CASE 2: GROSVENOR PARK
Clearly, Dubin has done very well for himself in the past, developing over 4,000 units in Maryland. His most recent development, Grosvenor Tower, a luxury high rise, was a massive success. He was able to garner a 98% occupancy rate since opening. The building caters to young professional couples and singles looking to live somewhere nice with commuter access to the metro into downtown Washington. Many of these tenants indicated to Dubin that they enjoyed the area and would one day like to own homes there.
This is where Dubin’s newest development comes into play, a 189 unit community called Grosvenor Park that would serve as single-family bridge homes for young professionals like the ones in Grosvenor Tower. This community would take the young professional demographic from apartment and span the time gaining equity for their “dream home”.
There are many risks associated with this project. First and foremost is the long list of Planning Department requirements, $2.6 million in total including $1 million worth of road improvements. There is also a requirement that 15% of units must be set aside for moderate price dwelling units. These units are built comparable to market, but sold at a fraction of the price. Mortgage interest rates were also relatively high during the time of construction due to a number of economic factors. Dubin is afraid that this financial requirement will drive his prices above market rate, and out of range of his potential buyers. To mitigate these risks, Dubin has come up with the plan of developing in chunks, only building as many homes as could sell in a timely fashion before further development. He also offers a high level of customization in these homes. Purchasers have a chance to have a home that fits their wants at a relatively low cost in what Dubin believes to be a prime location. Dubin also plans to develop the more affordable units after he has established a financial base with the...
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