Plaza Walk’s model grand opening celebration is happening this Saturday, August 2nd! Come out to tour the beautiful new model home and learn all about this exceptional new community in Cerritos! Stop by between 11:00 am & 2:00 pm to enjoy food from Bollywood Bites and Rice Balls of Fire Food Trucks and ice cream from Saffron Spot. Plaza Walk will offer up to 4 bedrooms, 3.5 baths and up to 1,821 square feet of living space and is the perfect place to call home. For more information on Plaza Walk please call 562-370-9501.
Save The Date! The Plaza Walk Model Grand Opening event is happening Saturday, August 2nd! Come out to tour the beautiful new model home and learn all about this exceptional new community in Cerritos! Stop by between 11:00 am & 2:00 pm to enjoy food catered by Bollywood Bites and Rice Balls of Fire Food Trucks and ice cream from Saffron Spot. Plaza Walk will offer up to 4 bedrooms, 3.5 baths and up to 1,821 square feet of living space and is the perfect place to call home. For more information on Plaza Walk please call 562-370-9501.
The Olson Company was highlighted in a recent issue of Builder Magazine.
Metrostudy says: The Olson Co. is the most significant builder of urban infill housing in California. They specialize in introducing product to unique, often built-out urban areas while staying focused on gentrification and changing demographics.
During the housing downturn, executives at The Olson Co. watched as overall unit count shrank from a high of 787 in 2006 to 126 in 2010. As the market hit bottom, company executives looked to the firm’s past for inspiration.
Founded 26 years ago as a builder of high-density urban communities in California, the company expanded in the 1990s into luxury suburban and urban developments outside of its core Orange County market. Post-recession, company leaders decided to return to Steve Olson’s original vision of in-town, affordable, transit-based housing for first-time and move-up buyers in urban Los Angeles and Orange County, and the strategy is paying off. Last year the company grew 66 percent doing what it does best: building small-lot attached and detached townhomes in more than 90 cities including Fountain Valley, La Verne, Alhambra, and Fullerton.
“We’ve adhered to our original strategy of building affordable homes in areas that are within walking distance to schools, retail, and parks to reduce our buyers’ commute time,” says CEO Scott Laurie (pictured). “As prices moved up we’ve moved up our prices, but we still try to be the low-price leader for new housing within the marketplace.”
The company leverages its long-standing relationships with local municipalities to help acquire land parcels in desirable areas. “We always go in to a city saying ‘How can we solve your problems?’” he says. “The way we separate ourselves from the competition is that we are full-service, from entitlements and rezoning through buildout.”
The builder has nabbed 15 Eliant Awards for home buyer satisfaction in the past three years by keeping close tabs on what buyers want in a new home. For instance, Olson includes solar standard in some areas and all projects are certified to LEED for Homes. Developments with feng shui elements are a hit with Asian buyers, who make up to 76 percent of buyers in some areas. “When you look at what we do, we have a very good understanding of who the buyer is and where we should and shouldn’t be building,” Laurie says.—Jennifer Goodman
Grand Opening Success! We’re pleased to announce we had a fabulous time and an overwhelming response at the opening weekend for Legacy Walk in Fullerton. We have already taken 8 reservations. Act now to secure your new beginning with Olson Homes these homes are selling fast! Sales office is open daily from 10:00 a.m. to 6:00 p.m.
Mark your Calendar! The Legacy Walk Model Grand Opening event is happening this Saturday, July 12th! Come out to tour the beautiful new model home and learn all about this exceptional new community in Fullerton! Stop by between 11:00 am & 2:00 pm to enjoy some food and fun at our Summer BBQ raffle. We will be raffling off 4 tickets to the Los Angeles Angels of Anahiem and 4 Tickets to Disneyland. Legacy Walk will offer up to 4 bedrooms, 3 baths and up to 1,960 square feet of living space and is the perfect place to call home. For more information on Legacy Walk please call 562-370-9503.
Visiting with a few Housing Giants who increased their revenues most year-over-year
Kyle Clapham, Managing Editor
The paucity of younger people in the market for a new home has not deterred Neal Communities . Baby Boomers between the ages of 55 and 65 comprise nearly 80 percent of the Sarasota, Fla.-based builder’s current customer base, with 60 percent of sales specifically to OPALS (older people with active lifestyles), 20 percent to empty nesters (people older than 45 who are employed but without children at home), 10 percent to singles (primarily women), and 10 percent to families, says president Pat Neal.
