Living The Live/Work Niche

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For small builders such as Parkwood Homes Ltd. of Gaithersburg, Md., the benefits of being among the first to build live/work units have far outweighed the significant risk of taking on a unique product.

June 01, 2002

 

Small-volume Parkwood Homes earned a place among the big boys by building these live/work units at Kentlands in Gaithersburg, Md.h

 

For small builders such as Parkwood Homes Ltd. of Gaithersburg, Md., the benefits of being among the first to build live/work units have far outweighed the significant risk of taking on a unique product.

Four years ago, Parkwood owner and CEO Steve Wilcox was one of the few takers on an offering of 13 live/work lots in Kentlands, a groundbreaking New Urbanist community in Gaithersburg. He saw the units as an opportunity to distinguish the company from the pack.

Today, Parkwood is a live/work expert. Despite its size (about 40 closings per year), it has been invited to buy single-family lots in master-planned communities including Stapleton in Denver and Urbana Fields in suburban Washington. Here are Wilcox’s live/work basics:

 

 

 

 

  •  Two-thirds of the buyers are business owners who want to occupy the storefront and lease the floors above. The rest are real estate investors who can turn a profit in three ways: renting a third-floor, one-bedroom apartment; renting second-floor office/retail; and renting first-floor retail. Basements also figure into the deal for offices.

     

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  •  Stick to a basic floor plan on commercial levels. Leave it to buyers to make alterations on their own. Commercial codes typically add 30% or more to the cost of construction, so allowing changes is a money-losing proposition.

     

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  •  City officials are often a builder’s best ally. They are often as interested in seeing the concept work as you are and become problem solvers.

     

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  •  When developing pro formas, build in the necessary time and costs required to build commercial units.

     

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  •  Contrary to conventional wisdom, live/work units are profitable when priced right. The same three-floor units Parkwood began offering in the high $300,000s eventually sold in the mid-$500,000s.

    Beginning with those first 13 units, Parkwood has built and sold 46 live/work units, 30 in Kentlands and 16 in a neighboring New Urbanist community called Lakelands.

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