A growing number of homebuilders are seeking out abandoned commercial properties for residential subdivisions as demand for housing continues to surge.
The process of constructing homes in places once occupied by such things as hospitals or rock quarries is pricier and more complicated than converting the farmlands that builders prefer. But dwindling available land and zoning restrictions aimed at curbing sprawl are pushing more builders to give a second look at property they once would have ignored.
In Harford County, Fallston Crossing is one of the latest subdivisions where new homes are sprouting up just off the commercial strip of Belair Road in the shadow of used-car lots and service stations.
A few years ago, the property housed Fallston General Hospital. Now it's an abandoned commercial lot with few prospects, according to developers. By next year, it is to have 101 three-story, single-family homes with an average price in the mid-$400,000s.
"I think everybody thought they might take that building, rehab it and use it for a nursing home or something like that," said H. Allen Fyle Jr., president of Fallston-based LIN-MAR Homes, which is custom-building half of the Fallston Crossing project.
Redevelopment includes tearing down the structure and putting in new roads, as well as water and sewer lines to accommodate the residential plan.
The property was already zoned for residential development, allowing an easier progression for developers. Most political leaders are not interested in rezoning commercial land for housing, because businesses often provide more tax revenue and jobs to local governments. But if the commercial property is not viable for businesses anymore, local leaders are considering homes as an option to protect green space elsewhere.
"Sometimes it provides a good transition between other commercial property and residential sites," said Anthony McClune, deputy director of planning and zoning for Harford County. "Properties zoned for business are inside the development envelope served by water and sewer, so those are the areas that are appropriate for development and are consistent with the master plan. We would rather see them revitalized than be run-down."
Members of the National Association of Home Builders and area builders say similar commercial conversions are occurring across the country, especially in areas where zoning limits have whittled the land available for new construction. Most jurisdictions have worked to restrict construction on open parcels because of residents' concern about crowded schools, roads and other infrastructure.
"You have to be creative and you have to be very flexible in this market today," Fyle said. "You're going to find a ton of infill development in years to come."
Consumers seem to be interested in such developments even if they're in the midst of a commercial zone. In Fallston Crossing, for example, builders are creating a neighborhood setting for the development behind the commercial whirl of Belair Road's restaurants and shopping centers.
Less than a year into the Fallston Crossing project, LIN-MAR has contracts on six of the seven homes of phase one that are either built or in construction. Barry Andrews Homes also is building part of the development.
Susan Stroud Parker and her husband, Jimmy, were among the first to move into Fallston Crossing. Despite the early-morning sounds of construction crews nearby, they are enjoying their first custom-built home.
"I'm used to living in close quarters with other residential and commercial properties," said Parker, a transplant from Annapolis and a lobbyist for the Home Builders Association of Maryland. "I also like living in a neo-traditional type of neighborhood, with narrow streets and houses that are clustered together, so there is an economy of land use."
Besides persuading consumers to live in such nontraditional settings, builders have other challenges in converting land that formerly served commercial tenants.
"When you're developing a farm or forest, there's really not much there in the ground," said George Rathlev, land acquisitions manager for Beazer Homes, which has two redevelopment sites under contract in Maryland. "But if you're ... not the first guy there ... there's everything in the ground. There's water lines, sewer lines, gas, electric, telephone, building foundations. You have to be very much aware that the ground is full of things you don't normally expect to find."
Beazer plans to redevelop the former Greenspring Quarry in Baltimore County. The site is zoned for residential and commercial use, so Beazer plans to build more than 500 condominiums and 83 single-family homes along a 360-foot-deep lake. The company has teamed with another builder to construct a 125-room hotel, 62,000 square feet of retail space and 287,000 square feet of office space on land that is nothing more than rock and trees now. Prices will range between the high $200,000s and $500,000.
"These are sites that are now very attractive to builders because there is the desire by the jurisdictions to encourage development in these existing areas where the infrastructure is already in place," Rathlev said.
Beazer also plans to build 288 condominiums and 92 townhouses as part of a planned waterfront district in downtown Cambridge. The project will be built on industrial property vacated years ago by businesses such as canneries and shucking houses. Prices will range in the middle to high $200,000s.
"A lot of national builders and local builders will recognize the value and desirability of doing this kind of thing," Rathlev said of redeveloping commercial areas.
Larry Rosenberg, president of Mark Building Co. in Owings Mills, broke ground on his first redevelopment project in 2002 with the Waterview Town Center in Middle River.
The property had been the site of 1,140 apartment units that had become derelict. In 2001, Baltimore County purchased the land at a tax sale and demolished the 1940s-era units. The existing infrastructure, with schools, sewer system and transportation in place, provided an opportunity Rosenberg couldn't pass up, he said.
"We identified this as something we wanted to do several years ago, but this was the first time we were actually able to acquire a property and redevelop it," Rosenberg said.
Waterview is more than 50 percent complete, and more than two-thirds of its expected 175 single-family, $200,000-plus homes are sold. The town center will have a supermarket and 45,000 square feet of retail space.
"It really exemplifies the Smart Growth concept. ... With down-zoning and additional restrictions being placed on greenfield development, this allows you to continue to provide housing," Rosenberg said.
Bill Struever is president of Struever Bros. Eccles & Rouse, which for 30 years has specialized in redevelopment of mainly Baltimore-based properties for commercial and residential reuse.
He sees the changing economy and citywide loss of port and manufacturing activities as an impetus for a "once-in-a-century opportunity" for developers.
35 miles of waterfront
"It's not just about commercial going residential, or about old industrial that has no use now," he said. "It's really about the changing nature of our economy and the re-emergence of the potential of cities. ... There are 35 miles of waterfront in Baltimore. There's plenty of room for everybody.
"And the big homebuilders have discovered that there is a segment of the market that likes a more diverse and urban lifestyle," Struever said.
With that in mind, "land is a finite commodity on both sides - in terms of preservation, in terms of how you're going to be a good steward of that finite resource," said Fronda Cohen, marketing director for the Baltimore County Department of Economic Development, who believes the redevelopment of property can help revitalize older areas.
"Rethinking older housing will keep the older neighborhoods viable," Cohen said. Redevelopment "is a different type of homebuilding than when you have a greenfield. But that's where the opportunity is. It's in infill; it's in rethinking existing space."