From 2007 to 2011 the company continually retooled house plans so that its homes became much more cost effective to build. An emphasis on the efficiencies of building shape led to a redesign of the plumbing, air conditioning, and electrical systems, for example, and influenced the choice of value-centric materials as well as the compression of building time. In the last 14 months, however, Neal Communities has found growing interest in its larger homes with the inclusion of new luxury features and more personalization for what the builder calls the “first Florida home” niche market.
Buyers today tend to be more cautious and require more proof of value, but they still purchase new homes based largely on emotional factors and justify on facts, says Jeff Kornblau, vice president and COO of Eagle Construction . In response to this behavior, the Glen Allen, Va.-based builder adapted its business style to “think like a consumer” and “act like a retailer,” in that the company aims to capture design trends yet offer enough flexibility so buyers can personalize their new homes.
“We actively maintain a wide variety of home plans that are suitable for a variety of different homebuyers,” says Kornblau, who attributes 43 percent of the builder’s sales to active-adult/retirement/empty-nester communities, 37 percent to second move-up buyers and beyond, and 20 percent to first move-up. Eagle constructs attached houses with 1,204 to 3,144 square feet and priced from the low $200,000s to the low $700,000s as well as detached homes with 2,220 to 4,991 square feet and priced from the low $320,000s to the high $900,000s.
The builder introduced myriad design features in the last 12 months to satisfy ongoing customer demand, including outdoor entertainment areas with lanais, kitchens, oversized patios, and screened porches; multigenerational designs with first-floor in-law suites; basements with plenty of well-integrated entertainment space; and Craftsman-style front elevations that offer more character than a traditional elevation. “Product development continues to lead the way for our company,” says Kornblau, who also offers pocket offices, more storage, expandable family rooms, kitchens with oversized islands, and luxury master bathrooms with Roman showers.
Eagle also instituted a number of BIM standards and Lean building practices and converted its house plans from AutoCAD software to Revit, a more sophisticated 3D modeling program. “It will allow us to build our homes more efficiently along with providing certain detail upfront to make design decisions prior to start of construction,” Kornblau says. The tech upgrades continued with the integration of a new customer relationship management (CRM) tool, but establishing a trade partner council ultimately could make the most difference in the company’s initiative to control its production systems and improve communication with subcontractors by providing more accurate information to field personnel and managing current projects more effectively.
Despite a slow start to the year, Eagle remains poised to create future opportunities through expansion. The company, which was sold to the Markel Corporation in 2013, is opening a new division in Williamsburg and will increase its footprint in the Hampton Roads area.
After founding CB JENI Homes  in 2009, president Bruno Pasquinelli and his team identified distressed bank assets and undervalued land positions whose owners would subordinate lots. This arrangement helped the Plano, Texas-based builder secure its initial financing, but finding bank money to grow organically proved nearly impossible. In 2010 Pasquinelli partnered with Jim Brickman, a fund manager and adviser, who has provided CB JENI with enough financing and developed lots through JBGL Funds to expand the builder’s business throughout Dallas and surrounding suburbs.
“He recognized the opportunities available to the building companies with capital at the bottom of the [housing] cycle,” says Pasquinelli, who grew up in a Chicago home building company and managed its Dallas/Forth Worth division before founding CB JENI. “The builders that don’t have capital today are getting pushed away from the food bowl.”
The affiliation between CB JENI and JBGL afforded Pasquinelli the ability to launch a second brand—Normandy Homes—and offer a premium product to buyers who want more options and better quality than a mainstream production builder typically can provide. Normandy constructs detached houses of 2,100 to 4,500 square feet at price points from the high $200,000s to $700,000, whereas CB JENI Lifestyle Homes, which targets buyers who desire low-maintenance living, builds attached townhomes ranging from 1,400 to 2,400 square feet and priced from the $180,000s to the $300,000s.
The growing labor shortage contributed to a longer building cycle in 2013 and made managing costs even more of a challenge for CB JENI. The company has focused on recruiting subcontractors, but holding them responsible for their performance becomes onerous because they will simply go to work for a less “demanding” builder. Pasquinelli admits finding the “sweet spot” of accountability and reasonable expectations for trades remains a work in progress, but he says CB JENI adjusted its “touch points” with customers to keep them informed and set the proper expectations for an increasingly unpredictable building process.
The relative uncertainty in the market has rendered 2014 as a transition year for CB JENI, which will construct about the same number of townhomes and detached single-family houses as the company produced in 2013. In the very beginning of their journey, Pasquinelli and his key associates concerned themselves with spreading the builder’s footprint and taking advantage of opportunities in a downtrodden business climate, but today the company strives for operational efficiency to reduce cost and increase profit margins while the market recovers.
