Local custom home builders Tracey Smith and Michael Madden have tabbed Phil Kean Design Group for a 10-unit modern brownstone townhouse project in Downtown Orlando. It's a projected $6 million investment for which they've yet to choose a pre-sales broker or conventional lender, Smith told GrowthSpotter.
Proposed for 110 and 114 E. Marks Street, the project's 0.33 acres lie off the southeast intersection corner with N. Magnolia Avenue. The property is under contract, owned by an affiliate of Heathrow-based Wescar Inc. and developer Louis Geys, which bought in January 2005 for $337,700.
Smith and Madden met in Houston in the early 1990s, at a time she was practicing law and he was a commercial contractor, both eager to get into development. They moved to Orlando in 1992, founded River Oaks Development in 1994, and began developing small residential parcels. They later shifted focus to custom homes, and have since formed precast tilt wall panel manufacturer Atlas Walls.
"Michael and I came to know Phil (Kean) through building custom homes. We've admired his work, and on this project in particular were inspired by his recent 10-unit brownstones project in Winter Park that was really well received, it sold out before starting construction," said Smith, principal with Madden on newly created affiliate Mictra Development LLC.
"We did our research and found there's an abundant supply of condos, but a national and local trend away from those with consumers. Townhomes offer fee-simple ownership, and a two-car garage for each unit," she continued. "These will be modern, urban brownstones marketed to young professionals who want to live, work and play in downtown."
Phil Kean Design Group is on board as architect and civil engineer, while Smith and Madden's River Oaks Builders will be general contractor, and precast tilt wall concrete will be used on the project.
Total investment through buildout, including land acquisition, should approach $7 million, Smith estimated Thursday. The homes would sell for around $850,000, she added.
Funding should come from unit pre-sales, and lining up a private equity investor for an undisclosed amount. With those contributions to the capital stack on a fee-simple development, only 30 percent down will be needed from a conventional mortgage lender, Smith said.
She and Madden are currently interviewing brokerage firms for the exclusive marketing position on pre-sales. A capital investment group they've worked with in the past is expected to contribute equity, and a bank has yet to be chosen for the construction loan.
While the townhouses will share common walls, they'll be broken into independent clusters of two and three units, allowing construction of a few at a time based on pre-sale success.
The main challenge in developing the property was finding the right product and density for one-third of an acre.
Current zoning of AC3-A requires a minimum 75 dwelling units per acre, or 25 units on one third. With that requirement Smith would be compelled to go vertical with apartments, a product she felt the downtown market was becoming saturated with.
"The original plans were apartments, but I took a look and said I would do brownstones, because there's not a lot of that product locally, and the density would be a better fit," said Phil Kean. "This is in a section of town surrounded by commercial, where the density is 75 to 200 units per acre, so this project would be a bridge between the single family neighborhood to the east and high-rise projects happening to the west."
Smith and Madden want to downzone one classification, which will allow 10 homes on 0.33 acres. The developer also wants to change the future land use designation from Downtown Activity Center (DT-AC) to Residential High Intensity (Res-High).
City of Orlando's Municipal Planning Board should review the proposal on Sept. 20, which would be followed by City Council readings in late October and November.
The fee-simple project will require a plat to follow, and building permit applications could be made by late January or February, with groundbreaking expected in Second Quarter 2017.
Looking forward, Smith and Madden are actively seeking more properties in Downtown Orlando with infill or redevelopment potential. New relationships with capital investment groups to partner on future housing developments are welcome, she said.