In the early 1900s, the discovery of a large oil reserve near Beaumont, Texas, marked the beginning of the Oil Age, spurring development and speculation across the Lone Star State and leading to an oil boom that would result in the U.S. surpassing Russia as the world’s leading petroleum producer.
Today, Texas is in the grips of another boom. Home to five of the nation’s top 10 fastest-growing cities, Texas’ population is up more than 1.8 million from 2010 figures and is projected to double by 2050 as people flock to the state citing more job opportunities, lower cost of living, cheaper land, lower taxes, and an excess of culturally relevant big cities to choose from.
Texas is adding an estimated 1,100 residents each day, and there are few places where this boom is more pronounced than in the IH-35 corridor that stretches between San Antonio and Austin. The 80-mile stretch is home to a number of burgeoning bedroom communities that boast some of the best public schools in the state.
Vantage Communities is at the forefront of multifamily development in the greater San Antonio area and along the booming IH-10 and IH-35 corridors between San Antonio and Austin, Texas’ second and fourth largest cities. Taking the old real estate maxim of “location, location, location,” to heart, Vantage is constantly prospecting for new, up-and-coming communities, setting trends and acting as a tastemaker in the Texas market.
“Sometimes you have to set the trend rather than follow the trend,” says David Starr, co-founder of Vantage Communities. “I’ve always felt that the I-35 corridor was going to be like the Dallas-Fort Worth corridor, so it was my intention to be one of the first to develop all the communities between San Antonio and Austin.”
Vantage began building out the corridor in 2007, entering the market with a boom and unveiling five new properties in the communities of New Braunfels, Converse, Schertz, Prue in San Antonio and Midland all in the same year. San Marcos followed close behind the next year.
“We got those done and had others in the pipeline, but then the credit crisis hit,” says Starr. As banks tightened lending policies, the Vantage team had a difficult time securing loans to move forward with the development of a new property in Kyle, Texas, called Plum Creek. “We talked to 69 banks in late 2008, early 2009 before we found one that could give us a loan and we have never looked back since,” says Starr.
While the credit crunch made the financing of new developments a difficult proposition, it actually benefited Vantage on the leasing end of the process. “All throughout the crisis, we kept busy, and because people couldn’t obtain financing to buy houses, our developments were leasing up like hotcakes,” says Starr.
Vantage has lived up to its reputation as a multifamily development tastemaker, with other developers following Vantage into many of the same markets once the company has proven the area’s economic stability.
“We were one of the first to develop new class A multifamily housing in most of those communities, which really locked in the product and ensured a certain amount of success,” says Starr. “When we build in these areas, other products and hospitals and everything have developed in conjunction. We’re even going back and doing a second development in some areas because the market is still so strong,” Starr says.
Since 2007, Vantage has built 15 multifamily residential developments across Texas, with another four slated for completion this year. Having experienced some early success in the local market, Vantage is now looking to take the model on the road with three new developments underway in Kansas and Florida.
Finding a niche
Starr and Vantage co-founder John Condit have been business partners since 1991. “Back in those days, David did finance placement, and I did property management and development,” says Condit. The pair worked on projects off and on throughout the ‘90s and, in 2005, decided to team up again and bring their own skillsets to bear in the multifamily residential development market. With the addition of Matthew Starr to oversee the day-to-day operations, the initial team was set.
With years of experience in the industry, Starr and Condit took some of their favorite, time-tested multifamily development features and folded them into what would become the blueprint for all future Vantage communities. “We spent a significant amount of time designing a set of plans based on other properties we owned and held focus groups with designers, property management executives, resident managers, as well as residents to gather input and tweak the first set of plans in order to be successful,” Condit says.
“The floor plans we still use today were designed in that process and are virtually the same ones we created back then. However, we’ll still hold occasional focus groups to see what’s working, what’s not working, and what could be better with a specific eye to keeping our product updated and current in the market,” says Condit.
Vantage’s projects have ranged in rental price from market rate to affordable, but Starr says the company’s real specialty is delivery unit rent pricing just shy of Class AAA luxury status. “We might be $20 to $75 less rent per unit, but the residents are getting the exact same amenities, thus we provide great value. Our specific strategy is to price our product right below the Class AAA luxury properties, helping residents save on rent while providing a comparable unit and amenity package,” he says.
By tweaking design specifications based on consumer trends and resident preferences, Vantage is able to ensure that its product remains relevant while saving money on expensive, flash-in-the-pan trends. “We started using vinyl plank flooring in 2007 when everybody else was still doing wall-to-wall carpet, and that can save us $900 a unit per turn,” Condit says. “We also got a call one day saying, ‘you don’t have dog parks,’ and now besides the swimming pool and fitness room, the dog parks and wash areas might be our No. 1 utilized amenity. When a new idea warrants a change, we are extremely nimble in executing that change.”
