Toll Brothers Inc., a Pennsylvania-based developer that has brought half-million-dollar homes to the nation’s suburbs, is targeting Providence as its first venture into urban markets.
The company plans to build a $15 million, 94-unit condominium complex on the East Side, and is scouting out other sites in the capital city. Local real estate professionals predict the project could help rekindle what has been a quiet condo market, as more developers look to replenish a dwindling housing inventory in Providence.
Executives with Toll Brothers, a publicly traded company that posted $213 million in earnings on revenues of $2.2 billion in 2001, said the company’s research shows pent-up demand in Providence for condos and townhouses. They think people are willing to pay an average of $300,000, and as much $400,000, for the company’s luxury condos.
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“The need is there. There are a lot of empty-nesters and single people trading up in Providence,” said Paul Commito, director of acquisition and development for Toll Brothers. The company already has a presence in the state as the developers of East Greenwich Preserve, off Division Street, and Bristol Landing, near Mount Hope Farm.
Toll Brothers’ initial development in Providence – now being reviewed by the city’s planning commission – is proposed to be on 2.5 acres west of the Eastside Marketplace shopping center in the Wayland Square neighborhood, overlooking the Seekonk River.
The company wants to build two separate three-story buildings, with parking underneath each structure. The condos, which will range in size from one to three bedrooms, should be available by the end of 2003.
Commito said his company has its eyes on at least one other site in the city to build condos or townhouses. He would not give further details.
The company’s plans for Providence are a change of pace for the Huntington Valley, Penn.-based corporation, which has focused mainly on suburban and rural neighborhoods over its 35-year history. In the last five years, the company has built 17,400 homes in 21 states, including 4,358 homes last year.
“This is really the first project through the urban division. It’s extremely important for the division, the city and the company to get off on the right foot,” Commito said.
People familiar with the Providence market say Toll Brothers might be on to something.
“My gut tells me there are a lot of baby boomers whose children have gone and they are now looking. They want to go from two- and three-floor homes to single-floor living, but there is so little on the market in the small, ranch category,” said Sally Lapides, president of Residential Properties Limited, a Providence real estate brokerage firm.
Lapides said condos make sense at a time when available housing in the city is low. It was just a matter of time before developers started testing the depth of the Providence real estate market, she said.
While developers are drawing up plans or are in the process of converting former retail and manufacturing space in downtown and the jewelry district, builders have been slow to start from scratch.
“There are a lot of people in the talking stage of this type of development. I think Toll Brothers will likely get it done before them,” she said. “They are a threat to smaller developers right now, because (Toll Brothers) have deep pockets.”
Lapides said it helps that the company has years of building experience and carries a strong reputation nationally. The company did struggle with a public relations nightmare locally last year, following a Boston Globe investigation that revealed construction defects in Massachusetts homes build by the company. Toll Brothers strongly defended its work, and said some of the problems that arose were isolated.
Roger Warren, executive director of Rhode Island Builders Association, agreed with Lapides that the Toll Brothers’ project does not jibe with recent real estate trends in Providence.
“I find it interesting that they are finding a niche in the condo market when not many developers are building them,” he said. “The condo market never really came back after the 1987-89 crash. What this company is telling me is that this kind of housing is now popular.”
It’s safe to say Toll Brothers is relying on more than a hunch.
“One thing about major public builders, these companies have done the market research, studied the demographics and the customer profiles. That type of research has improved immeasurably over the last decade,” said Scott Campbell, an analyst who covers Toll Brothers for Raymond James in St. Petersburg, Fla.
Toll Brothers are also working on eventually tapping urban centers near Chicago, North Jersey, Boston, Brooklyn, Manhattan and Washington.
Campbell said Toll Brothers’ move to the cities was a natural step. He said other large homebuilders have done so, because other markets have become tighter to maneuver in.
“It certainly helps address the concern of obtaining and entitling land, which has been one of the impediments to home building,” said Campbell.
Toll Brothers representatives said aside from limited land inventories, the company has noticed a strong desire by buyers to come back to the city.
“There has been a philosophical change in how people view cities. People are seeking out an urban life, because of cultural and educational elements found in the city. You get that in Providence,” said Commito.
Providence is also attractive to Toll Brothers because of its size. Commito said residents can walk from the East Side to downtown without breaking a sweat.
Toll Brothers will likely market the condos to empty-nesters already living in Rhode Island, but they also see Boston commuters as a source of business. He said housing prices in Boston are 50 percent higher than those in Providence, and the commute is not farfetched.
The company has a contract with Koffler Corp to buy the land needed for the project. Koffler owns the nearby shopping center, where Eastside Marketplace is located.
The city’s planning commission has given the project master-plan approval, and the company is now required to submit a final design and engineering plans.
Robert Azar, senior planner with the city, said the city is requiring Toll Brothers to complete a traffic study, after neighbors of the project raised traffic concerns.
“The concern is adding more cars to Gano Street, and what the impact would be on East George Street and Pitman Street,” said Azar.
The company also needs to come up with a plan to mitigate some of the disruption caused by pile-driving work and the comings and goings of large trucks.
“Overall, this is a significant project for this neighborhood,” said Azar.
Commito said his company hopes to get approval by the end of the summer.
