The Heritage at Freemason Har Norfolk, Virginia

The Heritage at Freemason Harbour

Project Type: Residential

Case No: C031013

Year: 2001

SUMMARY The Heritage at Freemason Harbour is an upscale apartment community located in the historic Freemason neighborhood of Norfolk, Virginia. The 184 units are located in three U-shaped buildings over three blocks and feature courtyards and on-site parking. Retail and office space is located on the ground floors of two of the buildings. Targeting high-income singles and couples, the Heritage is the first luxury apartment development in downtown Norfolk.

FEATURES

Urban infill Public/private partnership New product type in market Located in revived downtown/waterfront area The Heritage at Freemason Harbour

Norfolk, Virginia

Project Type: Residential

Volume 31 Number 13

July-September 2001

Case Number: C031013

PROJECT TYPE

The Heritage at Freemason Harbour is an upscale apartment community located in the historic Freemason neighborhood of Norfolk, Virginia. The 184 units are located in three U-shaped buildings over three blocks and feature courtyards and on-site parking. Retail and office space is located on the ground floors of two of the buildings. Targeting high-income singles and couples, the Heritage is the first luxury apartment development in downtown Norfolk.

SPECIAL FEATURES

Urban infill Public/private partnership New product type in market Located in revived downtown/waterfront area

DEVELOPER

Collins Enterprises, LLC 2001 West Main Street, Suite 175 Stamford, Connecticut 06902 Telephone: 203-358-0004 Fax: 203-358-8660 http://www.collins-llc.com

DESIGN ARCHITECT/SITE PLANNER

Do Chung & Partners 189 Bedford Street Stamford, Connecticut 06901 Telephone: 203-357-0089 Fax: 203-353-0036

ARCHITECT

CMSS Architects 5041 Corporate Woods Drive, Suite 200 Virginia Beach, Virginia 23462-4375 Telephone: 757-222-2010 Fax: 757-222-2020 http://www.cmssarchitects.com

LEASING AND PROPERTY MANAGEMENT AGENCY

Drucker & Falk, LLC 9286 Warwick Boulevard Newport News, Virginia 23607 Telephone: 757-247-3429

PUBLIC OFFICIALS

Norfolk Redevelopment and Housing Authority 201 Granby Street, 12th Floor Norfolk, Virginia 23510 Telephone: 757-423-1111 http://www.nrha.norfolk.va.us GENERAL DESCRIPTION

Situated on the waterfront of the Elizabeth River, downtown Norfolk has reached the pinnacle of its revitalization. In the last ten years, the city of Norfolk and the Norfolk Redevelopment and Housing Authority (NRHA) have committed time and money to create a vibrant downtown near the region’s financial district. Treating the redevelopment of the downtown as a business venture, the city sought to create a new image for the area as a lively place to live as well as work. The city government found its niche by marketing Norfolk as the “downtown” for the surrounding Hampton Roads region, made up of several distinct cities and counties, each lacking a central core.

Capitalizing on its waterfront real estate, the area includes several new and revived projects. Waterside, a Rouse development similar to HarborPlace in Baltimore, Maryland, is situated on the water, near a marina and ferry docks, and has repositioned itself as a dining and entertainment venue. A nearby park hosts festivals, art shows, and local entertainment events. Nauticus Naval Maritime Center, a naval maritime museum, has found new life in the exhibition and docking station of the naval battleship U.S.S. Wisconsin. The historic retail core on Granby Street has been revived to include new and existing retail, existing office space, and some of the area’s best restaurants. Tidewater Community College has woven its new campus into the current building fabric, bringing both people and activity downtown at all hours. The three-year-old MacArthur Center, a $300 million Taubman mall anchored by Dillards and Nordstrom, provides the region with its first upscale shopping mall. Finally, the area’s many cultural and sporting venues, such as Chrysler Hall, the Virginia Stage Company, Harbor Park (AAA stadium), and minor league hockey (affiliate of the National Hockey League’s Chicago Blackhawks), combined with the new retail and current office employment, have set the stage for Norfolk to become a regional downtown.

