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."

Copyright 2005, commercialappeal.com - Memphis, TN.

Memphis seen as an example of success

By Julie Goodman
jgoodman@clarionledger.com

MEMPHIS — Memphis has seen burgeoning residential development in its downtown, spurred initially by the reopening of the Peabody Hotel 24 years ago.

Developers say they descended on the city because of its riverfront property and, eventually, the Autozone Park, home to the minor league Redbirds baseball team, with its inexpensive tickets and family-oriented charm.

They used funky urban styles to lure in the 20- and 30-something crowd, future CEOs who eventually might want to move their businesses to the city. Other homes cater to a different demographic, featuring a classic Southern rivertown theme with porches and clapboard siding.

Here, residents can take in everything from pulled pork to the Rock 'N' Soul Museum, which explains how rural families of yore played music on a diddly bow. It is a far cry from Jackson, Miss., which offers no waterfront or sultry guitar music to pour into the streets at night, although the night life is what city officials are working toward on Farish Street.

Developers, architects and planners mostly from around Tennessee gathered here this week for the "Uptown Downtown and Around Town Memphis" seminar, presented by The Seaside Institute and Looney Ricks Kiss Architects.

Participants discussed what works and what doesn't work for city development. A successful decision could be something as simple as raising a first-floor dwelling several feet to give a resident an elevated view that is not just an eyeful of a sidewalk, they said.

Organizers pointed to areas of Memphis that were once boarded up, rife with urban blight, and have since turned into hotspots for construction and renovation. Warehouses have been converted to loft apartments, decades-old housing projects were torn down for mixed-income dwellings, and a railroad yard was converted into townhouses and apartments.

Downtown streets are studded with portable toilets, with men toiling away on rooftops amid mounds of dirt and construction machinery.

The high-growth sector of downtown Memphis experiences 10.3 percent annual growth, while the city as a whole only experiences 1 percent, said Jeff Sanford, president of the Center City Commission, a public-private partnership charged with downtown redevelopment.

Developers have catered to a range of target markets, investing in everything from sprawling homes overlooking the ballpark to 450-square-foot lofts.

"If someone walked through with a ring through their nose, we had something for them," said Brent Little, a developer who worked on the Echelon at The Ballpark Apartments, $36 million worth of luxury rental property with 9-foot ceilings, gourmet kitchens and granite countertops.

The apartments have a 93 percent occupancy rate.

Paige Close, an architect with the Memphis-based Looney Ricks Kiss firm, a principle designer of the Echelon apartments, also worked on a project that involved converting the top four floors of the historic YMCA into loft apartments, featuring exposed concrete and interior brick facades.

While the downtown area did not fare well in traditional market indicators such as job, population and employee income growth, Close said, it did show a tendency toward higher rents and occupancy rates, and that was enough for developers.

Over the years, the development has helped bring Memphis out of a precipitous decline, brought on in part by massive white flight after the assassination of the Dr. Martin Luther King Jr. in 1968.

The ballpark, for instance, drew suburban families to downtown, ones who never considered the attraction of the area before.

"There is something about baseball and that beautiful green field, the electric atmosphere and the lights and everything, that just make it spectacular," Close said.

"The other thing we felt like it created was this cohesion between black and white ... It's become this almost civic space where we've reconnected as a community — suburban, urban, white, black, every different socio-economic category out there is part of that audience."

Sanford said there is now $2.5 billion of new construction and renovation under way in downtown Memphis which, by some estimates, still is just about 30 percent of what needs to be done.

Development breeds development, he said. "We're sort of victims of our own success in that regard."