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December 17, 2017

Inside the Agrihood Trend

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Inside the Agrihood Trend

Developers are bringing the farm closer to consumers’ tables in urban, rural, and suburban spaces. Learn how real estate pros work in communities that are organized around the availability of fresh, hyperlocal food.
452-home Agritopia development in Gilbert, Ariz

Has foodie culture finally gone mainstream? According to The Urban Land Institute’s “America in 2015” survey, 73 percent of Americans highly prioritize access to fresh, healthy foods. That preference may also appear on your clients’ house-hunting checklists: Thirty-seven percent of REALTORS® say their buyers want access to local food, and another 6 percent say clients seek community gardens near their new homes, according to the National Association of REALTORS®’ 2017 Sustainability Report.

Though ULI defines “agrihoods” narrowly—“master planned or residential communities built with a working farm as a focus”—residential areas organized around consumers’ desires for fresh, local food are popping up all over the country. And real estate pros working in a variety of markets in urban, rural, and suburban locations are finding success in this growing niche.

A Tree Grows in Oakland

Urban developments that incorporate agriculture may help residents mitigate common stressors of city living. “Townhome and condo complexes can be really concrete and not very green at all,” says Sandi Giannini, a real estate salesperson with HD Properties in Oakland, Calif. While most of her clients can’t afford a pastoral home at California’s high real estate prices, Giannini says they still prize greenery and fresh food. “People like the idea of a country setting but are living in an urban environment because of work.”

That’s why Giannini loves showing off the repurposed warehouse space of the Pacific Cannery Lofts in West Oakland. The development features a raised-bed community garden of 30 plots shared with Ironhorse, an affordable rental community next door. Giannini says the garden space is a major selling point in her tour and marketing materials.

Not all residents want to cultivate food themselves, but the green atmosphere is widely appealing. Many of Giannini’s clients work long hours in the tech industry and appreciate living in a complex where tomato plants and lemon trees offer fruits to residents. “They’re not looking to become full-time farmers,” says Lara Hermanson, principal at Farmscape, the company that installed and maintains the organic gardens between Ironhorse and Pacific Cannery Lofts, among hundreds more across the region. Though Farmscape’s annual contracts are negotiable, Hermanson says few communities decide to take over the work of tending to the edible landscaping completely. “In most cases, I’m the farmer in perpetuity.”

Deep Farming Roots in the Midwest

While it may not be surprising that urban farming has taken off in the Bay Area, Hermanson points to the country’s breadbasket as a vital source of the agrihood trend. “It’s a California way of doing this for sure, but the original one is the one in Illinois,” Hermanson says, referring to the development known as Prairie Crossing in Grayslake, Ill.

The community of 357 homes, which was built more than 20 years ago, celebrates its connection to both wilderness and farming. Scot Lara, a real estate professional with Berkshire Hathaway Home Services KoenigRubloff Realty Group in Libertyville, Ill., has lived in Prairie Crossing for more than a decade. He and his wife were initially drawn to the community’s nature trails more than the 100-acre organic farm at the center of the development. “We didn’t really understand what it was all about; we just loved the way it looked,” Lara says. But after they signed the paperwork on their Prairie Crossing home, coworkers warned him they were going to turn into “tree huggers,” insinuating the development was “like a cult.”

Now that he’s a real estate professional, Lara confronts these misconceptions about Prairie Crossing often. Though the area is subject to a host of environmental and land-use rules, he explains that the restrictions help keep vistas open and trails clean. “The kind of rules that are in place are the kind of rules you want in place,” he says. “That’s what allows a place to remain the way you liked it when you first moved in.”

Lara can demystify the development’s restrictions for interested buyers, but he’d rather talk about the atmosphere. He describes Prairie Crossing as a “special” place where kids “travel in packs together,” and it might take him hours to mow the lawn because neighbors keep stopping by to chat or offer a cold beer. “There’s a sense of community that would be very hard to find in your everyday neighborhood,” he says. He has sold 10 homes in the development in the last year and says his ability to sort facts from hearsay nets him referrals from neighbors: “They say, ‘He understands what we have and what makes this a unique community, and he can convey that to other people.’”

