- September 24, 2010
Few communities in Florida have earned the kind of positive national recognition as Seaside.
The Florida Panhandle town, designed by Andres Duany and built from scratch near Destin, earned Time magazine's development of the decade award in 1990 and the Urban Land Institute's highest honor.
Now, Palm Beach Gardens-based developer Kitson & Partners has tapped Seaside's former CEO, Rick Severance, to build a new town from the scrubland on the Charlotte and Lee county line called Babcock Ranch.
But Seaside is a small hamlet compared with the promise of Babcock Ranch. Chicago-based Evergreen Real Estate Partners has committed $350 million to its partnership with Kitson to build a 19,500-home community on a tract of land the size of Manhattan, Babcock bond documents show.
The story of Babcock Ranch is well-known: Kitson, backed in 2006 by Morgan Stanley, engineered the purchase of the 91,000-acre ranch for an undisclosed sum and sold most of the land to the state for conservation for $350 million. He retained nearly 18,000 acres on which to build Babcock Ranch and held it through the recession, swapping Evergreen for Morgan Stanley as its financial partner.
Evergreen's commitment to seeing the project through was a big draw, Severance acknowledges. “Our capital partner is committed to our success,” says Severance. “They completely understand our vision, and that's an absolute blessing.”
That's critical because the upfront cost to develop a town the size of Babcock is significant. Bond documents show the first phase of the town alone will cost $125 million, including more than $33 million for amenities that include a charter school, a restaurant, a wellness center, an outfitter's store and co-work office space. The first phase will have 1,100 homes and residents could start moving in as early as next year.
Meanwhile, Florida Power and Light is building a solar-energy field on 440 acres on the north side of Babcock Ranch to power the entire town. When the sun's not shining at night, natural gas will kick in.
Severance, 48, is a seasoned operator with experience on a variety of developments beyond Seaside. He has served as senior vice president with The St. Joe Company and since 2006 has operated his own consulting firm, New Vector.
“One of my firm's strengths was known for our ability to manage change in a respectful way,” Severance says. He's been called on to boost the performance of communities from Destin to the Cayman Islands.
That's important because Babcock Ranch will have to weather the inevitable ups and downs in the economy. “Great places insulate themselves from minor swings,” Severance says. “Syd and the team have been very mindful about creating a special place.”
That's why Babcock Ranch is phasing the development and will adjust its plan as the economy warrants. “It's large enough we can accommodate a number of demand segments,” Severance says.
Certainly, the long-term trend of population growth in Florida will drive Babcock Ranch. “I've got another 18-year run on the baby boomers,” says Severance, though he's quick to point out that the development will be multi-generational.
To boost sales, Kitson is involved in discussions with potential draws to the area. That may include sports, entertainment and corporate relocations (there's room for 6 million square feet of commercial space, enough to fill about 100 football fields). “Those catalysts potentially increase absorption and velocity of sales,” Severance says.
Expect Severance's fingerprints to be all over Babcock. Small details such as how traffic flows or how pedestrians interact with vehicles are critical, he says. “I spend as much time on the small things as the larger things,” Severance says.
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