Knightdale developer keeps project alive

KNIGHTDALE -- It's hard not to think of the housing bust when you first visit the Poplar Creek Village subdivision off Poole Road.

With only a handful of homes built on the community's 181 lots, the project resembles other forsaken residential projects whose future remains bleak.

That patina of failure is something David Menaker, Poplar Creek's developer, is working hard to overcome.

"You've got to get past that image," he says. "You look (at those other developments) and it's the end of something, where in our case this is the beginning of something. We have a vision. We have a place that we want to get to."

His vision includes a subdivision organized like a European village, with larger single-family lots on the edges and more dense patio homes in the center surrounded by community gardens.

There also are plans for a mountain bike trail and a 214-unit apartment complex at the entrance to the subdivision, just east of where Poole Road intersects with Hodge Road.

As a little guy in a business increasingly dominated by national behemoths, Menaker faces stiff challenges. But his project remains alive at a time when many other developers in his situation have either walked away or had their projects taken from them.

Menaker and his partner, Wayne Adams, built a number of local apartment complexes before forming their own residential development company, Holly Homes, in 2003.

The company's first big project was the Hunter Glade neighborhood in Holly Springs. After the company built a few homes, national homebuilder Lennar swooped in and bought the remaining lots.

"We took that money and rolled it into (Poplar Creek)," Menaker says. "Right at the beginning of the wrong time."

Holly Homes ended up borrowing about $5.5 million from Crescent State Bank to develop the 82-acre site. Site work included spending more than $1 million to connect the project to Raleigh's water and sewer system.

At one point, Lennar was interested in buying the property and turning it into an active-adult community for seniors. But Lennar couldn't make the project work within the confines of Knightdale's planning ordinances.

Building in a batch

The project got a major boost when Mungo Homes, a privately held South Carolina builder, put 50 lots under contract. Mungo paid $344,000 in August for eight lots and is now constructing speculative homes on them.

That is more spec homes than Mungo typically puts up at one time, but Division President Geoff Shiley said in a neighborhood like Poplar Creek, you need to show people you're committed.

"We've got to show people that we're going to do what we say we're going to do, and that's gotten harder," Shiley said. "People are certainly skeptical that we're going to be able to perform. But we've got a good track record in the neighborhoods we're in, and we're in good financial shape."

Mungo's homes will be priced from $190,000 to $250,000 and will range from 2,300 square feet to more than 3,200 square feet.

The builder has the right-of-first-refusal to take the remainder of the Poplar Creek lots, and Menaker said Mungo's presence has brought stability to the project.

A change of lender

Menaker said the project has also been helped by having a local community bank as its lender. But that recently changed.

Last month, a New York firm, Hudson Realty Capital, bought the debt on the property from Crescent, which was acquired last year by Piedmont Community Bank Holdings.

The Holly Homes loan was one of several real estate loans Hudson purchased from Crescent.

Menaker has spoken to his new lenders, and he said they expressed interest in working with Holly Homes on the project.

Poplar Creek faces competition both from the existing home market - where prices continue to fall - as well as from several newer nearby subdivisions, Churchill and The Preserve at Rockbridge to name two.

Menaker is counting on buyers being drawn to both his vision for Poplar Creek and the development's proximity to U.S. 64/264. Instead of viewing his company's size as a liability, he prefers to view it as an asset.

"We're here every day," he said. "We don't just drive by. This isn't one of our 14 investments."