Housing was the last piece of the downtown development puzzle and is critical to achieving the vibrant “24-7” community that the city and NRHA desired. In the early 1990s, Collins Enterprises was interested in developing in Norfolk after the company’s representatives attended a conference on water-oriented communities. Collins Enterprises, an integrated real estate company that owns, manages, develops, and acquires residential, mixed-use, and commercial properties, previously focused solely on development in the New York metropolitan area, but now has a growing national presence and is targeting markets in the northeastern corridor and the Southeast, particularly the Tidewater area, where Norfolk is located. The company believed that Norfolk had the potential for development in its focus area, with a pro-business municipal government, financial incentives, and an active redevelopment plan in place.

THE SITE AND ITS SURROUNDINGS

Developed on city parking lots in the Freemason neighborhood, the Heritage is two blocks from the riverfront. To the north lies historic Freemason Street, a turn-of-the-century cobblestone street with Victorian townhomes renovated into offices, condominiums, and single-family homes. North of the development across Brambleton Avenue are the Chrysler Museum, the Harrison Opera House, and the Ghent neighborhood, which has the largest concentration of Victorian townhomes in the area. To the south are Freemason Harbour Condominiums, the Nauticus Naval Maritime Museum, and PierPointe Condominiums, another Collins Enterprises development. To the west of the Heritage apartments is the waterfront of the Elizabeth River, which leads into the Chesapeake Bay. To the east is Boush Street, which the city of Norfolk recently redeveloped from a busy road into a traffic-calming boulevard and pedestrian walkway. The apartments create a buffer between the residential development of the Freemason district and the commercial development across Boush Street.

PLANNING AND DESIGN

The Heritage was developed upon three parking lots spread across three blocks in the Freemason Harbour neighborhood near the waterfront. Encompassing an entire city block, each three- or four-story building has approximately 60 units. Parking comprising covered and open spaces is provided in gated lots in the courtyards of the U-shaped buildings as well as on the street.

The apartments’ urban architectural style blends well with the surrounding area. Classic details on the brick exterior include pitched roofs, bay windows, wood accents, and French balconies with wrought-iron railings and porches. Trash containers are behind closed doors in the courtyards, and compressors and other mechanical equipment are hidden on the roofs. Units are designed with an entrance on one end and large windows or French balconies on the opposite end to catch breezes from the water. Some units have cathedral ceilings, gas fireplaces, and full balconies. All units feature Berber carpeting, ceramic tile entries, soaking tubs in the master bathrooms, and monitored security systems.

Apartments are a mix of one-, two-, and three-bedroom units, with 27 varieties of floor plans. First-floor units are smaller than second- through fourth-floor units in order to provide space for covered parking. On College Place, the ground-floor level of two Heritage apartment buildings houses a dentist’s office, a coffee and chocolate shop, an upscale delicatessen and wine store, and an electrical lighting consultant. The deli is a lively spot to have coffee or a meal, with outdoor seating for patrons who choose to sit with their dogs. Such street-level commercial activity benefits both the developer and the residents. The retail and office uses bring people to the apartment buildings, which draws more drop-in visitors and helps to rent the apartments.

The developers and architects had several design and construction challenges to address. At one point in the city’s history, there were gas stations and a mechanic’s shop located on the land. In removing the parking lot pavement to construct the buildings’ foundations, the developers found concrete bunkers and brick cisterns, and intact gas tanks. The developers had to carefully remove these items according to state and federal guidelines. The NRHA provided assistance in dealing with the obstacles encountered in the underground excavation and credited the removal costs against the land value of the purchase price.

The third land parcel had a floodwall that was incorporated into the building’s design as a ground-floor entry plaza. Designing around the floodwall incurred additional expense because of the building space lost to the floodwall. The expense of the lost space and the steel framing as support for the apartment above the plaza was reimbursed as extraordinary costs by the NRHA.

