Novare's Niche

Atlanta-based Developer Continuing to Expand With Multifamily Projects

By Bea Quirk

Until recently, condo towers have sprouted like mushrooms in cities both large and small across the Southeast and U.S.

But Atlanta-based Novare Group was a pioneer when it began those kinds of projects at the beginning of the decade in its hometown.

"They identified a niche and went after it," says Bill Pinto, COO of Hardin Construction Co. in Atlanta. "They've shown that these kinds of projects can be successful if done right, and so others have tried them as well. They've been a magnet - and certainly changed the face of the city."

Novare is now starting to change the face of other Southern cities as well with ambitious growth plans. In 2006, the private real estate development company broke ground on five condo projects:

• In Atlanta-3630 Peachtree Road, with 181 residences on 25 floors;
• In Nashville-Encore, with 333 units on 20 floors;
• In Austin, Texas-360, with 44 floors and 430 units); and,
• In Tampa, two: the Element, with 395 units and 34 stories, and SkyPoint, with 383 condos.

Also, in Charlotte, work is continuing on the 386-unit, 36-floor Avenue.

Founded in 1992, Novare is currently developing approximately 5,000 residential units. It started four condo towers in 2004 and five in 2005, and has plans for eight starts this year, says Judd Bobilin, its executive vice president and chief development officer.

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Novare is riding the wave of what Bobilin calls "the great urban expansion," focusing on second-tier markets with untapped demands for downtown condos. Urban condo towers have been its exclusive project type since 2000; before then, it also did adaptive re-use and office projects.

Novare focuses on its core residential market of 25- to 34-year-old young professionals.

The first move out of Atlanta was to Nashville, where construction began on Viridian in 2004. It was completed last year, and all the 305 units were sold a year before its completion. At the recently announced Encore, also in Nashville, half the units were sold in five weeks.

Bobilin says that, typically, cities have a 1:7 or 1:9 ratio between downtown workers and residences. But in Nashville, the ratio was 1:19. "There was obviously a pent-up demand," he adds.

But Novare doesn't go it alone in these new cities. "We find a local developer and partner with them," Bobilin says. "These partners have a history in the market and knowledge of how it works. It mitigates our risk."

In Nashville, that partner was Tony Giarratana.

Novare looks at other factors as well, such as an area's job and income growth. Also, the developer looks for cities with a strong base of young professionals that is at least equal to the national average of 14.3% of the population.

Bobilin says these young professionals are also looking for interactive experiences, so the projects include an amenity deck with a pool and fire pit, fitness center and clubroom with a large plasma screen, terminals with Internet access and a place to play video games.

Novare retains ownership and manages its properties, so, "We constantly interact with our customers," Bobilin says.

Typically, about 65% of the units have one bedroom, and the rest have two. The average size is only about 900 sq ft. Most residents are first-time homebuyers, and because of their age, their parents are often involved in their decision.

So, Bobilin says, units feature granite countertops, Whirlpool appliances and Kohler fixtures "to pass the parent test."

Prices vary from city to city, but generally range from $180,000 to $350,000, with an average price of $250,000.

Novare's towers also feature ground-floor retail. "People want to live where they have access to great retail right below them," Bobilin says. "Retail is a significant portfolio for us."

When Novare included 40,000 sq ft of retail in its first condo tower, the 498-unit Metropolis in Atlanta, chains shied away. They preferred the standardized sizes and layouts available at malls or other suburban locations over the unique features of an urban mixed-use project.

But that's changing. "Chains now see the urban core as an opportunity," Bobilin says. "They're seeing a huge demographic shift, and they are willing to adjust their plans to fit the space."

Most of Novare's design work is done by three firms: Smallwood, Reynolds, Stewart, Stewart; The Preston Partnership; and Rule Joy Trammel + Rubio, all of Atlanta. Most of the construction contracts are with Atlanta-based R.J. Griffin & Co., Brasfield & Gorrie of Birmingham, Ala., and the Atlanta office of Manhattan Construction.

Atlanta-based contractor R.J. Griffin & Co. has been building condo towers with Novare since it started with the Metropolis in Atlanta, a project it completed in 2002. Its most recently completed project is the Viridian in Nashville, and it's currently constructing the 360 in Austin, Texas, the Viewpoint in Atlanta, Avenue in Charlotte and the SkyPoint in Tampa. "We are in a partnership with them - they're not just a client," says Griffin senior vice president Mike Bartlett.

Bobilin says Novare will stay in the Southwest and Southeast and will remain focused on first-time buyers. But it is expanding its product mix. It has recently added a new concept called Twelve, which includes a luxury condo tower built over a several-story hotel. The hotel will provide services - such as housekeeping, food service, laundry and concierge - to the condo residents. The developer completed Twelve Atlantic Station in late 2005, and is now constructing Twelve Centennial Park, also in Atlanta. Additionally, construction on Twelve Charlotte is expected to begin in the first quarter.

In its second new product offering, called Midwave, Novare is responding to the growing number of empty nesters who are choosing an urban lifestyle but don't want to give up size or first-class touches.

At Gallery in Atlanta, one of the first of these new projects, the average size of units is 1,740 sq ft, and 95% of them feature two or three bedrooms.