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Demand for new homes inside I-240 loop a boon for city

By Tom Charlier
Contact
May 15, 2005

There was nothing wrong with the remodeled brick rancher that sprawled across a shaded lot at 4576 Park, but John Gallina and Rob Hansom tore it down anyway.

Salvaging the bricks and windows, their crews dismantled the 60-year-old home so quickly this spring that by the time tulips sprouted in the yard all that remained was the driveway and mailbox.

In its place, Gallina and Hansom began constructing a gated community with seven homes, each to be priced well above the $500,000 they paid for the original house and 2.4-acre lot. And if similar projects in the area are any guide, they won't have any trouble selling them.

"You don't find any of these things sitting around empty," said Don Berge, president of MarketGraphics of Memphis, which tracks the local real estate market. "All those projects like that are so successful."

For all the gloomy talk these days about residents wanting to flee Memphis, the demand is soaring for so-called infill projects like the one being built by Gallina and Hansom.

Building permits for new homes in an area stretching from Midtown to the western edge of Germantown nearly doubled between 2002 and last year. It's an indication that many people are willing to pay a premium for new homes built in older parts of the city.

Aside from their popularity among home buyers, the infill developments are something of a salve both for Memphis's frail tax base and Shelby County's swelling debt.

In contrast to suburban subdivisions -- which require heavy government investment for new roads, utilities and schools -- infill projects are built in areas where the infrastructure exists.

What's more, they tend to boost the property values, and hence tax yield, of the lots on which they're built. Based on projected starting price of $675,000, the seven homes at the Park Audubon Planned Development being built by Gallina and Hansom should generate a total of at least $85,000 a year in city and county taxes -- more than nine times the revenue from the previous home.

The projects, with their higher densities, sometimes create conflicts with neighbors. But because they're a potential antidote to suburban sprawl, infill developments conform with the "smart growth" agenda pursued by county Mayor A C Wharton.

For several years most of the infill activity has been centered in East Memphis, where new homes have been sold at rates of about 25 per year, according to MarketGraphics.

But in recent months more projects have risen in other sections of the city, including Midtown, where sizable developments are under way off Barksdale and at the former main library site at Peabody and McLean.

In all, the number of permits issued for new homes in an area stretching from near I-40 Midtown to the western edge of Germantown grew from 104 in 2002 to 192 last year. Barely four months into 2005, 73 have been issued.

The infill successes have helped pave the way for more ambitious projects to redevelop the city's core.

Memphis officials are promoting Uptown, a mixed-income, mixed-use community north of Downtown that will contain 1,200 homes and apartments. Hundreds of other units will be built at developments planned on the sites of razed public housing projects.

In a March report, MarketGraphics tallied more than 100 housing starts in the Downtown area in the previous 12 months.

"We're attracting a lot of new people," said Robert Lipscomb, the city's director of Housing and Community Development.

Residents are drawn to infill developments for a variety of reasons, industry officials and home buyers said. Much of it has to do with location.

"A lot of people want to live inside the I-240 loop," Berge said.

Among them are Diana and Joe Teagarden. Last year they moved a few blocks from a larger, nearly century-old home in Central Gardens into one of the first homes completed in the development at Peabody and McLean.

"We wanted to stay in this area," Diana Teagarden said.

"We wanted something scaled-down and new."

For Bobby Mack and his family, who moved into a new home in a gated development near Walnut Grove and Highland two years ago, seclusion was a main attraction.

"It's peaceful and quiet, and it stays clean," Mack said.

East Memphis remains especially popular, with infill homes often priced at more than $500,000. Builders say their customers, typically retired empty-nesters, want to live near the restaurants, grocery stores and shopping centers found in the city. They also tend to travel a lot and are looking for security and smaller, low-maintenance lots.

"They enjoy being able to lock up their house and turn on the automatic sprinkler" and leave, said Drew Renshaw, who is building four of the 14 homes in Boxwood Green, a gated infill development off Poplar in which homes will start at about $825,000.

If infill projects have a drawback, it's their potential impact on neighbors, who often object to the density of homes. At Park Audubon, for instance, Gallina and Hansom agreed to scale back from 10 to seven homes after neighbors complained.

City Council member Brent Taylor said the council's main challenge in deciding whether to approve projects is to strike a balance between neighbors' concerns and the overall benefits to Memphis.

Developers say the infill projects show that for all its problems -- everything from soaring taxes and political scandals to crime and poor schools -- Memphis retains some appeal.

"You hear so much negative talk about Memphis -- the political structure and so on," Hansom said. "What's amazing is the interest and recognition from people looking to get back in to the location, the lifestyle (of the city). ... I think it's almost a hidden movement."

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