VCP Success Stories

$22 Million - 1100 Acre Acquisition in Gainesville, GA - PRESS RELEASE

Investors Place Money on Gainesville

Atlanta Business Chronicle - April 24, 2008

A Marietta venture capital firm has purchased nearly 1,100 acres just outside the city limits, betting Gainesville is poised for more growth. Vision Capital Partners paid $22 million for the 1,097 acres, most of which is zoned for single-family and multifamily residential, said Rob Heitner, Vision Capital's managing partner. The company raised its funds from domestic institutional investors, who have asked not to be identified, he said.

Vision Capital plans to rezone 132 acres to increase density and allow for more commercial uses, including some for medical office space, since the land is not far from Northeast Georgia Medical Center. The land also fronts Interstate 985 and has some frontage along Old Cornelia Road. "We'll probably do a mix of commercial, retail, and a range of homes from apartments to condos to 1-acre, $1 million home lots," Heitner said.
For now, however, the plan is to sit tight on the land. Strategically, the land Vision Capital bought "is in the path of growth," said Frank Norton Jr., president of The Norton Agency in Gainesville. "Gainesville is growing. We have a strong business community in northeast Georgia and the strongest wage payer is the Northeast Georgia Health System, which is undergoing a $350 million expansion."

The land "is a good long-term hold," Norton said. Hall County, where Gainesville is the county seat, has seen 29.4 percent population growth from 2000 to 2007, with 180,175 residents as of July 1, 2007, according to the U.S. Census Bureau.

Vision Capital's investments are held anywhere from two to six years, and that's what makes Gainesville an attractive investment, Heitner said. "That property is the only direction you can expand and build more homes on. To the south the property is blocked by the [Lee Gilmer Memorial] Airport." Across the interstate and farther west is Lake Lanier. "It's not ready to be developed yet," Heitner said of the land. "But it's ready to be primed for development."
Even so, it is hard to predict when Gainesville, or any other outlying metro area, may be ripe for development again, said Les Stumpff, vice president of Ryland Homes' Atlanta division. Atlanta's housing market is still slumping, with existing home sales down 26 percent in the first quarter, compared with a year ago. In Hall County that decline was more pronounced. Existing home sales dropped 45.5 percent in the first quarter, compared with first-quarter 2007, according to data from Georgia Multiple Listing Service Inc. Economists and home builders believe Atlanta's housing market will bounce back from this cyclical downturn, but no one is quite sure when that will be, nor how strong the recovery will be. "It's hard to predict what the market is going to look like when it truly comes back," Stumpff said. The market will likely return with lower volume and lower-priced homes, he said. "The growth was so explosive and developers went so far out [in the metro area] to develop lots, I think we are going to be stuck with some of those [excess] lots for a while," he said. "Some of the outlying counties, for us, were the first to dry up."
Ryland's communities in upper Gwinnett County -- which added 168,656 residents from 2000 to 2006 to rank it among the counties with the highest numerical population growth in the nation, according to the U.S. Census Bureau -- even saw reduced demand, Stumpff said.

That's not to say communities in Gainesville and other outlying metro communities aren't popular. Village at Deaton Creek near Gainesville was the top-selling community in metro Atlanta last year, ranked by closings, according to Metrostudy Inc., a residential real estate research firm. Pulte Homes Inc.'s Del Webb brand is building Village at Deaton Creek, an active adult community for people ages 55 and up 40 miles northeast of Atlanta, which opened in July 2006. The community may have as many as 1,250 homes. Ryland is a builder in Heron Bay in Locust Grove in southern Henry County, another master-planned community that was ranked 12th as a top seller by Metrostudy. A lot of master-planned communities have created a desirable destination in areas where there otherwise might not have been demand, Stumpff said. "They create the demand." And some of those top-selling, master-planned communities are out in counties where growth is rapid.

Earlier this year, the Census Bureau named Forsyth, Henry, Paulding and Newton counties in the nation's top 10 fastest-growing counties from 2000 to 2007. Not surprisingly, eight of the top 30 "hot home" communities ranked by Metrostudy are in Forsyth, Henry and Paulding counties. Vision Capital is also hunting for more land in Henry and Paulding for future development, Heitner said. "We do a lot of research and we typically buy raw land within a certain distance of a work center," he said. Vision Capital had been concentrating on south Fulton County in the past few years, and has now turned its attention elsewhere, he said. "We've been buying stuff in Calhoun, Paulding, Henry and now Gainesville," Heitner said. "The fastest-growing communities, that attracts us and our interests."