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Tampa developers Charles Funk and Jeff Meehan are committed to green projects — those with strong environmental features. And they've found that saving energy, utility costs, and natural resources can pay off in the real estate marketplace. The developers have tapped into a powerful consumer trend: a demand for green housing and commercial buildings.
They experienced the trend firsthand as they were building a 456-unit apartment complex in Boynton Beach on the east coast of the state, when a buyer swept in with a $108.5 million offer before they had even completed the project's second phase. Designed with energy-efficient features such as windows and a tile roof engineered to reduce the impact of the Florida sun, Seabourn Cove's early residents were reporting energy bills far lower than at their previous apartments, says Meehan.
As with earlier projects, the green approach translated into sales. “All three of us are environmentalists,” says Funk, including his son, Brian, a project manager. “It has an economic value.” In fact, the apartment community's fast sale surprised even the developers.
They had planned to keep the Boynton Beach apartments in their investment portfolio. “When we built this project our intent was never to sell it. Our intent was a longer term hold,” says Meehan. But the offer from The Heitman Organization, Chicago-based real estate managers, was one they couldn't refuse.
It wasn't only elements like the $600,000 they spent on windows that attracted buyers. Funk and Meehan were also highly selective in approving tenants for the units, for which rents started at $1,250 for an 875-square-foot one-bedroom apartment, rising to $1,800 for a three-bedroom unit of about 1,600 square feet. They turned away applicants with poor credit histories and some who had been upside-down on home mortgages, says Meehan.
Their residents were a prime demographic, with an average age of 39, and household incomes averaging $114,000 per unit. And they were committed, long-term renters, Meehan notes.
The Tampa builders undertook their project at a time when there were few new multifamily units available to meet the pent-up demand. Across the country, many renters fled the single-family market amid a plunge in values and uncertainty over the jobs and housing markets. “Nothing new was being built and so the rental market became very, very strong. There just wasn't any new product on line, so apartments started making an awful lot of sense,” as an investment, says Funk.
With funding scarce, they reached into their own pockets to get the construction started. “We chose to build at a time when banks weren't making loans,” says Funk. “We had a lot of money in it ourselves.” Finally, two banks formed a joint venture and lent more funds. The sale vindicated the risks both developers and lenders took.
Funk and Meehan have partnered in real estate for nearly a quarter century. They built the Bank of Tampa building, Arbor Greene and Stonelake Ranch residential communities in Hillsborough County, and Bayside Marina, all projects with strong environmental elements.
Nearly 100 of the 160 estate homes at Stonelake Ranch have sold, despite the price tag. One property recently was advertised on YouTube for $2.2 million, while several others were priced less than $2 million.
After their recent multifamily sale, the developers are building a medical office building and hotel in Orlando, in partnership with the Orlando Regional Medical Center. The move demonstrates the builders' strategy to diversify with new property types. That's a good thing, says Meehan: “It's not putting all your eggs in one basket.”
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