Developer does land-office biz in… land

As seen in Crains Detroit Business
By Jennette Smith

Franklin Property’s role in home-building totals $200 million

With 11 new or recently completed residential developments scattered around the state, Franklin Property Corp. is leading about $200 million worth of home construction. The Farmington Hills-based developer’s latest project is in Novi, where Franklin Property sold 36 home sites to Hometowne Building Co. for development. Construction on the $15 million Summerlin of Novi development, off West Park Drive between 13 Mile Road and Pontiac Trail, is expected to start in July. Farmington Hills-based Hometowne is building homes priced from $390,000 to $500,000.

Franklin typically assembles land and then sells lots to residential builders, while maintaining architectural oversight. In some cases, such as projects in northern Michigan, it is also the builder. Franklin’s developments are spread out across Michigan, from Augusta Township in Washtenaw County to Boyne City. Some of the 11 projects are nearly complete, while others are to be built out during the next few years. Franklin President Andrew Milia said the common thread between the locations is that they are considered either in-fill or growing areas with good schools and name recognition. “We pick communities that are established,” he said.

Franklin Property is 10 years old and solely owned by Milia. Franklin creates neighborhoods in the range of $600,000 to $1 million and $200,000 to $400,000. Lately, the $200,000 range has been in demand more because those homes are still attractive to buyers, Milia said. Rising land prices, however, sometimes make it difficult to make the math work. Rising prices for the developer and builder get passed to home buyers.

In Farmington Hills, for example, Milia said he has future in-fill home sites that are likely to be developed with more expensive homes. Franklin works with a variety of builders on its projects, including Hometowne, Robertson Bros. Co. in Bloomfield Hills, Adrian Building Co. in Rochester Hills and Riedel Custom Homes in Chelsea.

Patrick O’Leary, president of Hometowne, said Franklin Property has a sharp eye for land and is easy to work with. Hometowne is the builder on five Franklin projects. Besides the new one in Novi, the developments are in Ypsilanti Township, Farmington Hills, Augusta Township and Van Buren Township.

Franklin competitor Centex Homes is also bullish on its land purchases and home-building efforts across metro Detroit. Michigan division President Tim Stapleton said that so far, he hasn’t competed with Franklin for land purchases. But the company is always looking for land to add to its portfolio, he said. Centex Homes is a division of Dallas-based Centex Corp. (NYSE: CTX). “In good areas, land is difficult to find and getting more expensive,” Stapleton said. “Right now it’s getting very competitive.” Milia said the northern Michigan communities where Franklin is the land owner and builder were attractive because there is an increased demand for permanent housing, in addition to vacation housing.