Vantage is also able to deliver consistent quality for less than the competition thanks to time-tested partners who have been with the company since its inception. Concept Builders and Crane Construction Company have been the only two general contractors on all Vantage projects since 2009 and the company has used a lot of the same subcontractors for a majority of the work. Vantage utilizes B&A Architects of San Antonio, as well as Chris Weigand with Big Red Dog Engineering.
“We bring our development team partners in when we’re still looking at the dirt,” says Starr. “We have a reputation for doing the same project with 80 percent of the same subs, which means we don’t run into surprises; everything that can be repeated that works, we try to capitalize on. Our team meets once per week, face-to-face, so that budgets and time expectations are met. No one is allowed to pass the buck. Accountability is a big part of the entire team. The development cost savings achieved by our experienced team helps us to hedge any downside that might be experienced in the market.”
Boasting a 25-year partnership, Concept Builders has been working with Starr and Condit since long before Vantage was founded. “We got into multifamily in the early ‘90s when Condit moved his operation to San Antonio, and we started working for him,” says Mark Gross, president of Concept Builders. “Their model works really well, and they have a background in managing these projects, because they know the market inside and out.”
Up to 40 percent of Concept’s annual work is tied to Vantage, with three projects in the works for the coming year. “Between the design team, architects, and engineers, we’ve got people who have a lot of multifamily construction experience, and it shows,” says Gross.
Prospecting new communities
One of the latest Vantage communities to hit the market is Vantage at Georgetown. Located 30 miles north of Austin — the country’s fastest-growing city — Georgetown itself grew by 24 percent over the last four years. This population boom has led to a housing crunch that presents ample opportunities for savvy developers looking to get into the country’s most booming residential housing market.
“Georgetown is a new, up-and-coming community, but when we went, there was a lot of talk about other people going into this submarket but not a lot of new product being developed,” says Starr.
The fourth project undertaken by Concept Builders on behalf of Vantage, Vantage at Georgetown, is a 250,000-square-foot, 288-unit development that features a resort-style swimming pool, cabana, picnic area, dog park, clubhouse and business center. The property is conveniently located near public parks, school and highways. The individual units feature 9-foot ceilings, balconies, cherry or oak wood cabinetry, walk-in closets, and top-of-the-line black-on-black appliances, including washer and dryer.
The black-on-black color scheme was one example of Vantage selecting the design based on resident focus groups concerned about the difficulty of keeping stainless steel appliances free of smudges and fingerprints.
Soil conditions at the development site presented some challenges for developers. “The soil was pretty bad at the site, so we had to dig out a lot of it, drain out the water, and fill it back up,” says Steve Mahlmann, project manager with architecture firm B&A Architects and a regular collaborator on Vantage projects.
Being a successful developer often means taking risks in communities that are poised for growth: a process Vantage has become very familiar with over the years.
“Great schools are probably the No. 1 thing to look for, and then ease of transportation, strong job market, and rent levels. We’ve gone into a lot of bedroom communities, because people want their children to be in these schools districts but can’t afford a house, especially with the credit crunch, so that’s a niche we fill,” says Condit.
As Vantage looks to expand, the company is eyeing potential new projects in Kansas and Florida, as well as a new joint venture development partnership for high density, mixed use housing in and around the Long Island, New York market. “There are some towns in Suffolk County, New York, that have a tremendous need for housing that is high quality, so we’re exploring that opportunity,” says Starr.
While expansion into these markets will be a challenge for a company that has carved out a niche working in a defined geographic area, Vantage plans on sticking to the same processes and principals that have gotten it where it is today. “I could do a one-off project in almost every city in America, but the gear-up is not realistic, and it takes the quality and competitiveness we’ve built up in the brand advantage right out of it,” says Starr. “We’ll go to an area and make sure we can deliver two of three different projects in that area and make sure the school districts in the area are quality and people will want to live and work there.”
Vantage’s bold growth plan includes building five new developments in the next year alone as real estate brokers and banks come out of the woodwork to help the company expand. “We won’t have any issue raising the debt and equity money as we have built valued banking and investor relationships with financially capable institutions and fund in the multifamily development field. Our lenders and investors team with us on repeat deals time and time again. For every site selected for development, we probably turn down 25 others,” says Condit. With several deals closing, the total development count of Vantage properties will reach 21 by end of summer 2016, with a full pipeline for 2017 already well under way.
For the developers, success is giving somebody a beautiful home and a new opportunity in life. “I like to see the full circle completed as a piece of dirt becomes a valued community. We lease it, stabilize it, sell it, and the lenders and investors are happy, the residents love it, and the property managers think it’s an easy property to run,” says Condit. “Whenever I walk a community, and our development is somewhere I would call home, then I’m satisfied. We call all of the ingredients working together the Vantage Lifestyle.”
As the Texas housing market continues to explode, driven by record population growth, Vantage Communities has positioned itself to take advantage of the boom thanks to a litany of strong partnerships, an understanding of the region and local markets, and its commitment to developing quality multifamily housing communities.
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