Sound control was a concern for the developer. Steps were taken to ensure that the apartment buildings had extra-thick walls and that studs and electrical outlets were staggered. Plywood floors and Gypcrete deadened the sounds between upper and lower units. Finally, the developer inspected each unit before the walls were sealed with drywall to ensure that the insulation covered all the small spaces between the walls and around the electrical outlets.

The Heritage features urban amenities, including elevators, covered and open parking, and luxury finishes in each unit, according to Arthur Collins II, principal and CEO for Collins Enterprises.

FINANCING AND PUBLIC APPROVALS PROCESS

The Heritage at Freemason Harbour is positioned as an upscale apartment community, the first of its kind in the Norfolk marketplace. The lack of comparable new projects in the area as well as the high pro-forma rents projected for the development made obtaining financing for the project difficult, as this was a pioneering project for the area. Initially, construction financing was sought only from local lending institutions. Two deals that were well along with local banks fell apart when they were acquired by larger out-of-state banks. Ultimately, Collins brought in Bank Boston, its lender on several Connecticut developments, to provide the construction financing for the Heritage.

The developer purchased the land for the apartments from the NRHA. Together, “Collins and the NRHA structured a deal so that the city provided the major streetwork, water, and sewer [systems] and Collins provided the landscaping and lighting,” states Steve Cooper, assistant executive director for development operations with the NRHA. Collins’s expenses were credited against the purchase price. The city spent approximately $5 million to upgrade the water and sewer systems in the area, improved nearby Friendship Park, and added other landscaping to the surrounding neighborhood.

The NRHA assisted the developer by smoothing the way with the neighbors by supporting the apartments’ construction and facilitating meetings to discuss concerns. The surrounding Freemason Harbour neighbors had three main concerns: density, parking, and ensuring that the project’s design fit with the existing neighborhood, with little use of vinyl siding. Neighbors were concerned that the use of such siding would be out of character for the area. The developer worked with the neighbors and the NRHA to ensure that the exterior materials were attractive. Brick facing was chosen because of its durability and low maintenance, and the use of vinyl siding was restricted to the interior courtyards of the buildings. The U-shape of the apartment buildings mitigated the project’s density and helped to screen the parking from view of the street.

MARKETING AND MANAGEMENT

Collins Enterprises used a historic home in Freemason Harbour owned by the Urban League to serve as a marketing and preleasing center. As the first upscale rental community in downtown Norfolk, the Heritage was provided with plenty of free publicity by the local newspaper, which wrote a series of ten articles on the changes in downtown Norfolk just prior to the development’s opening. Collins also placed ads in the area’s rental publications and informed members of the local corporate market and the area’s largest employers in the hope that they would pass the information on to their staff and relocation representatives.

Drucker & Falk, LLC, a regional owner and manager of approximately 16,000 apartment units in the Southeast, manages the property. The firm offers residents a variety of services, including Federal Express delivery and pick-up, dry cleaning delivery, a community room, a fitness center, high-speed Internet access, and a house account at the local deli. For corporate renters, housekeeping services are provided on a weekly or monthly basis and are billed along with rent.

The apartment community provides a common meeting room with a kitchen that residents use for small parties and card games. There is a small exercise room on the premises and an extensive YMCA facility within walking distance. However, Jack Pope, project manager, feels that Heritage renters are not expecting the amenities such as a large workout room or pool often found in suburban apartment complexes. Instead, residents are attracted to the urban setting and ability to walk to work, restaurants, shopping, and cultural amenities—all the benefits of living in downtown Norfolk.

The Heritage at Freemason Harbour has been a success. The apartments are 100 percent leased with a monthly waiting list. Each unit was leased as soon as it became available. Current rents range from $1,000 to $1,700 a month and 75 percent of people who live at the Heritage make more than $50,000 a year. The Heritage’s luxury design features and urban amenities provide a community that attracts renters.