The Olson Company
At the end of 2009, the Olson Company  researched where job growth likely would occur in Southern California and decided to focus on three core geographical areas: north Orange County, San Gabriel Valley, and the South Bay portion of Los Angeles County that wraps around LAX. The Seal Beach-based builder previously constructed homes throughout California but concluded the company could operate stronger and more efficiently by taking advantage of the opportunities within a 40-mile radius of its corporate headquarters.
“This isn’t the same type of opportunity you’d find in the outlying areas because everything’s been pretty much built on; and what hasn’t been built on, there’s a reason for that,” says CEO Scott Laurie. Olson ranked more than 130 cities and areas in California and ultimately identified the three aforementioned markets as the most attractive based on job growth as well as favorable income levels, school scores, and crime and delinquency rates. “We’ve managed to build in 33 of those cities and areas since 2010,” Laurie says. “Today we have 28 that are in various forms of entitlement, development, and construction.”
Olson aggressively bought land in 2011 after running positive market forecasts while most other builders remained on the sidelines as the industry slowly stabilized. The company began reaping profits from those ventures last year and takes pride in providing solutions for cities and land sellers by making the most out of what could be perceived as challenging land issues. All of the builder’s projects start as entitlements that often involve a rezoning or an environmental cleanup as well as demolition to remove existing structures, says Laurie, who credits past collaboration with state redevelopment agencies as valuable experience for this type of work.
Olson recently closed a project in Fountain Valley in which the builder converted a 130,000-square-foot office building with 6-acre surface parking lot into 88 townhomes and small-lot detached product. The company also has transformed a boat-painting facility in Los Alamitos into 17 small-lot detached homes and is working currently in Temple City to erect 74 paired and detached houses from the site of an old wood-treatment facility and processing plant. “There’s never a discount [on the land] because there’s always an alternative use,” Laurie says. “But we create the value for the upside through the entitlement.”
The builder expects to take in nearly $115 million for 2014 on a minimal unit increase—about 215 closings compared with 188 in 2013. Because it usually takes around two years to turn a project from due diligence to vertical construction, though, Olson anticipates “real” growth in 2015 when the company projects almost 300 closings. PB
Get pre-qualified today and join our Plaza Walk VIP priority list. As an official VIP at Plaza Walk, you will be given exclusive access to private events and priority home selection. A private model showing and sales release will be held for the VIP Priority list. Our homes will offer up to 4 bedrooms, 3 baths and approximately 1,178 to 1,711 square feet. Sales office will be open for more information this weekend from 10:00 a.m. to 6:00 p.m.
Monthly figures on U.S. home-construction starts make the industry appear bipolar: down significantly in March, up big in April and down again in May.
The reality is, when the focus is broadened to the first five months of this year, home starts have exceeded last year’s tally.
Tuesday’s headlines noted that housing starts in May were 6.5% less than a month earlier. However, the Census’ monthly figures are subject to volatility and substantial revisions. You can get a more reliable picture at this point by examining year-to-date figures, which include most of the spring season.
Consider that, for the first five months of this year, builders started 396,000 dwelling units, not adjusted for seasonality. That’s up 6.6% from the same period last year.
Factoring out the fast-growing multifamily sector, you still get a 2.5% increase in single-family home starts in this year’s first five months (255,600) over the same period of 2013 (249,300).
“When we look over several months to smooth out that volatility, construction clearly is recovering, especially on the multiunit side,” said Jed Kolko, chief economist for real-estate website Trulia, referring to apartments and condominiums.
Mr. Kolko added that, over the past three months, construction starts for both multifamily and single-family exceed the year-ago tally by 10%.
The reasons that the new-home market has slowed to smaller gains this year from rather strong gains last year are well chronicled. Chief among them are rising home prices and interest rates. Even so, many analysts still forecast gains in starts and sales for this year.
“I still maintain my belief that we’re going to have continued increases in housing starts on a trend basis through the rest of this year and into next year,” said Brad Hunter, chief economist for home-building research firm Metrostudy, part of Hanley Wood LLC.
Metrostudy forecasts one million home starts for 2014, an increase of nearly 9% from 2013.
Scott Laurie, president and chief executive of Southern California home builder Olson Co., anticipates selling 30% more homes this year than last year. However, much of that is due to the builder starting new projects. On a per-community basis, which is akin to retailers measuring sales at individual stores against their year-ago numbers, the builder’s sales are flat with its totals from last year.
