The Real Deal Miami

Broward’s townhouse kick

Developers big and small are looking to maximize space as land scarcity increases and buyers favor lower price points

December 14, 2017
By Mike Seemuth

Label & Co.’s 150-townhouse development Centra Falls in Pembroke Pines offers units priced between $370,000 and $500,000.

Home construction in land-constrained Broward County increasingly involves redeveloping existing property rather than building on empty lots, and even then, sites large enough for new single-family houses are getting scarce. Enter the townhouse, a sector showing new life in Broward in resale activity and — as a result — seeing an uptick in new development.

“We’ve got very low inventory right now, so when houses or townhouses go on the market, they sell really quickly,” said Kay Conageski, a Keyes Company broker in Plantation. She pointed to a spate of new townhouse developments across Broward, including Artesia in Sunrise and Strata at Plantation, as proof of the robust development market.

Hard data about townhouse sales tends to get mixed with research on other types of property, but Conageski — who has been tracking the product’s activity in Broward — bases her estimates of townhouse sales on combined condo and townhouse sales data from the Broward Council of the Miami Association of Realtors. She said that on average, townhouses that sold in the third quarter were on the market for 54 days, compared to 65 days in the third quarter of 2016. According to her estimates, there were 1,904 Broward townhouse resales in the hurricane-disrupted third quarter, down from 2,133 in the same period last year, but the average resale price increased by 9.3 percent to $202,686.

“A lot of people are investing in those and renting them out as Airbnbs because of all of the restrictions around condos,” Conageski said. “Townhomes are usually more like single-family homes when it comes to rules and regulations, so they allow for renting.”

Sales are also brisk at several of the new townhouse developments around Broward, and more planned units are entering the pipeline, she said.

Small-scale developers and cash investors are increasingly buying older homes in Fort Lauderdale and replacing them with townhouses. “They’re popping up all over Fort Lauderdale,” Conageski said. “Developers will take two, maybe three old homes that are run-down, knock them down, make a small space and put maybe four townhomes in there.”

Industry sources unanimously said that land scarcity is the major factor driving townhouse construction in Broward, as it’s a denser alternative to single-family homes. Broward is 1,323 square miles in size, substantially smaller than its South Florida neighbors Palm Beach County (1,970) and Miami-Dade County (1,898). Developable land is especially scarce in Broward because about half of the county, or approximately 660 square miles, lies in the Everglades.

“There is a very limited land supply in Broward,” said Harry Posin, principal developer of Label & Co., who is overseeing multiple townhouse projects in Pembroke Pines. Posin said that the land scarcity prevents developers from building “anything of consequence or size … We have much less opportunity in Broward than in Dade and Palm Beach.”

And so, bigger players interested in Broward turn to the townhouse market to flex some muscle. In Hollywood, for example, Atlanta-based homebuilder Pulte Group is redeveloping a former golf course as an amenity-rich residential development with 645 houses and townhouses — roughly half of each. At the end of October, Pulte said it had sold all but a handful of the 151 houses and townhouses in the first phase of the development, called Parkview at Hillcrest.

The layout of Parkview at Hillcrest intermixes single-family homes and attached townhouses. Pulte offers two types of two-bedroom townhouses, the smaller ones in the low $300,000s, the larger ones priced in the mid- to upper $300,000s. Single-family homes start at about $420,000 and go as high as almost $500,000.

“The number one reason is typically affordability,” said Brent Baker, president of the Southeast Florida Division of Pulte Group, in discussions of how townhouse purchase decisions evolve. “There’s pretty good price separation between townhomes and single-family homes.”

Pulte is advancing a golf course redevelopment similar to Parkview at Hillcrest in Oakland Park, farther north along Interstate 95, in northeast Broward. Baker said Pulte plans to build as many as 600 homes and townhouses there in roughly equal numbers.

Another large-scale homebuilder, Minto Communities, is selling the final all-townhouse phase of a residential development called Artesia in the Sunrise suburb of Fort Lauderdale. Priced in the $400,000s and $500,000s, the 123 townhouses in Artesia’s final phase were 70 percent soldz at the end of October, according to Tonia Abrahamsson, senior director of South Florida sales for Minto Communities.

Other Broward townhouse projects are part of larger developments such as the Gale Residences Fort Lauderdale Beach, a 12-story condominium one block from the beach that the developers said sold out this year. Newgard Development Group built the Gale mostly as condos but also offered seven townhouses ranging in size from 1,627 to 1,854 square feet, with asking prices that started at $895,000.

Farther west, less pricey projects comprise the bulk of Broward townhouse development. The city of Plantation is getting a cluster of 157 new townhouses called Strata at Plantation. The developer, Invesca Development Group, started prices in the mid-$200,000s for the two- and three-bedroom units, which range in size from 1,819 to 2,232 square feet (including garage and terrace space).

And in Pembroke Pines, Posin is selling the last of 150 newly built townhouses and breaking ground for 125 more. “We find it to be a very steady market,” Posin said of the project, citing relocated residents from the Miami area as one plus. “Some people are moving up, as they historically have done, from Dade County.”

Like other townhouse developers, he draws upon many segments of the Broward residential market, from starter-home and move-up buyers to downsizing baby boomers whose kids have grown up and left the nest. He also pursues what he calls “the multi-generational market” — extended families who need as many as five bedrooms. “We offer optional elevators,” he said.

He and his company, Label & Co., built a two-phase, all-townhouse development in Pembroke Pines called Centra Falls, with 150 townhouses priced from $370,000 to $500,000 and ranging from 1,687 to 2,922 square feet in size.

“Centra Falls is basically sold out,” Posin said in a phone interview this fall, adding at that time that about 20 units were unsold, nearly two years after sales began.

In January 2017, Label & Co. and investment partner BBX Capital landed a $12.95 million construction loan to build another townhouse development in Pembroke Pines: a 125-unit project called Chapel Grove, which will have lower price points than the eight-acre Centra Falls development.

Townhouse prices at the unfolding Chapel Grove development range from the mid-$300,000s to the lower $400,000s. Chapel Grove townhouses will range in size from 1,600 to 2,900 square feet.

Compared to Centra Falls, “it’s a totally new design and, frankly, a little bit more affordable,” Posin said. “Affordability is always an issue in this business.”