More for Less
By Sean Roth
Real Estate Editor
It was a drafty January morning when Robert iDani Barwick decided he was done. Heid just sold his aircraft-cabin systems producer Baker Electronics Inc. to Honeywell International Inc. for a tidy profit. It was time to ride into the sunset. Goodbye hassles and deadlines. Hello retirement.
It didnit take.
Today, Barwick is chairman of de Morgan Homes, an upstart Ellenton company that plans to shake up the local homebuilding market. Its goal: Make a profit building new workforce housing in the $115,000 to $200,000 range.
Barwick isnit new to real estate and development.
Before Baker Electronics, Barwick was a principal in the one of the largest privately owned real estate advisory firms in the i80s and i90s o MIG Cos. During his time at the firm, assets under management increased from $100 million to $1.4 billion.
In 1992, MIG Capital Management became de Morgan Investment Management Inc. Its focus was redirected toward real estate development. In the early i90s, de Morgan Goray built the Country Club of Arkansas, which Barwick says is similar in scope to University Park.
Around 1996, Barwick shifted his attention from MIG/de Morgan to Baker. But he still retained a financial stake in the development company.
de Morgan Homes combines the experience and finances of Barwick and the homebuilding know-how of Richard Bedford, now its executive vice president and chief operations officer.
The company, which is about two years old, became a county-commission darling early on for its first large-scale project, Oak View, a 198-unit (single-family and townhome) community being built at 2900 21st St. Court E., Palmetto.
In October, de Morgan agreed to keep a minimum of 50 homes, or about 25% of the community, below $115,000. Company officials say the commitment was required to get the additional density and application-review incentives. Units will range from 800 square feet to 2,000 square feet, and qualified lower-income buyers will receive down-payment assistance from the county.
iIt really looks to be a fabulous project for what they are proposing to deliver on the affordability side,i says Amy Stein, a Manatee County commissioner. iIt has a lot of open green space and community amenities. They are going with a more clustered density, which can be a little higher because theyire in the urban core.i
But the partners emphasize they arenit alone in affordable housing development. They point to fellow homebuilder David Lewis, who is developing Palmetto Estates, a 200-unit affordable-housing development.
Both projects will be the largest affordable for-sale developments built in the county in the past decade.
Barwick and Bedford say their company is well situated to be a long-term player in the low-priced market.
iThe reason we are different is we take seriously the social element of providing for the economic and social needs,i Barwick says. iWe try to keep the density at a rational level and try to use land efficiently. We design homes that are not expensive but that look good. We also have a lot of talent not usually found in a company of our size.i
Without that extra talent, Bedford says, the company would be unable to produce good-looking projects at a reasonable price. With a 54-acre parcel, the Oak View community will include 162 single-family homes and 36 townhomes. Despite its density, Oak View has drawn praise from commissioners for its open area and recreational space.
The biggest dispute with the county commission o in a relatively easy approval process o concerned the placement and number of sidewalks in relation to Tillman Elementary School and road paving outside of the project itself. The commission eventually reduced the sidewalk requirement to only one side of street in the development and eliminated some of the road-paving requirements.
But why would a homebuilder lock itself into price constraints in an industry where impromptu cost increases are the norm? It has to do with the social element and the companyis niche, Barwick says.
iThere is almost no competition,i Barwick says. iThere is just about no products there ... but that is where roughly half the population is looking.i
Sales are expected to start in Oak View around the first of the year, he says. And the development should be sold out within two years.
The company has agreed to give one of the homes in the new community to a needy family.
iThe idea works from both a social and a public relations perspective,i Barwick says. iThe ultimate selection is going to be made by a group made up of various clergy and people from other groups. We want to keep that final selection at arms length.i
Oak View will be the companyis second residential community. de Morganis first subdivision, Hill Park, was a small 30-home subdivision in Bradenton near Samoset, which it started earlier this year. All of the homes, which ranged from $130,000 to $180,000, have been sold.
iIn the future we will probably have to look for land outside Manatee County,i Barwick says. iWe will go into Hillsborough ... Charlotte and south of there.i
But de Morgan will likely not build in Sarasota County, company officials say. While Sarasota has a great need for new workforce housing, they say land prices and regulatory costs there are just too high.The exception would be if the company could partner with a larger landowner to create the affordable component of a village as required by the 2050 Comprehensive Plan, he says.
In keeping with Barwickis prodigious growth goals, the company is moving quickly to acquire land.
iWithin four to five years, we should be doing 500 homes a year,i Barwick says. iIn another seven to 10 years, we should be up to 1,000 homes a year.i
Even at that rate, the companyis esearch shows that it would merely dent the field of workforce housing customers.
Barwick was recently asked to join an informal committee headed by Manatee County Commissioner Ron Getman. The groupis goal is to eliminate roadblocks in building affordable housing, Getman says, adding: iWe are hoping to clarify the land development code O to make it easier for developers to understand the process.i
Other committee members include: Jay Brady, executive director of the Gulf Coast Builders Exchange; Britton Williams, of Bruce Williams Homes; and a representative of Manatee Countyis Community Service Department.
Getman says the committee will make recommendations to the commission, which it may or may not accept.
iItes pretty exciting,i Getman says. iThe suggestions and attitude from the committee has not been more government but to create fewer governmental hurdles. If you clarify the requirements, you can speed up the approval process.i
The committee is expected to release its finding in about 90 days.
iIf we can reduce the rezone and planned development review process to seven months from 12 to 18 months,i Barwick says, ithat could end up saving developers at least 5%. You have to be terribly efficient (to develop workforce housing). It takes about two years from the point when you find a piece of property. The main issue is uncertainty. To the extent that you can make the process more predictable, you can improve the margins for developers.i
An extra $10,000 cost can push an affordable/workforce development out of the workforce-priced market.
iSome of those well-known luxury builders may scream and yell as they go through the process but in the end those costs are just added on to the price of the house,i Barwick says.