“For us, the best way to quantify it is that we’re doing just as well as we did last year,” Mr. Laurie said. “And last year was a very good year.”
By Kris Hudson
In the first half of 2013, builders around the country saw buyers return to the market. But to capitalize, they needed to have some homes ready to sell.
“Because we had grown our company every year since 2008, we were well-positioned and well-capitalized to put a lot of inventory on the ground,” says Fred Delibero, CEO of Summit Custom Homes in Kansas City, Mo. “That allowed us to capture a lot of market share before the competitors came back into the market.”
Bonterra Builders in Matthews, N.C., Eagle Construction of Virginia in Glen Allen, Va., and The Olson Co. in Seal Beach, Calif., also stood out from the pack because they made lot purchases and product design decisions during the downturn that fueled massive growth in 2013. These builders marshaled the capital to compete with their larger well-heeled competitors, while staying small and nimble enough to maneuver around them in the hunt for land and labor.
The dramatic rise in closings at these four companies made them among the biggest gainers on our Builder Next 100 list (released in May), while securing top spots in their primary markets. Here’s how they did it.
Getting in at the Bottom
Bud Ohly, president of Eagle, began preparing for the recovery during the recession’s darkest hour. In 2008, he started two distressed real estate funds to scoop up troubled projects. Eagle would assist banks with distressed properties by completing construction, marketing, and even changing light bulbs and mowing yards.
“We got very familiar with a lot of banks and when they had a problem, they’d call us,” explains Ohly, whose closings jumped 74 percent in 2013, a year that saw the firm acquired by the Markel Ventures subsidiary of Glen Allen–based Markel Corp. in August. “We’d analyze the situation and turn those into opportunities to buy good properties. It was kind of a perfect storm where everything came together and really gave us the dry powder to get future projects off the ground.”
Delibero also purchased a number of bank-owned lots in 2009, which fueled his firm’s 61 percent growth in 2013. In a market without any public competition, Summit has an advantage of size that companies like Bonterra and Olson don’t—it’s the market’s biggest builder and one of only a couple that also does development. But securing land is still difficult.
“The demand for land became so incredible so quickly,” Delibero says. “There was a period of time where you were purchasing lots from banks. Then, all of the sudden, prices went up considerably in a short period of time.”
Darren Sutton, president of Bonterra Builders—whose closings jumped 99 percent in 2013—estimates he secured 15 percent to 20 percent of his lots from banks. But that pipeline has since dried up. “You can’t buy the opportunities that we search for from banks anymore,” he says.
In the Charlotte market, which has seven builders among the top 10 nationals, Sutton sought out farmers and land owners who wanted to sell. Quality was his selling point.
“A lot of land owners know the people that own the land around them and they want to make sure they find somebody who will do a good job on it,” Sutton says. “People know we’ll build a nice product on it, so it kind of makes them happy.”
With more than 100 different plans, Bonterra secures lots its bigger competitors often find too small. For instance, Sutton recently picked up a couple of small development infill sites at A-plus locations that will accommodate about 15 homes apiece.
“A lot of this stuff is not something the national guys want,” Sutton says. “They don’t have the product to go on it, and they don’t want to spend the money to develop a product for something that small. But I don’t mind doing that.”
The Olson Co., whose closings jumped 66 percent in 2013, executed a similar strategy to accumulate land. In addition to being able to move quickly, president and CEO Scott Laurie chases complex deals that may have environmental issues and need demolition and new entitlements.
“It’s a pretty good barrier to entry,” Laurie says. “It typically takes two years to get from where we start due diligence to where we’re starting vertical construction. A lot of builders won’t wait for years to get started on the vertical construction.”
The Right Mix
While the downturn gave 2013’s highest risers a chance to gather land at discount prices, it also forced these builders to rethink their product offerings. For instance, Delibero began to focus on energy-efficient products as a way to differentiate Summit from its competitors in the Kansas City market.
“In the downturn, people were starting to become concerned about cost in general, mainly what it cost to own a home,” Delibero explains. “We were able to capitalize on that in our marketing. I think it was an important differentiator.”
Noticing that many of his customers were planning families, Delibero also shifted Summit’s focus from one-and-a-half story ranch homes to two-story homes. “We redesigned our plans to be market relevant and sharpened our pencils in our purchasing and operations and customer follow-up,” he says. “We talked to our buyers and found they were focused on open floor plans. We started from scratch.”
In preparation for the recovery, Eagle constructed an 8,300-square-foot design center in early 2012, which was named the 2012 Best Design Center in North America by the NAHB. Ohly says his company does an “unusual” amount of customization for a builder of its size.
