This month, Centex Homes signed a contract to buy an 11-acre site next to the new, $100 million Music Center at Strathmore from the American Speech-Language-Hearing Association (ASHA). The deal upset Strathmore officials, who feared losing a popular outdoor concert site. But for Centex, nabbing the ASHA parcel was another coup in its aggressive strategy to acquire in-fill sites in Montgomery County.
With large parcels of land for new housing growing more scarce in Montgomery and other parts of the Washington area, Dallas-based Centex and other national developers are going after smaller, higher-density sites closer to Metro stations.
In fact, the Washington region is the site of one of the largest concentrations of national builders in the country, said Boyce Thompson, editorial director of Builder magazine.
"Everything is in-fill," said Howard B. Katz, Centex vice president for the Washington region. In-fill is defined as redevelopment within existing development.
Building on in-fill sites in urban areas often generates more complicated political and zoning demands than erecting a cul de sac on open farmland, said Greg Gieber, a real estate analyst with A.G. Edwards & Sons.
But increasingly, developers are willing to go through the headache in markets such as Montgomery, where high housing costs and traffic congestion fuel demand for smaller units close to public transportation. The buyers are mostly affluent, childless professionals, real estate experts said.
"Competition for these sites is intense," said Tom Bozzuto, president and chief executive of the Greenbelt-based Bozzuto Group, which built housing on a six-acre plot near the Wheaton Metro.
"There is so much capital looking to be invested in real estate" that financing is not a problem, Bozzuto said. A couple of local builders have even built a business around in-fill sites, including Eakin/Youngentob Associates and PN Hoffman.
But as a public company with revenue of $10.4 billion in 2004, Centex has deep pockets to draw on. With the ASHA site, for example, Centex outbid several other unsolicited offers, said Arlene Pietranton, executive director of ASHA.
"Centex as a large public corporation has access to unsecured working capital at lower cost than private builders, which have to convince banks that a project is worthwhile," Gieber said.
What local builders lack in financial capital, they make up for in human capital. "It used to be that local builders were the first to jump on in-fill sites because they were better connected and heard about sites more quickly," Thompson said.
But today, Centex and others have been in the market long enough, their network of contacts is just as good, and they are beating local builders to the bargaining table.
Centex's experience in Wheaton is a case in point. About five years ago, Good Counsel High School officials were looking for land for an athletic field when they were approached by a lawyer they knew about a property in Olney, said school President Arthur Raimo. "Olney was further out than we wanted initially, but he said he knew of a buyer for our site, which turned out to be Centex."
The school agreed to move to Olney and sell its land to Centex and partner John Laing Homes, which plans to build more than 130 residential units on the site.