Developers and towns can benefit from infill creativity

Real Estate Weekly, Feb 24, 1999 by Peter C. Lewis, David Eisenberg

Residential construction activity today is focused in suburbia, where raw land is available and where approval conflicts often rage over density, traffic and school budgets. Also, as these zones shift farther from the city, commuting time grows for prospective buyers. But there is another option that can benefit developers and towns: the creative development of infill sites.

We are witnessing today a slow but steady percolation of much-needed infill development. Formidable difficulties exist, but when these can be overcome, the rewards for all participants can be substantial.

The benefits of this approach are so obvious that everyone would practice it i f it were simple. But uncovering such land in affluent areas, and determining how to re-position it to justify the premium such properties generally cost, are difficult tasks. Our company, Wharton Development Corp., has developed in excess of $125 million in a variety of real estate projects, including infill. For 13 years, it has been successfully developing communities on Long Island and Westchester in New York, and in New Jersey. We can point to two specific communities as example of the direction we expect infill development to take in the future.

The Enclave at Englewood Cliffs is a new community of 19 four- to six-bedroom estate homes located in a quiet residential suburb just four minutes from the George Washington Bridge. It may be the last new neighborhood to be built in prestigious Englewood Cliffs, and it certainly offers the most elegance and the greatest value: expansive homes priced from $859,900 that would cost $1.25 million and up elsewhere in the area.

This land had gained approvals, but remained undeveloped for 20 years. When the owner died and the estate put the property up for sale, we were one of several developers who assessed its options. As we are experienced with both larger scale projects and significantly upscale homes, we saw value here and acquired the land. Due to our close relationship with financial sources, and utilizing our own capital, we were able to close quickly and for all cash, which was particularly appealing to the seller.

The Enclave offers remarkable accessibility - it is just 20 minutes from Midtown Manhattan - great beauty and tax rates among the lowest in northern New Jersey. The cachet of this attractive infill site will allow us to create an entire distinctive neighborhood, with traditional brick and stucco exteriors with turrets, copper roofs, shutters and dormers, along with brick paver driveways, period lampposts, special mailboxes and lush landscaping. Its four home designs range in excess of 4,600 square feet of living space, plus oversized garages and basements. One example of the way we've taken traditional luxury to a higher level is the downstairs wine room with floor-to-ceiling wine storage, cabinetry, medieval-type lighting, a limestone floor and a wood tasting table accommodating six chairs. That coordinates with the upstairs master suite's sitting round, which features a fireplace and a compact refrigerator for cooling wine.

A second example of our infill development is The Preserve at Rye. We purchased a 41-acre parcel of land in Rye, NY from the Sloan Kettering Institute for Cancer Research. We purchased it for cash in conjunction with a major New York City bank. The property, which held research facilities, had no approvals for residential development. We structured a transaction that provided time to secure approvals and to demolish the existing oh-site buildings. We crafted 38 single-family homes set in a natural preserve and priced to $1.5 million, and sold out the community within one year.

Wharton Development Corp. has purchased properties from the Resolution Trust Corp., banks and estates, and has devised complex financial restructuring to gain several of our acquisitions. This approach applies equally to other real estate opportunities that we are pursuing, including the purchase of buildings in high-density areas for redevelopment into self-storage facilities. We are actively working on a series of new real estate opportunities, and we are always looking for that next, extraordinary project.