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Business Observer Thursday, Feb. 3, 2022 6 months ago

Counter balance: Nimble developer finds ways to navigate housing crunch

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Metro Development Group has capitalized on pandemic-driven market trends to bolster its appeal to frustrated homebuyers. Now it has to keep up with newfound demand.
by: Brian Hartz Tampa Bay Editor

As home prices skyrocket in St. Petersburg and Pinellas County — which, being a peninsula on a peninsula, has scant land available for new construction — residential real estate developers are reaping the rewards of offering a new vision for surburban living.

Tampa-based Metro Development Group, in particular, has been one of the big winners of the affordable housing crisis that’s taken hold in many Florida cities, particularly St. Pete and Tampa. Five of Metro’s communities — Epperson, Mirada, Southshore Bay, Union Park and Cypress Creek — rank among the 20 fastest-growing new-home communities in the Tampa Bay area. And Epperson, with its 7.5-acre Metro Lagoon swimming and watersports amenity, is the No. 27 fastest-growing master-planned community in the United States. Sales leapt from 350 in 2020 to 638 last year, an 82% spike.

Courtesy. The Epperson master-planned community in Wesley Chapel.

What’s more, buyers of homes in master-planned communities don’t represent the usual demographics. According to a survey conducted last year by Walker Brands, 72% of Epperson residents are working full time, and one of the top reasons they bought into the community was because of its proximity to Innovation Preparatory Academy, a K-8 charter school.

“There are some master plans that will get on people’s shopping list, as well, but very few of them have the breadth or depth of the amenity mix we do,” says Vaike O’Grady, Metro Development’s vice president of marketing. She joined the company in October after working as regional director at Austin, Texas-based real estate research firm Zonda.

Affordability has also been a big draw for suburban master-planned communities. With an already hot market showing no signs of cooling off, and supply-chain issues continuing to plague builders and developers, Metro's challenge going forward is simple to explain, complicated to execute: to supply enough housing to meet demand. 

‘JALAPENO HOT’ MARKET

O’Grady says it’s hard to think of time when the housing market was more active.

“In Texas, we would call it ‘jalapeño hot,’” she says. “It's mind-boggling how strong the demand is, and it's frustrating because if we could build faster, we could serve more people. We got a little stuck at some points during this past year because we just ran out of lots to sell.”

‘It's mind-boggling how strong the demand is, and it's frustrating because if we could build faster, we could serve more people.’ Vaike O’Grady, Metro Development Group

One way Metro has risen to the housing market’s challenges has been to cater to as many types of buyers as possible. Communities such as Epperson offer a range of housing product, from entry-level to $1 million-plus homes. The mix also includes attached homes and even single-family rent-to-own properties.

That approach has allowed the company to attract homebuyers such as Ernest and Jocelyn Adams, a Black couple priced out of their beloved St. Petersburg.

The Adamses hadn’t given much thought to shopping for houses in the suburbs. They'd been living in a rental property close to downtown St. Pete, and in early 2018 they began to look for a home to buy. What followed, Jocelyn says, was “sticker shock.” The only homes in their price range were older properties with structural or mechanical concerns that made them wary.

CEA Marketing. Jocelyn Adams runs her business, Bossy River Dog Treats, at her home in the Epperson master-planned community in Wesley Chapel.

Ernest, 48, who works for IBM, heard about Epperson from a co-worker. So the couple, who have a young daughter, Ryver, decided to check it out.

“We didn't know anything about Wesley Chapel,” says Jocelyn, 34, a former teacher. “We knew it was an hour from St. Pete, so we were a little hesitant that way. And we didn't even think about what the lagoon really meant, because when I think of lagoon, I think of a swamp, right? When you hear the word lagoon, you don't think pretty crystal-clear water.”

After two visits, the Adamses were sold, and they put down a deposit on a 2,100-square-foot home they were able to customize to their liking. With a bevy of upgrades, the sale price came to $310,000. Compare that to St. Pete, where the average single-family home price shot up 26.5%, to $312,628, from November 2020 to December 2021, according to Zillow.

MIND THE GAP

O’Grady says the pandemic has created some strange undercurrents in the housing industry that have benefited Metro and other developers. For starters, the price gap between existing homes and newly-built homes has narrowed significantly.

Courtesy. An aerial view of the Metro Lagoon amenity at Epperson in Wesley Chapel.

“From a price point, usually resale is less expensive,” she says. In the past, “if you can’t afford a new home, you’ll look to resale, and most builders and developers viewed resale as their major competitor. The pandemic has changed that … the gap isn’t as big from a price-point perspective, and there’s not as much inventory on the ground because people aren’t selling their houses like they were.”

Paying attention to demographic trends has also been key to success in a housing market that can just as easily create losers as winners.

“We’re on the leading edge of where growth is going,” O’Grady says. “We were here in Wesley Chapel as it was just starting to gain momentum. And, interestingly, the competitive set for a community like this is fairly small. If someone is looking at Wesley Chapel, odds are they’re going to come here. So, we don’t see our biggest threat as resale, more so it’s new home competition.”

WORK IT

Communities like Epperson are also benefiting from major shifts in the way people work — or choose not to work. Jocelyn Adams, for example, never returned to her teaching job at New River Elementary School after going on maternity leave, while Ernest worked from home even before the pandemic. Ryver was born in their Epperson house, and Jocelyn decided to focus on being a stay-at-home mom while also launching her own business, Bossy River Dog Treats. She also tutors a handful of students when she’s not home-schooling Ryver or working on her business. On the later, she hopes to expand with a food truck that will visit dog parks around the area, offering treats for both humans and canines alike.

“Epperson is a great community because so many homeowners have dogs, and they’re so loving of their pets,” Jocelyn says. “We have a dog park and we’re able to put on dog events. So it was a beautiful move for us, for business and personal reasons.”

LAGOON BLUES

The only downside to Epperson, Jocelyn says, is the fact that the Metro Lagoon amenity, which uses water-filtration technology licensed from Miami-based Crystal Lagoons, is sometimes open to the public.“There was a lot of uproar,” she says. “But what I’ve seen improvement on, what I see Metro trying to do, is have some resident-only events.”

Courtesy. The Epperson master-planned community in Wesley Chapel.

Developers are locked in an amenities arms race — Metro is building an even larger lagoon amenity, spanning 15 acres, at Mirada, a master-planned community in San Antonio, a small town in Pasco County — so it makes sense, Jocelyn says, that they would need to find additional revenue streams.

“What we pay for our HOA and lagoon fees is not going to keep that place up and running,” she says. “We understand that.”

Master-planned communities’ ever-expanding creature comforts are getting the attention of another key demographic: out-of-state homebuyers. Walker Brands’ survey found that more than half, 53%, of Epperson residents moved to the community from another state. (The top five? New York, New Jersey, Michigan, Ohio and Georgia.)

While Tampa Bay’s low cost of living is definitely not what it used to be, “if you’re moving from California," O’Grady says ,"it’s a deal to live here.”

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