'Boutique' neighborhoods show small can be just the right size

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It’s easier saleswise to be Amazon than the corner bookstore. To compete, “small” must find ways to say “unique” to buyers.

It’s perhaps why “boutique” is being used to describe small communities put together by local builders who face tough competition from large public builders.

To the builders, boutique is more than just window dressing for developments of 50 homes or less, though. It’s an emerging niche that aims to win over homebuyers with larger lots, natural foliage and more creative home designs.

The first time developer Chet Skinner used the term “boutique” was to describe Oak Bluff Estates, an 11-home enclave in northern Duval County completed in 2013.

He doesn’t remember hearing the word used for a community before.

But, it captured what Skinner Bros. Realty was trying to accomplish.

“A lot of times we’re working with bigger-sized lots,” Skinner said. “So, if you master-plan it right, you’re able to carve the subdivision around these great natural assets.”

Assets that may include mature trees, foliage, marsh and waterways — the features that give the feeling of a more established neighborhood.

The layout also offers builders something different than the standard mass-cleared 50-by-110 lot, and the builders respond by adapting floorplans in creative ways.

“It just gives everything a more boutique-y feel,” Skinner said.

Skinner reprised boutique in 2014 with Vista Wood, an 11-home community near Dunn Creek, and in March for The Bluffs at Plummers Cove, 21 homes on the St. Johns River in Mandarin.

Jerry Dean, Jacksonville division president for Vintage Estate Homes, called boutiques “a good business model for what we do.”

The Melbourne-based builder built out Oak Bluff Estates and also another 11-lot development, Vista Wood.

Vintage Estate mixes boutique building with take-downs of groups of lots in master-planned communities, like Fleming Island’s Eagle Harbor. The boutique projects, though, give Vintage Estate creative control over the community.

Varied elevations keep houses from looking the same. “It gives it the feeling of a semi-custom neighborhood,” Dean said.

Where have all the 75-lot deals gone?

Small subdivisions have always been part of home construction, said developer Greg Matovina. But there are reasons builders are being pushed in that direction more and more.

One is the continued dearth of financing.

Large public builders can turn to equity to raise cash. But, local builders have traditionally relied on bank loans. And bank lending for construction has been slow to recover.

Another reason for building small, Matovina said, is competition for land. National builders are engaged in a land rush that stretches back to the days of the building boom.

Because many of the nationals are both the developer and the builder of a community, they can run thin profit margins on the development side, and effectively squeeze out independent developers.

There’s a hole in the doughnut that’s gone untouched, though. The 10- to 15-lot deals don’t give the nationals enough to sink their teeth into, Matovina said.

Even many local companies don’t want to build that size.

A 75- or 100-lot subdivision hits the financial “sweet spot,” said Daniel Blanchard, executive vice president at Ewing Real Estate Inc.

They are big enough to justify two or three models and a sales team, and to profit through several years of operations. And they’re small enough that the cost-to-carry won’t kill the deal.

“I hear from builders every day who say — bring me a 50-acre deal where I can build 50, 75, 100 lots,” Blanchard said. “They’ve bought the heck out of those. They’re just not left. Now, you see 600-lot deals out there and 10-lot deals.”

Matovina said to make a 10-lot deal work for a developer, though, everything has to “fall in place,” with no unusual cost items.

Landscaping for a concrete wall on a long stretch of road frontage? Too expensive. A lift station? The deal is dead.

The business model for small-scale

But when those smaller deals do fall in place, there are developers who find them attractive.

It allows a company like Skinner Bros. to finance the project on its own, without taking on a lot of debt. And they can get in and out of the deal quickly.

“There are some developers who are comfortable taking on that 600-lot subdivision, and going out and raising a good bit of equity,” Skinner said. “This is just a decision that we at our company have made.”

It’s a model that can also better fit the needs of builders.

During the boom, many local builders were pushed into creating land departments to compete with the nationals for inventory, Skinner said. Boutiques allow them to refocus their resources on the building side.

“It allows the developers to be developers and it allows the builders to be builders,” he said.

Financial exposure has been a factor pushing Troy White toward the boutique niche. He is building La Fontana, a 52-unit condo community at World Golf Village.

He was asked to bid on a bigger complex — a mixed-use condo/retail project in St. Augustine. He declined after hearing 15 to 20 other builders also were asked to bid.

“Every builder who does not have access to public funding has to be strategic if they’re going to compete against public builders at all,” White said. “You can pretend you can go up against them, but you can’t.”

The small projects, outside the range of the nationals, are less competitive and more manageable from a financing standpoint.

“And, we can make something that’s special and appealing to buyers,” White said.

Steering clear of land and financing competition isn’t all that’s driving the boutiques.

Tidewater Homes brought on its inaugural project, Sissy’s Laine, a 12-home subdivision in Mandarin, this year. Afterward, developers approached the company about putting spec homes in communities, offering 60 to 80 lots.

But Tidewater wasn’t aiming to do more than 12 to 20 homes a year, said Scott Brannock, vice president of Marketing and Operations.

The company can be more hands-on and focused on customers, not always possible with a national builder.

“A lot of buyers would like to know who’s actually building their homes, instead of only having contact with a project manager,” he said.

Tidewater’s mission is to pick up from where production builders like Lennar or a David Weekley Homes would leave off, without becoming a custom homebuilder.

Its first home under construction at Sissy’s Laine will be used as a model for sales there and at other developments in Jacksonville.

With prices starting in the $490,000s, Tidewater hopes to attract upscale buyers by making more features standard. That means granite throughout the house, 7-and-1/2-inch baseboards, crown molding and coffered ceilings.

The standard appliance package includes high-end Bosch appliances. There’s also a mini-iPad port for home automation.

“For people to be able to live in an established area like Mandarin in a brand new home, that’s hard to come by,” Brannock said.

Vintage Estate’s Dean said small subdivisions usually have no CDD fees and low HOA fees. And, there’s a good possibility a homeowner will get to know everyone in the neighborhood, he said.

“When customers walk into a large master-planned community, what they’re really buying into is the amenities,” Dean said.

In the case of boutiques, the neighborhood is the amenity.

“It’s a place where you are going to know who your kids are playing with,” he said.