An Oasis in the Suburban Desert

The area around the 452-home Agritopia development in Gilbert, Ariz., is vastly different from both West Oakland and Prairie Crossing. It has two Walmarts, a major freeway, and a large mall filled with big-box stores, all less than three miles from the community. Though it’s now a Phoenix suburb, Gilbert was largely agricultural up until recently. After seeing many of his contemporaries sell off their farms to developers in the 1990s, farmer Jim Johnston worked with his family, builders, and developers to create a new kind of community for the area.

When construction began around 2001, the whole development—from the roof pitches and porches of the Craftsman-style houses to the low vinyl fences and narrow streets connecting them—looked foreign to Colby Myers, half of the husband-wife team at Treehouse Realty in Gilbert, Ariz. “The homes were completely different than we had ever seen,” he says. “It just has a beauty you don’t find in Arizona.”

Myers says the feel of the place and the amenities—including a working farm, community garden plots, pool, and volleyball, basketball, and tennis courts—do a lot of his sales work for him. “Agritopia has a ‘Pleasantville’ feeling. You automatically feel safe and welcome, which creates a sense of home,” he says. “As real estate professionals, we show a lot of houses in an effort to find our clients a home. From the moment you drive into Agritopia, those houses become homes.”

That makes for stiff competition. Myers says he and his wife, Michele, are involved in only one or two Agritopia transactions a year. It’s hard to score listings in the tightly knit community because the homes are often “spoken for” before they officially go on the market.

Paying the Grocery Bill

As the agrihood trend expands, it’s becoming clear many consumers are willing to pay a premium for neighborhood access to fresh food. While these developments vary widely in how they actually distribute food to residents—from farmers’ markets to community-supported agriculture arrangements to more typical grocery store interactions—the funding of the farm is sometimes a separate charge, and often via a homeowners association. Myers says the majority of homes in Gilbert are in HOAs, but Agritopia’s fees skew significantly higher. He estimates Agritopia’s homeowners pay more than twice as much as those living in traditional developments nearby. But he adds that the demand for homes within the community makes it clear many feel it’s worth the price.

Lara says Prairie Crossing raised its quarterly fees in January for the first time in nine years, from $270 to $295. The rates are competitive with other developments in the area, he adds, especially considering all the educational programs and environmental initiatives funded through the HOA fees. Lara says the board’s focus on financial stability and long-term investment is reflected in the $1 million they keep in reserves. “The bottom line is they are all here for the same reason we are,” Lara says. “It shows you how much they care about maintaining it.”

The cost equation is more opaque in rentals. The Urban Land Institute found that Farmscape’s growing areas cost no more to maintain than traditional landscaping, yet residents pay an average of $7 more per month in rent to live in multifamily buildings that include the company’s gardens. However, Hermanson notes that the cost calculation could be different outside of California. “In the Midwest, people aren’t as used to paying for amenities as we are,” she says, comparing Farmscape to drop-off laundry services. “In Chicago, it still sounds ridiculous to not wash your own undies.”

Depending on size and complexity, developers may pay between $35,000 and $1 million for a Farmscape creation. Maintenance costs are charged weekly—between 25 cents and 65 cents per square foot for the vegetable garden and $2 for each fruit tree—and include replanting and amending the soil. Hermanson says the economics of agrihoods can work in any development with a few smart trade-offs. “Replace the pool or the gym that no one uses, that aren’t really creating the sense of place that an urban farm would,” she suggests. Additionally, developers who include access to healthy food in economically disadvantaged communities may be eligible for grants from the Treasury Department’s Community Development Financial Institutions Fund, according to ULI.

Giannini predicts it won’t be long before the whole industry sees edible landscaping as a true amenity: “There are some real estate pros who don’t look at it yet as a feature, but they’re going to be pleasantly surprised by how much more interest people are going to have in this.”

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