GL Homes scores rare success with older adult developments

Miami /
Jan.January 28, 2009 04:26 PM

The real estate downturn has forced major builders into bankruptcy, but
Sunrise-based GL Homes is thriving with its active adult communities,
proving an exception to the depressed region’s rule.

The well-reported grand opening of Valencia Reserve, a 1,100-home
active adult community in Boynton Beach, is a case in point. Last
weekend, GL Homes saw 3,000 people visit its newest property —
including three couples who camped out all night to get their pick of
lots. By the end of the weekend, GL registered 840 prospects
and sold 24 units totaling more than $8 million. It was a vintage
vignette of the 2005 housing boom, and a rare occurrence.

“There was a pent up demand for another great Valencia community,” said
Marcie DePlaza, a division president for GL Homes. “We had a waiting
list of hundreds of potential buyers that were looking to be in the
next Valencia because they would have their first choice of lot
selection, meaning they would secure the best lake views.”

Although communities catering to active adults are growing across the
nation — the National Association of Homebuilders reports more than
100,000 units were constructed in 2008 for a 55-plus niche that is
expected to exceed 85 million by 2014 — building an active adult
community in retiree-rich South Florida does not guarantee success.

Indeed, Oriole Homes Corporation of Boca Raton, a leading developer of active
adult retirement communities, closed its doors in September 2008. Other
large home builders, including Levitt and Sons of Fort Lauderdale, WCI
Communities in Bonita Springs and TOUSA of Hollywood, all filed
bankruptcy last year.

“Some over-55 projects are failing miserably,” said Jack McCabe,
principal of McCabe Research and Consulting in Deerfield Beach. “It’s
not just about age. It’s about location, location, location and price
point, price point, price point.”

GL Homes isn’t making concessions, but the builder has adjusted its
price points to accommodate the current climate. GL’s prices over the
past few years have ranged from the low $300s to the low $600s.

With Valencia Reserve, GL has lowered the prices of some models as much
as $120,000. Prices begin at $250,000 for a two-bedroom, two-bath,
1,870-square foot home.

DePlaza points to a trend among the over-55 set: downsizing from the
high-end country clubs. McCabe confirms the trend. The age of the
mega-mansion, he said, is ending as consumers
become more cost conscious.

However, homeowners aren’t giving up luxury amenities at sites like
Valencia Reserve. The property offers a 41,000-square-foot clubhouse,
tennis, basketball, a massive social hall, fitness, aerobics, multiple
pools, an ample sundeck, specialty interest rooms and even a Wii
interactive gaming studio.

Despite the initial success of Valencia Reserve, McCabe offers a warning.

“We’ll have to wait and see how many of these contracts actually turn
into closings,” he said. “I would expect a higher closing rate with
single family homes than with condos. And these buyers are older, so
they are established with savings and good credit ratings.”

GL Homes now has eight Valencia communities in Florida, mostly on the
east coast. The builder has already secured land in Palm Beach County
to build its ninth property.

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