August 03, 2015

How one Wilson County Neighborhood has Beaten the Real Estate Bust

by Eric Snyder
-Nashville Business Journal-
When developers of Providence began a new master planning process for the massive Mount Juliet neighborhood in 2002, they wanted to ensure it would thrive even without a large retail component.
As fate would have it, however, the launch of that plan coincided with the development of Providence Marketplace, an 830,000-square-foot lifestyle shopping center developed by Crosland and Carolina Holdings Inc., a retail destination that has given thousands a reason to call Mount Juliet and Providence home.
According to Edsel Charles, chairman of the Brentwood-based real estate research firm MarketGraphics, Providence is the No. 1 selling neighborhood in the 21 states that MarketGraphics studies, and has been for several years. Providence developer CPS Land, meanwhile, advertises its development with signs identifying it as Tennessee’s No. 1 neighborhood in 2007, 2008 and 2009.
A Booming Market
A large part of Providence’s success, Charles said, is that it has gone after Nashville’s aging retirement community.
"We’re not geared up as an industry to deliver product for retirees," Charles said, estimating that the Greater Nashville area only has about 50 percent of the product that that will one day be necessary for that demographic.
Providence’s largest component – the 1,069-lot Lake Providence – is being developed by Del Webb, a retirement-community developer and subsidiary of Pulte Homes.
CPS Land officials say they are pleased with the progress of the retirement product – Del Webb has built 500 homes in Lake Providence through January, and 325 are sold – they say it is only a piece of the puzzle. The key to Providence’s success, they say, is in its diversity.
What’s in a neighborhood?
In addition to apartments being developed by MLP Investments, CPS divided the 1,000-acre development into nine distinct neighborhoods. Instead of selling individual lots to developers, CPS Land sold entire neighborhoods to individual builders, such as Beazer Homes, Drees Homes, The Jones Co. and Dell Webb, among others.
Developers bought neighborhoods with restrictions already in place on square footage, price point and design. While Bradford Park, for instance, features Craftsman-influenced bungalows clad in siding and starting in the $170,000’s, The Reserve features all-brick homes starting in the $300,000 range.
CPS Land developers cite this as a key to their success: Having a variety of projects at disparate price points – from $149,000 to $470,000 – allows builders to focus on their strengths without focusing on one market sweet spot, thereby cannibalizing it in the process. The product also appears to a wide variety of residents, from apartment dwellers to first-time homebuyers to retirees, CPS officials said.
Geoff Hart, the Nashville division president for Beazer Homes, said it is that variety – and the destination created by Providence Marketplace and other retail outlets – that is driving Providence’s success.
"Before that (retail), there really was no big destination," Hart said.
Having different developers in charge of the various neighborhood sections, he said, allows builders to maximize their marketing efforts and take ownership of their projects without butting heads with the competitors.
"Each developer has their own piece and knows how that piece fits into the puzzle," he says.
Hitting a Sweet Spot
Of Providence’s more than 3,236 lots, more than 2,400 have been developed. Fifty-four percent of all homes, or 1,759, were sold through the end of January.
In 2006, homes sold in Providence represented more than 35 percent of all those sold in Wilson County, according to Dudley Smith, CPS’s executive vice president and president of Providence Developers, Inc. That year, 167 homes were sold in Providence, followed by 282 in 2007 and 214 in 2008. Last year, 180 single-family homes sold.
Providence also includes a variety of amenities, including playgrounds, pedestrian trails and a swim club with four pools.
"We try to put our money into the things that residents really use the most," said Allen Patton, president and chief manager of CPS Land. He added that CPS has to be mindful of spending the right amount of money on amenities: "You have to be careful because you can easily spend too much money on that stuff."
David McGowan, president of Nashville-based Regent Homes, called Providence "a nice community, there’s no two ways around it." He echoed the importance of the village design and use of partner builders, which he said left CPS with "no exposure." CPS also caught a break, he said, in that the land was already appropriately zoned when CPS Land began its master planning in 2002.
To have a similarly sized development get approval in Mount Juliet today , McGowan said "would probably be very tough."
The CPS Land developers take a long view at completing their project, saying that it could take eight years for the residential side to be sold out, and ten on the commercial side. There is still some room to grow.