Real Deals

Real Deals: Builders scoop up land around Heritage as Wake Forest development nears completion

dbracken@newsobserver.comNovember 14, 2013 

No residential development in the Triangle can match the recent success of Heritage, the massive Wake Forest community that consistently ranks as the region’s top-selling subdivision.

In the third quarter, Heritage once again outpaced all others, recording 73 sales, or 24 more than the next closest subdivision, Triangle Multiple Listing data show.

That type of sales volume has made the land around Heritage very attractive to national builders, particularly as Heritage edges closer to being fully built out.

In August, Orleans Homes paid $3.5 million for 68 acres off Rodgers Road at the southern edge of Heritage, according to property records. The Pennsylvania builder plans to begin construction next year on a 130-lot subdivision called Stonemill Falls.

And this week, Standard Pacific Homes paid $6 million for a 72-acre tract that Heritage developer Andy Ammons put up for sale nine months ago. The California-based builder is planning a 206-lot subdivision called Homestead at Heritage on the property, which is adjacent to Heritage Elementary and Heritage Middle schools.

Ammons, who acquired the land for $2.92 million in early 2006, said it made sense to sell now given how many builders are starved for land.

“At this point in time, I thought the way the market is going and the national guys need land and lots so bad, it was better to sell it wholesale to the company and let them build it out,” he said.

Deals few and far between

Ammons just finished paving the last streets in Heritage, which has about 300 lots remaining. The development, originally planned to be 900 homes, today has more than 2,600 homes and several thousand apartment units.

“It’s been much more successful than we thought it would be,” said Ammons, who expects the remaining lots to be sold over the next 18 months.

Ammons said eight bidders initally emerged for the 72-acre tract that sold this week. Tom Beebe, Standard Pacific’s director of land acquisition, said finding and closing such deals is only getting harder as the market improves.

“You’ve got all the national builders here, and more coming all the time,” Beebe said. “So there’s a lot of people turning over the same rocks trying to find the really, really good locations. It’s become very difficult to find land.”

While in the past builders might have turned to land development companies for assistance, that is no longer the case.

“There’s just not that many companies left out there that do developed lots for builders,” Beebe said. “A lot of those guys got caught in the 2008 fiasco. To get the really, really good locations, all of us nationals are having to develop our own lots. ”

Trying not to overpay

The key, Beebe said, is to be selective, which for Standard Pacific means not getting into bidding wars and not building in some Triangle markets where the company feels demand may be softer.

Standard Pacific, which expects to sell 430 homes in the Triangle this year, is now active in communities in Cary, Apex, Durham, Raleigh and Wake Forest. The company also plans to begin building next year in a subdivision in Holly Springs that it now has under contract.

Mitch Sanner, the Carolina division president for Orleans Homes, said the fact that Heritage did so well during the downturn gives him confidence that the area will perform even better going forward.

“With the attraction of the location, the schools, the commuting corridor, we’re very optimistic we’ll be successful there,” he said.

Of course, if replicating Heritage’s success was easy, it would have been done long ago. The development’s location has helped, but so have a host of other decisions made by Ammons and his team. Originally marketed as an amenity-rich community, Heritage today sells just as many homes by touting the quality of its various neighborhoods and the fact that it doesn’t resemble many other large one-builder projects.

Ammons, who still owns hundreds of acres of land in Wake Forest, is likely to have no shortage of bidders should he put other tracts up for sale. He expects to sell a 40-acre tract to D.R. Horton next year on the south side of Heritage.

“It’s kind of a double-edge sword,” Ammons said. “The land used to be affordable out there. Now that we’re successful, I’ve priced myself out of the market.”

Bracken: 919-829-4548 or dbracken@newsobserver.com; Twitter: @brackendavid

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