Sutton began the downturn by pulling all of the bells and whistles out of Bonterra’s homes to increase affordability. That didn’t work out very well. So, like Delibero, he went back to the drawing board and added upgrades like brick siding, hardwood, Energy Star products, granite countertops, and 9- and 10-foot ceilings. “I separated myself from the pack of national home builders,” Sutton says.
Finding Material and Labor
The fastest risers of 2013 were able to secure land and tweak their designs during the downturn, when competition was minimal. But as construction picked up, finding labor and materials became something of a wild goose chase.
“The labor pool is still not where it needs to be,” Sutton says. “We had foundations sitting waiting for framers and we were waiting for brick masons. A lot of the labor corps was depleted during the downturn.”
Sutton had to pay his subs more and turn around payments in as swiftly as a week.
“A lot of our vendors that were actually what I called labor-oriented vendors [framers, painters, and drywall hangers] were paid on a weekly basis just to keep us a preferred builder,” Sutton says. “I hate running my business like that, but you have to do what you have to do to get the job done.”
But Bonterra’s size offered Sutton more flexibility than his larger competitors had. “One thing about our organization is that I’m pretty quick to make a decision and we don’t have to run it up a ladder,” Sutton adds. “The publics may have budgets set that they can’t increase [for labor].”
Delibero, without public competition, faces different issues in the hunt for labor. He says some smaller builders might overpay for labor, which forced him to be disciplined as pricing overheated.
“That creates upward pressure in labor and materials costs,” he says. “Public builders know what things should cost and can create equilibrium in market.”
Regardless of with whom these private builders competed or how they went about securing labor and land, they ultimately ending up finding a path to success in 2013. And that was the intent all along.
“My goal was to be pristine in ’13,” Ohly says. “And, we were pretty darn close.”
Summit Custom Homes
Biggest Market/Rank: Kansas City (1)
Market Share in Top Market: 7.5%
Active Selling Communities: 30
Homes Closed in 2013: 180
Projected Closings in 2014: 216
Key to Success in 2013
“In 2008, we retooled the company and shifted our focus from a story-and-a-half ranch product to a two-story product. We also became very focused on green building.”
“Down the road, would we like to be regional? Probably, yes. It would possibly be in 2015. That’s what we’re looking at right now.”
The Olson Co.
Biggest Market/Rank: Los Angeles (8)
Market Share in Top Market: 3.1%
Active Selling Communities: 7
Homes Closed in 2013: 188
Projected Closings in 2014: 215
Key to Success in 2013
“It was the land we bought in 2010 and 2011. We really know the markets. We’re so focused in only building in LA and Orange County. We know the market down to every street and every ZIP code.”
“The key to our success is our discipline. We are very good at saying no. One of the real keys to success is our strategy and knowing what we will and will not do. When we say let’s do something different, we’ve opened Pandora’s box.”
Eagle Construction of Virginia
Biggest Market/Rank: Richmond (2)
Market Share in Top Market: 11.5%
Active Selling Communities: 7
Homes Closed in 2013: 304
Projected Closings in 2014: 249
Key to Success in 2013
“We were ready. We had mature communities selling out and a nice mix of new ones. We had a good combination of mixed-use, high-density, and age-targeted offerings. Many of these properties were purchased with capital raised to invest in distressed projects and land in the dark days.”
“We want to grow into three new geographic markets and become more efficient by decreasing cycle time. We have a major focus on low-maintenance and high-density [communities].”
Biggest Market/Rank: Charlotte (10)
Market Share in Top Market: 3.8%
Active Selling Communities: 25
Homes Closed in 2013: 294
Projected Closings in 2014: 375
Key to Success in 2013
“We increased our community counts and focused on getting the best locations we could. We were pretty aggressive and got some deals from the banks. So, we were able to get some good lot prices going in [on what was delivered in 2013].”
“We’re going to look into expanding into another market. Right now, we’re based out of the Charlotte MSA [metropolitan statistical area], which also encompasses the northern part of South Carolina as well. We’re looking at another market within North Carolina or South Carolina for something that’s a good fit for us.”
By Les Shaver
Join us at Liberty Walk’s Carnival this Saturday June 7th from 12:00 pm. to 4:00 pm. Tour the model homes, enjoy food, games and take a ride on our train! Liberty Walk offers up to 5 bedrooms, 3 baths in up to 1,908 square feet. All homes include Solar Power! Model homes are open daily from 10:00 am to 6:00 pm.