Residential Real Estate and Housing Starts and Development/Redevelopment and Real Estate & Retail

Developer betting on cottage homes

September 1, 2008

Buyers in Seattle, Milwaukee and even Bloomington have snapped up new cottage homes in developments that turn the McMansion trend on its dormer-decorated head.

But will Indianapolis buyers have a similar appetite for the tiny energy-efficient homes clustered around community greens? A local developer is betting they will.

Casey Land and his Land Development & Building LLC are working on plans to build more than 20 of the homes near the Fashion Mall at Keystone in a project called Haverstick Cottages. Their three-acre site, southeast of Haverstick Road and Sinclair Wood Drive, is just north of a property targeted for a Whole Foods Market and 30 condos.

The developers have not yet filed their plans, but they have met with city planners, who are generally receptive to the idea, and with neighborhood leaders, who aren't yet convinced the cottage concept will work in the area.

Neighbors had supported an earlier plan for about 14 condos on the property south of Our Lady of Peace Cemetery, but they are worried the new, denser plan will add traffic and remove green space.

The property most recently contained one single-family home. But the parcel abuts a property at the northwest corner of East 86th Street and Keystone Avenue where Whole Foods had planned to open a 60,000-square-foot store as part of a mixed-use project by local developer Paul Kite Co.

The Driftwood Hills Neighborhood Association, which lost a court battle over the Whole Foods approval, appeared to have gotten its way after Kite sold the development to the now-defunct Premier Properties USA Inc., which planned to move the grocer across the street. But now Dominion Capital, an Atlanta firm that took the property back from Premier, is hoping to eventually revive the Whole Foods plan.

That would likely bode well for the cottage proposal, which calls for roughly 22 units on 3.3 acres--about double the density suggested by the city's comprehensive plan. The houses would range in size from 875 to 1,600 square feet and feature clusters of detached garages. Land has hired architect Ross Chapin, who has built dozens of cottages in Seattle, to design the project.

Land would not discuss his plans with IBJ, citing concerns that a story could "taint" his upcoming zoning application.

But in July he told The Wall Street Journal that he learned about the small-home trend in an industry magazine and decided to try it out in Indianapolis. He told the paper the nationwide downsizing trend can lead to quality-of-life improvements.

"These days, we drive to the house, open the garage door, go in," he told the Journal. "But it's important to get to know your neighbors. I think people miss that."

Still, neighbors aren't convinced Driftwood Hills is the right place to try out the cottage trend. The site is wedged between the busy thoroughfares of Keystone Avenue, 86th Street and Interstate 465--not exactly the most pedestrian-friendly of Indianapolis neighborhoods.

"We don't doubt this product is successful in resort or walkable communities, but we don't have that here yet," said Karen Hamilton, president of Driftwood Hills Neighborhood Association and an immediate neighbor of the project. "It hurts any neighborhood if something goes in and it isn't successful."

The association is worried about adequate setbacks, buffering and green space. Members aren't sure if Hoosiers will buy a home where they have to walk down a lane to get to their garage. And they want to protect a giant beech tree in the center of the property.

Driftwood Hills hasn't taken a formal position on the proposal but expressed concerns during a preliminary meeting with Land.

Meeting with neighbors and incorporating their feedback is a wise move, said Matt Press, a developer who is building 34 bungalows, four-square houses and cottages on about seven acres in Bloomington's Bryan Park neighborhood.

It took some convincing--of both neighbors and city planners--for Press to win approval for the narrow-grid streets, very small homes with smaller-than-normal setbacks, and driveways on alleys, he said. Key to making the case: Homes in his infill project matched the early-20th-century styles of many others in the area. Connectivity was another factor--there are nine points of entry and exit for the neighborhood.

"When you're doing a cottage development like this, it needs a lot of explaining," Press said. "To a lot of people, it looks like a lot of teeny houses with high density-a lot of people might assume it's for a low-end market."

In reality, Press has commanded an impressive premium for the small homes. He has sold 21 so far, at prices ranging from $189,000 to more than $400,000 for the largest, most customized homes. Four more are under construction and already have buyers.

"Pretty much everyone who's got a TV knows the real estate economy has slowed down dramatically," Press said. "But smaller and compact--New Urbanist-inspired--projects are actually still moving forward."

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