By Meghan Hall
SummerHill Homes is heading into 2019 full steam ahead, with construction finally underway on its 27-acre development in the heart of Santa Clara beginning at a time when many real estate professionals — and especially developers — are closely watching the market for evidence of a market slowdown. Called Nuevo, the community is what SummerHill Homes has termed an “urban town,” complete with 40,000 square feet of retail and restaurant space, and both for-rent and for-sale residences.
“I truly think it’s unique, but not because we are developing it,” said Robert Freed, chief executive officer of SummerHill Homes. “It’s unique to be able to have such a large piece of property in this area. To get 27 acres is unprecedented.”
According to Freed, SummerHill Homes began acquiring the parcels, located at 3505 Kifer Rd., back in 2012, before entitlements for the land were even proposed. The home developer then negotiated with seven different sellers in order to create a contiguous, self-contained site and paid close to $140 million for the all of the property.
In all, the development will have 537 for-rent apartments, 41 single family homes called E-States, 114 townhomes called E-Towns and 176 townhomes called The Terraces. Over six acres of parks and outdoor amenities are planned throughout the neighborhood, while a 4,000 square foot community center, outdoor reading rooms and sports courts will also be part of the development. The for-sale units range from 1,268 square feet to 2,990 square feet and will be priced between $1.1 million to around $2 million. Freed said that because of the different product lines incorporated into the development, the decision was made to market the development as an urban town, because the project is not quite as urban as an infill, mixed-use development, or as suburban as a multiple-community master plan area.
“A typical mixed-use project, at least in my vernacular, is associated with a combination of land uses and often it is associated with a purer urban city environment versus where we are, which is transitioning from residential to urban,” explained Freed. “The urban town was really a reaction to the fact that it is an unprecedented scale at a truly unique location. It has the feeling of a small little town, and so that’s how we ended up branding it.”
All four housing products are currently under construction, said Freed, but SummerHill sold the condominium portion of the site to Toll Brothers, who is developing their portion of the property simultaneously with SummerHill’s.
“That strategically was good, because they are a good name and a good partner,” said Freed. “They’re quality in their brand. At the same time, it mitigated our risk, because we also had started construction on the other three product lines. It’s full steam ahead for us.”
Overall, SummerHill Homes decided to diversify their product offerings, because it was not only in line with the City’s goals of providing more housing to keep up with job growth, but it made the project more economically viable. According to Freed, SummerHill Homes worked closely with the Santa Clara city officials through roughly a dozen iterations of the project, each with varying densities and goals in mind.
“The City has been focused on trying to provide an adequate housing supply to meet with the demand generated by what is, fortunately, a lot of great job growth,” said Freed. “We have a pretty good handle on what the consumer wants, and we wanted to find that balance between the demand for rental and the demand for for-sale housing.”
That demand is something that Freed believes won’t wane any time soon, even though it will take several years to complete Nuevo’s buildout. SummerHill Homes anticipates that the development will sell out in three to four years, and that job growth will continue to drive housing demand in the Bay Area, and especially in Santa Clara, where major Silicon Valley employers such as Intel, Apple and Google are located.
“This was ground zero for a successful housing project,” explained Freed. “We started looking in this area knowing the City of Santa Clara had a long-term plan of redevelopment of this area…A jurisdiction that was willing to engage in the planning process on this site, with a great proximity to jobs was key.”
The City of Santa Clara had not yet solidified its plans for the site before SummerHill Homes approached them with their proposal. However, SummerHill’s commitment to the project and its willingness to drive the entitlement process convinced the City to accelerate its planning process for the area. Now that the project has finally broken ground and is coming to fruition, Freed anticipates sales of the condominiums, townhomes and single-family homes to begin in the near future.
“Given the demand that we’re sensing, we will start selling shortly,” said Freed, who believes that SummerHill will have no problem selling its product. “We’re going to have a good level of demand in 2019, because of the historical relationship between job growth and housing. I think it is beneficial if there’s others besides me who focus in on that, because confidence will drive those sales. We’re demonstrating our confidence in these projects, and I think the consumer will be doing that as well.”