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.”
DIFFERENT IS GOOD 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.”
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.'”
Learn more about markets featured in this article: Grand Rapids, MI.
