The soft market for new homes is causing developers of Kiley Ranch Communities in Spanish Springs to change direction for a while.
Paul Curtis, chief executive officer for Kiley Ranch Communities, says developers of the 800-acre master-planned community have put the brakes on homebuilding and instead shifted to developing infrastructure that will be necessary for the entire project.
Two upscale condominium projects Caviata and Waterstone on Sparks Boulevard just east of Pyramid Highway now are planned as rental properties instead.
Both were projects of Pacific West Companies of Reno.
"PacWest chose to sell Caviata and Waterstone to an investor because they did not get the sales absorption they counted on," Curtis says.
The new owner will lease the combined 400 units until the market turns around. The business model under which Pacific West was operating made it too difficult for them to continue. Meanwhile, Caviata is nearly finished, and Waterstone should be completed in a couple of months.
Creeks Crossing, one of two villages sold to Lennar Homes, also has been impacted. While Lennar still owns the two projects, work on Creeks Crossing has slowed down dramatically. The market downturn does not change the direction of the Kiley Ranch development team. Curtis says the original concept remains the same to develop approximately 650 of the 800 acres into community homes. The rest will be devoted to commercial office, retail space, walkways and parks.
Although no one foresaw the damage the subprime mortgage collapse and other housing woes might have on the residential sector, Curtis says any developer worth his salt must expect to see some challenges ahead.
"When we began this a few years ago, we knew there would be ups and downs," he says. "What we envisioned then and still do today is a mixed-use master plan community that creates jobs, opens up more retail, and delivers a pedestrian-oriented environment."
Homebuilding will bounce back, Curtis says. In the meantime, the emphasis at Kiley Ranch will turn toward developing infrastructure essential to future office and retail development.
"As soon as we flip the switch on infrastructure, that's when people know you are serious," says Curtis. "Pretty soon we will begin to market heavily the business opportunities that will attract those employment generators."
One person Curtis is counting on to provide support in that regard is Dick Bostdorff, a longtime Reno businessman who recently returned from a stint as senior vice president who oversaw the merger of Airborne Express and DHL. Bostdorff currently serves as chief operating officer for Kiley Ranch.
Curtis says the company is presently working with its market strategists "to understand the next generation of residential products that are going to be attractive and affordable in this marketplace." Meanwhile, the company has turned its attention to preparing land east of Pyramid Highway and north of Sparks Boulevard for commercial development.
"We are in escrow right now to sell about 52 acres of land to a retail developer who will develop the shopping center," says Curtis. "I came to the enlightened conclusion that I am not a retail developer, but a land developer, so we have brought in a national company to move forward on this component of the project."
Kiley Ranch hired Peavine Construction of Sparks to grade the 52-acre site and has moved about a million yards of dirt in the last 90 days, Curtis says. Later this fall, improvements are expected along the east side of Pyramid Highway. Construction then will begin on David Allen Parkway. There will be two arterials coming off of Pyramid.
All of this infrastructure, says Curtis, should be completed by October or November of 2008. While new commercial is being readied, Curtis thinks the market will begin to see new homebuilding underway although probably not at the same scale nor under a business model that obviously caught national publicly-held builders by surprise.
"The motivations that a public homebuilding company has are contrary to the kind of entrepreneurial market-driven objective that a private, smaller homebuilder has," he says. "While this downturn creates problems for the public companies, it creates opportunities for others. In that regard, we are very confident. The correction was a necessary thing."