McShane and Phillips Development & Realty
Patience and persistence in finding funding for a large apartment development near the University of North Carolina Charlotte is paying off for the project’s developer. Tampa-based Phillips Development & Realty broke ground in September 2011 on the $28 million Phillips Mallard Creek class A+ apartment community at 655 West Mallard Creek Church Road in Charlotte.
The complex is located within walking distance of the University of North Carolina at Charlotte and minutes from Carolina’s Medical Center and University Research Park. The property also provides close proximity to key transportation corridors including Interstate 85, Highway 29, Interstate 485 and Interstate 77, and the future Charlotte blue line light rail stop. The 321,582-square-foot complex will feature a total 300 units with 11 three-story buildings plus a clubhouse on a 30-acre lot.
General contractor McShane Construction is leading the project, which is on track for a May 2013 completion. Initial occupancy on some of the 300 units in the 12-building complex will begin in July 2012, Development Manager Ryan Hartney says.
The project was conceived before 2004 and was planned to begin in 2008, when the national housing market was affected by the recession. After losing its initial financing, Phillips secured a loan for Mallard Creek through CBRE with the U.S. Department of Housing and Urban Development’s 221(d)4 Program. A 40-year fixed non-recourse loan backed by HUD was closed in 2011. This project will be market rate and is not part of any subsidized program.
“The biggest challenge with respect to the project as a whole is keeping everyone together, on the same page and shooting for the same target,” Hartney says, noting that the HUD approval process delayed groundbreaking by more than 18 months as the HUD 221(d)(4) Program was basically the only form of financing available over the past three years. Many developers like Phillips submitted applications and created a large backlog in the HUD system and its processing of the loan, the developer says.
“Getting this deal closed and putting the project together was the most challenging part of getting this project to where it is today,” he adds. “One thing we’ve really learned from this project is to keep your head up at all times. It was important for us to stay positive, keep our nose to the grindstone and make this happen.”
Phillips Development, founded in 2001, builds and owns residential properties in the southern United States. Its projects are generally located near healthcare properties and retail districts. “We’ve found that second-tier markets near major city districts have been successful for us in the past and will likely be successful for us in the future,” Hartney says.
The 300 one to three-bedroom units in the 30-acre complex are targeted for rental to UNC-Charlotte students, staff and faculty, as well as employees of the Carolina Medical Center and University Research Park.
With financing now secured, foundation and slab work is now fully underway. McShane in December began foundation work on two of the complex’s 12 buildings, with concrete slabs poured on two additional buildings.
The 11 apartment buildings on the site will feature a stick frame construction with Hardie siding. The 12th building – a clubhouse – will feature similar materials as well as brick. The sizable rental development will offer one-, two- and three-bedroom apartments with varying floor plans. Individual apartment finishes will incorporate granite countertops, high-end 42-inch cabinetry, vinyl plank and ceramic tile flooring and stainless steel Energy Star appliances.
The clubhouse will offer residents a number of amenities including a resort-style pool, a media room, a sports bar, an all-purpose room and study areas. Most of these areas will feature LED lighting.
The surrounding site will include grill and picnic areas. The complex will also offer tenants walking and biking trails, pet exercise area, carwash, carport parking structures, and nine garage buildings. “The layout of the site will highlight a creek running through the property,” Hartney says. “We want to feature the natural beauty of our surrounding property and add value to our residents through that.”
Phillips self-performs landscaping on its projects. “We’ve found ways to save on our operating expenses by incorporating more plant life that grows naturally, doesn’t require as much irrigation and adds a natural value to the property,” he adds.
A Collective Effort
The Phillips Mallard Creek development is the second Phillips project in recent years to be built by McShane Construction. The contractor in 2011 finished work on Phillips Swift Creek, a 196-unit garden-style apartment complex in Cary, N.C.
McShane is headquartered in Rosemont, Ill., with regional offices located in Arizona, California and Alabama. The firm serves several markets, including multifamily, office, healthcare and hospitality.
“I think we bring a lot to the table when it comes to the multifamily market,” Project Manager Dave Blanchard says. “We’ve completed many successful and challenging projects and had many repeat customers, so I think that speaks to our capabilities.”
The contractor used many of the same subcontractors on both of its projects for Phillips. Hartney credited McShane and its subcontractors with their expertise and patience throughout the Mallard Creek project.
“McShane has been great all the way through, and we’ve developed a very good relationship with them,” he adds. “We made this happen collectively.”