Meeting Community Needs
Article courtesy of http://www.affordablehousingnews.com winter 2014 issue
The Franklin Johnston Group develops affordable community in job-heavy area of Norfolk, Virginia.
As a developer and manager of multifamily rental properties, including affordable housing, The Franklin Johnston Group is leveraging its many talents with the development of an infill property in Norfolk, Virginia. The Pointe at Pickett Farm is in its second phase and adds to the list of affordable communities the group has development in the Mid-Atlantic region.
“We take a product-centered, market-rate approach to developing Section 42 deals,” says Tom Johnston, Chief Development Officer. “They all contain the same type of quality and amenities that a luxury product has, so from a product standpoint we are able to provide a very superior product in cost-effective ways. There is a lot of depth in the Virginia affordable housing market, so we are able to tap into that and essentially lease up extremely fast. That has allowed us to optimize these deals in terms of the cash flow and the developer fees.”
The Pointe at Pickett Farm offers the first new residential development in this particular area of Norfolk for many years. In addition, the location is desirable for residents looking to live near some of the city’s large employment centers.
“The site was actually the last working farm in the City of Norfolk,” Johnston says. “We are sandwiched in between two large commercial areas that have large concentrations of jobs, one being the Norfolk Industrial Park and the other being the Military Circle commercial retail hub. We have a new residential product in an area where the city hasn’t seen any new resident [product] in 25 to 30 years. That has allowed for us to have a unique and new product in an established area where there are a lot of job opportunities”
A POSITIVE RECEPTION
The Development’s $16 million first phase is complete, and some of the prominent features include gourmet kitchens, spacious closets, a large clubhouse, a state-of-the-art fitness center, a swimming pool and waterpark, gated access, a playground, 24-hour emergency maintenance and full-size washers and dryers. According to Johnston, the first phase experienced an enormously positive reception.
“We leased all 120 units from the first phase within 40 days of opening the clubhouse,” he says. “Anytime you can achieve a 100-unit per month absorption base, you know you have the right product, the right developer and the right management team all working together. I think the locational aspects and the quality of the development really allowed it to market itself. It has been incredibly well received with that type of lease-up base.”
Phase II will add 180 units and have a price tag of about $24 million, and it’s scheduled for completion in November 2015. The Franklin Johnston Group already has an interest list and will begin the preleasing process when the company is approximately 120 days from delivering the first building.
“For Phase II, what we really hope to do is, through the quality of Phase I, establish an excellent reputation that is a great, affordable yet high-quality place to live for people who work in that section of Norfolk,” Johnston says. “By having 300 units in one location, I expect that we will have excellent operating economies of scale and efficiency, ultimately leading to excellent cash flow.”
AFFORDABILITY AND QUALITY WRAPPED INTO ONE
The Pointe at Pickett Farm sits on a 20 acre piece of land. In addition to bringing affordable housing to a job-heavy area of the city, the project also delivers a top-quality product to the market.
“The design, construction and management of this community has allowed us to really put forth a superior product in a market that, quite frankly, has a lot of competition,” Johnston says. “By virtue of the fact that we can build them a little less expensively, design them a little bit better and provide superior on-site management, it has allowed us to surpass the performance of pretty much all of our competitors.”
The Franklin Johnston Group is proud of the positive impact the newest affordable development in Norfolk has had, and the project has also paid off financially for the company.
“We are providing a great place for moderate-income people to live,” Johnston says. “It’s allowing for a place to raise children, and a place where they can have high self-esteem, be proud of where they live and do well in life. At the same time, we are a for-profit company, and develop these properties so that they provide a strong cash flow to the people who take risks when we develop them. We feel good about what we are able to do in the community and for the people who ultimately live in our properties, but they are good financial performers as well, so it’s a true win-win.”
