If you were to summarize the recent history of real estate investing, one thing that would be largely absent from the go-go years of the middle of the last decade is patience.
Fueled by cheap credit from lenders, many developers raced to build as much as they could before the music stopped and demand for their properties dried up.
Schrimsher Properties will probably never be accused of being in a hurry. The Orlando, Fla.-based company takes a very deliberate approach to land development, typically doing about one deal a year and sometimes holding on to land for more than a decade before selling.
“Our deal is long-term hold. Be patient. Let the market happen when it happens, and then have something nice available for guys that want to build,” says Steve Schrimsher, the firm’s president.
In recent years Schrimsher, which is owned by Steve and his brothers Frank and Michael, has begun making selective acquisitions in the Triangle. In late 2009, the company paid $4.26 million at auction for about 45 acres off Atlantic Avenue in Raleigh near the Beltline. And last year, Schrimsher paid $6.9 million for 93 acres in the Davis Park development in Morrisville. The land, which has frontage along Davis Drive and Hopson Road, is next to a proposed Triangle Transit rail station.
Schrimsher’s approach is to buy a site and then figure out what the best design standards are for signage, lighting and landscaping the property.
“If you have those standards built in, then you can end up with a very nice product, but it does take a long time sometimes to do it right,” Steve Schrimsher says.
The company rarely does any actual building on the sites it repositions, preferring instead to seek out development partners that share Schrimsher’s vision.
“They’re a highly focused entity that understands what they’re good at, and they don’t deviate from it,” says Marcus Jackson, managing director of investments for Colliers International in Raleigh, which represents Schrimsher in the Triangle.
Because the company often hangs on to land for long periods, it very rarely takes on any debt that might need to be refinanced or paid off before a suitable buyer has been found.
“Most of what we do is all equity because you never know,” Steve Schrimsher says.
As an example, he cites one of the firm’s first deals, the purchase of 400 acres in Orlando near Universal Studios and the Florida Turnpike. It took 10 years to find a buyer for one of the parcels on the site, which is now home to The Mall at Millenia.
It took Schrimsher significantly less time to find a buyer for the property off Atlantic Avenue. In March, it sold a 22-acre parcel for $4 million to Davis Development, a Georgia company that in December plans to begin building a 297-unit apartment complex called The Avenues.
Schrimsher expects the remaining land to be sold to an apartment developer when the market matures.
As for the Morrisville property, Steve Schrimsher said the company is – no surprise – not in a hurry to find buyers for the four parcels.
“It might be like Orlando; it might take us 10 years to find a buyer for the parcels and put together something nice,” he said.
Just in the last month, however, the land has been garnering significant interest from national homebuilders. The property is zoned for 1,950 residential units and 125,000 square feet of commercial space.
Such interest isn’t surprising. Having exhausted most of the inventory of available lots in the Triangle, homebuilders are starting once again to look at raw land. As for Schrimsher, don’t expect the company to alter its approach.
“If you just are patient, and just keep getting up every day doing the right thing, eventually some good things will happen,” Steve Schrimsher says.