EXPERIENCE GAINED

The development is a success for a variety of reasons, including the effectiveness of the public/private partnership with the city of Norfolk and the NRHA. The NRHA showed its interest in and support of the project, and the city helped pave the way with the neighborhoods. However, it takes both patience and determination to work with the city on a redevelopment project, as a relationship between a developer and a city has to be cultivated over time. Art Collins personally gathered market research for the project to find out that local condominiums were selling at prices comparable to required rents at the Heritage. He confirmed these findings by assembling a team of research, marketing, leasing, and building specialists. The Heritage at Freemason Harbour is the first product of its type in the area in the last ten years. Collins Enterprises knew that, along with the development’s other amenities, small additions like elevators and gated parking spaces that were not present in other communities would help attract tenants. A beneficial structure was created through the public/private partnership involving the city of Norfolk, the NRHA, and Collins Enterprises. Since the development was a new product type for the market, the Heritage at Freemason Harbour was phased to guard against high vacancy during lease-up. PROJECT DATA LAND USE INFORMATION Site area (acres/hectares): 4.34/1.75 Total dwelling units planned/completed: 184/184 Gross density (per acre/per hectare): 42/16.8 Average net density (per acre/per hectare): 42/16.8

LAND USE PLAN Acres (Hectares) Percentage of Site Attached/multifamily residential 4.34 (1.75 ) 100

RESIDENTIAL UNIT INFORMATION Unit Unit Size Unit Size Number of Units Range of Type (Square Feet) (Square Meters) Planned/Built Current Rents One bedroom 778+ 72.2 42/42 $945-1,080 Two bedrooms 1,183+ 109.9 101/101 $1,230-1,565 Three bedrooms 1,510+ 10.2 41/41 $1,400-1,730

OFFICE INFORMATION Percentage of NRA occupied: 100 Number of tenants: 3 Average tenant size: 1,500 square feet (139.35 square meters) Annual rents: approximately $12 per square foot ($123.03 per square meter) Average length of lease: 3 to 5 years Typical terms of lease: triple net

RETAIL INFORMATION Tenant Number of Classification Stores Total GLA (Square Feet/Square Meters) Food service 1 800/74.32 Convenience 1 3,000/278.7 Site acquisition cost: $1,660,121 Site improvement costs: $1,310,773 Construction costs: $13,673,377 Soft costs: $2,420,286 Total development cost: $17,753,784

DEVELOPMENT SCHEDULE Planning started: June 1997 Site purchased: March 1998 Construction started: June 1998 Phase I completed: March 1999 Project completed: June 2000

DIRECTIONS

From Norfolk International Airport: Take I-64 toward Norfolk, then I-264 to Norfolk, and exit at Waterside Drive, which becomes Boush Street. Turn left on College Place.

Driving time: 15 minutes in nonpeak traffic.

Leslie Holst, editor, Development Case Studies Leslie Holst, report author David James Rose, copy editor Joanne Nanez, online production manager

This Development Case Study is intended as a resource for subscribers in improving the quality of future projects. Data contained herein were made available by the project's development team and constitute a report on, not an endorsement of, the project by ULI-the Urban Land Institute.

Copyright © 2001 by ULI-the Urban Land Institute 1025 Thomas Jefferson Street, N.W., Suite 500 West, Washington D.C. 20007-5201 The urban architectural style of the Heritage at Freemason Harbour blends well with the surrounding area. Classic details include the brick exterior, pitched roofs, bay windows, wood accents, and French balconies with wrought-iron railings and porches. Apartments are a mix of one-, two-, and three-bedroom units, with 27 varieties of floor plans. Shown here are the interior courtyards, which provide covered parking, walkways to front doors, and elevator access in the central cupola. On College place, the ground-floor level of two Heritage apartment buildings houses the entrance to the apartment office, a dentist's office, a coffee and chocolate shop, an upscale delicatessen and wine store called the Downtown provisions Company (shown here), and an electrical lighting consultant. The shops and office bring people to the apartment buildings, which creates more drop-in visitors and helps to rent the apartments. The apartment community provides a common meeting room with a kitchen that residents use for small parties and card games. Site plan.