Because the product is so different from what's typically offered in the market, Engles says that it's critical to educate prospective buyers and get them to visit the community. “Some people hear we have no basements, so they're not interested,” he says.

Engles has used advertorials—ads that look and read like articles—to help drive traffic by touting the advantages of single-floor living for aging in place. “This is a home to move into now and stay in for a long time,” he says. “Our target market doesn't even want to move once, and certainly not twice. That has prompted a lot of good response.”

He's also advertised in the local Realtor trade publication to overcome their skepticism about the product and to try to increase Realtor-driven sales. To date, only one sale has involved a real estate agent, he says.

His second, and equally important, marketing tool is a steady stream of well-publicized community events, such as a fall festival with a hayride, face painting, and a wreath-making workshop. Another event featured free sessions with a personal trainer to demonstrate the clubhouse's fitness center. During the holidays, previous visitors to the community were invited to a potluck dinner and tree trimming that included adopting needy families through a local charity.

All the events give prospective buyers an opportunity to meet current residents and talk to them about the quality of the homes, the richness of the community and its activities, and the benefits of not having to shovel snow, rake leaves, mow the yard, or negotiate stairs.

“We heavily promote the lifestyle and the community we offer,” Engles says. “We often say we sell a lifestyle and a community, and a free condo comes with it.”