Home builders adapt designs

Feb 26, 2010 — Pioneer Press

Jessica Fleming

Feb. 26, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- DAKOTA COUNTY -- As the housing bubble burst, the glut of town homes in the metro market was almost immediately apparent.

Many owners of town homes ended up selling at a loss, and builders who had planned new units suddenly found themselves unable to find buyers willing to take a risk.

Tired of sitting on that land, developers are now standing before city councils asking to build detached town-home units on the land instead.

The units are single-family homes with smaller-than-average yards whose owners belong to an association that manages maintenance on the property.

They are easier to sell, builders say, and appeal to empty-nesters not accustomed to sharing walls with neighbors.

The Apple (NASDAQ:AAPL) Valley City Council recently approved 10 such units in its upscale Cobblestone Lake development.

The land was initially slated for attached town homes, said Jacob Fick, project manager with Tradition Development Co.

"But these are what buyers are looking for," he said. "And in today's market, they have the upper hand. A lot of people still like their single-family homes, but they don't want the maintenance."

In Burnsville, Nicollet Development has proposed a similar group of eight homes, replacing what would have been 19 attached town homes in the Heart of the City downtown development.

The city rejected Nicollet's first proposal -- the planning commission and the Heart of the City design review committee were unhappy with the quality of the units, and the council agreed. But a deadline for tax increment financing for the project was extended, giving the company time to come up with a design that satisfied city officials and residents in a neighboring town-home group, 11 of whom would have to sign off on the change.

The proposal would also require a change in the land's zoning.

"Basically, it's a change in the market," Dave Pokorney, of Nicollet Development, said. "We just don't see that there is a market today for attached town homes, at least not in the short term. And we see that there is an emerging market for older empty-nesters who would like maintenance-free living."

But there is another reason single units are appealing to developers: They don't have to sell multiple units before construction can begin.

"It's hard to finance six-unit town homes," Pokorney said. "If you've only sold one, it's hard to get a loan on the other five."

In some cases, developers will front the money themselves for a second unit in a side-by-side attached town home or even build just the foundation of the other half. But that can be risky business, developers said.

"In the last half-dozen years, there were a lot of attached town homes built in the Twin Cities, maybe too much, so we sort of saturated that market," Pokorney said.

Single-unit town homes are not new to the Twin Cities. Many newer developments with a mix of housing are including them.

There are a half-dozen developments in Woodbury with detached units, associate planner Eric Searles said.

"It's been a successful market in Woodbury," he said.

Ron Clark Construction and Design has a few similar projects: "villas" in Minnetonka where shoveling and mowing are taken care of by an association and some similar homes in a new development in Savage, said sales and marketing assistant manager Sarah Dulong.

Developers insist the new homes are equal in quality to the high-end units they are replacing.

"I think when it's done, people will like it and it will be a successful product," Pokorney said.

Pokorney said he understands Burnsville's reservations about his proposal, but he and other developers have been left with few choices.

"The return isn't as great, so it's probably not something most developers want to do," Pokorney said. "But we have to do something in this market with these projects."

Jessica Fleming can be reached at 651-228-5435.

Newstex ID: KRTB-0190-42399411