Infill is often the way to go for new construction

Today, homebuilders look at an dilapidated old house, abandoned business structure or small parcel of land in a new way - as pockets of opportunity.

The days of homebuilders developing large swathes of raw land - buying suburban farms and building entire subdivisions - is expensive and increasingly rare. Most builders now focus on infill sites and teardowns for smaller construction projects.

Infill development is new construction on vacant or underused lots in established neighborhoods and business districts of a community. These scattered infill sites often sit near the center of town.

Infill building has been increasing nationwide.

"This is the strongest part of the market now where builders can make more margin," said Jay Dulla, executive vice president of Meritus Homes.

Advantage to homebuyers

A home on an infill lot offers an attractive option for homebuyers: new construction designed on a clean sheet of paper in a desirable neighborhood where they want to live. Often the home sits near in-town amenities where one could leave the car at home and walk to a coffee shop, book store or restaurant.

Many homes in the resale market are dated and do not have desirable features such as an open floor plan with the great room concept; a master bathroom with a luxury, walk-in shower; or a bonus room for a home office or hobby. Customers can opt for theses amenities with new construction.

Builders are experienced in the procedures of infill development and know how to process the whole package for a customer. It's more than simply tearing down a house and building a new one. This saves the buyer a tremendous amount of time, work and potential problems.

Some of the tasks builders take on with infill development include obtaining building and demolition permits, fencing the construction site and meeting other building requirements, removing trees, hauling and dumping construction debris, environmental land testing if needed, passing inspections and installing sidewalks and landscaping.

It's important that builders make sure surrounding property values are in line with the type and size of house being built. You don't want to build a $1 million house in a neighborhood that supports $350,000. Also, it's good if there have been other teardowns and new homes constructed on the block, said Jim Esperson, division president for David Weekley Homes

Where are infill parcels

Knowing suburban sprawl that has prevailed for decades could not be sustained, Lexington Homes has made infill construction its business model after the Great Recession, said Jeff Benach, co-principal of Lexington Homes.

A farmhouse and a few barns once occupied land where Lexington Homes built Park Ridge Place, a new community of 16 townhouses in an established residential area of Park Ridge next to the Chippewa Woods Forest Preserve.

At another construction project, the site of a bowling alley became Lexington Crossing, a new community of 54 townhouses in Rolling Meadows with the feel of a private enclave that sits near the Metra station and shopping.

Each community features townhouses with open floor plans, two to three bedrooms, 2½ baths and a two-car garage, plus a private balcony and professional landscaping.

Benach's blueprint for successful infill building is "the right place, right product and right price."

Meritus Homes has been successful with purchasing older homes in North Shore communities, tearing them down and building new custom homes on the property. These homes feature cutting-edge designs, high-end features and luxury finishes that today's luxury home buyers expect.

Criteria for infill building

Everyone knows that location reigns in real estate, and it's location, location, location when it comes to scoping out a site for infill construction projects. Meritus Homes looks for sites in a great location where land is in short supply and in high demand.

"It's important to select a location where people still want to live - such as the North Shore, Arlington Heights and Western Springs - in an area close to the center of town, not out on the fringe," Esperson said.

The school district is a real big thing, Esperson said. For example, determine whether sites are in the right high school district, and also in a good elementary school district.

Bob Meyn, vice president of sales and marketing for Taylor Morrison agrees. "Schools dictate pricing and product. The better the schools, the better your price point will be."

People want to live where they have easy access to transportation - Metra and expressways - because they don't want a long commute to their jobs. For example, Taylor Morrison's Colfax Crossing in Des Plaines offers a courtyard-style townhouse community that is within walking distance of the Metra station and near I-90 and I-294.

Most of Meritus Homes' infill projects are close to Metra, Dulla said. Its East Station community of 15 townhouses in Buffalo Grove sits in a desirable walk-to-Metra location on a parcel where one home once stood.

Homebuyers often see value in living in an established neighborhood near the center of town where they're close to area amenities. They want a convenient lifestyle near shopping, dining and entertainment. They like to be near parks and schools.

Meritus Homes' luxury home in Winnetka sits near downtown shops and restaurants, Elder Lane Park and even the beach, in one of the best locations in town.

Lexington Crossing in Rolling Meadows is also a good example of an in-town location. The townhouse community sits near the library, grocery shopping, schools and parks.

What drives the infill market?

Development of large construction projects out in the hinterlands dwindled because of lengthy commutes, overextended public facilities and community resources, increased infrastructure costs and loss of farmlands and open spaces. This led to builders to focus on smaller parcels in communities closer to Chicago.

Infill construction is also driven by the communities themselves as city planners, zoning departments and others look for ways to bring new life, more jobs and increased tax revenues to support city services. Brokers working closely with their community planners can play a role in bringing new inventory, revitalizing and shaping the future of the housing markets in towns where they live and work.