WHAT OTHERS VIEWED AS THROW-away land, Habitat for Humanity of Northern Virginia viewed as a valuable opportunity. The nonprofit builder created Stevenson Street, an 18-townhome project in Fairfax, Va., on what is commonly known as a brownfield. The land required special environmental observation because of the presence of naturally occurring asbestos on the property. That, of course, would be an additional cost to the builder.
But by purchasing the land for only $425,000 and then spending more than $50,000 per unit for development, which included air monitoring for the asbestos, Habitat of Northern Virginia simply reversed the typical practice of paying a premium for land and less on development costs. (Project manager Tom Lofft says developers typically spend approximately $25,000 per unit in that part of the state.)
Habitat of Northern Virginia is not unique among builders in coming up with creative ways to secure land. While a straightforward brown-field project is not so novel anymore, builders are going to great lengths to secure land, from going after repurposed commercial and industrial property and eyeing the next wave of military base closings to entering into unique partnerships and piecing together a patchwork of parcels. Even shifts in the operation and hiring practices of land acquisition departments are reflecting the changing landscape (see “Retooling the Acquisition Department,” page 52).
Base Closings: The Next Wave “What is most interesting to me is how these different trends are becoming interconnected,” says Daniel Slone, a partner with McGuire-Woods, a Richmond-based legal consultant for progressive, large-scale developers and builders.
“Some of the most interesting projects moving forward around the country involve the convergence of these trends,” says Slone. He cites as examples the Noisette project, which is located on a former Navy base in north Charleston, S.C., for its public/private coordination, as well as Virginia's 4,000-unit Haymount project, in which several big builders participated.
Base Realignment And Closure sites (BRACs) can be some of the most complex real estate transactions, according to Slone. “They can take years to reach the point that lots can be sold; however, they can also provide large tracts for big builder use in the heart of vibrant markets,” he says, adding that another round of base closures is scheduled for next year.
The National Association of Installation Developers in Washington, D.C., an organization involved in the economic development, conversion, and reuse of military real estate, has released The Community Base Reuse Planning Process—A Layman's Guide to help companies prepare for 2005 closings with an easy-to-understand overview of the base reuse planning process (www.naid.org).
Brownfield Gold As difficult to address as a closed military base, brownfield reclamation also appears to promise increased focus in the coming year. “After many years of somewhat sluggish movement in the development of large-scale brownfields, mostly by specialty developers, mainstream developers have become increasingly aggressive in pursuing brownfield opportunities,” says Slone. “There may be several reasons for this shift, but chief among them are the increasing price of other development opportunities, the availability of insurance as a risk management tool, and the willingness of localities to provide [development] incentives.”
One reason for the attractiveness of brownfields is the prime location some sites offer. That location appeal is only reinforced by the initial success of current brownfield projects such as Buccini/Pollin Group's Christina Landing in Wilmington, Del. The eight acres of former industrial property, located just across the Christina River from downtown Wilmington, was capped with 18 to 24 inches of top soil to make way for 63 townhomes and a 22-story residential tower.
In the case of Habitat of Northern Virginia, by acquiring the brownfield site—which is located in an already developed part of Fairfax, Va.—the builder was able to fulfill its mission of providing affordable housing near transportation and other urban amenities needed in order for lower-income individuals to thrive. “The homes are in an area where there is a shortfall of affordable housing,” notes Lofft.
Learn more about markets featured in this article: Los Angeles, CA.
