Builder - December 2008 - (Page 62) NEW DIVISIONS FOR BUSINESS Several builders whose companies have made the transition to other types of building say they expect such moves to outlast the housing recession. “We want to make an effort to restructure the company, because we definitely see the demand” for renovation, says Dashiell. Since her company started Beach Transformations, it has been fielding two to three referrals per week and has completed such projects as a $70,000 interior remodeling of a fi nancial services office, a roof replacement on a condo complex, and even a deck installation. The Dearborn Buckingham Group, a single-family and townhouse builder in Northfield, Ill., recently set up a separate division, Buckingham Properties, to handle remodeling projects, and a few months ago started contacting its home buyers to see if they were interested in improvements such as basement finishing or kitchen upgrades. “So far, the response has been pretty good,” says Chris Coleman, Dearborn’s president. But his company appears to be one of the few production builders that have moved in this direction. Builder contacted nine of the top 30 builders and none was taking on renovation or commercial work even as a stopgap. “We did a little remodeling but found that it was so different from what we do,” says Scott Buescher, COO of Mercedes Homes in Melbourne, Fla. He also notes that commercial construction in Mercedes’ markets also “has started to die out.” One executive with a top-10 builder thinks production builders must concentrate on what they are best at, regardless of economic conditions. “There’s not a builder out there that’s so good that it can distract its management from its core competency.” Coleman, whose company continues to build houses, disagrees. He thinks builders can do both and may have an advantage over conventional remodelers because builders’ estimating and bidding processes are more sophisticated. Day to day, though, Coleman does find remodeling to be different from production home building “in almost every aspect. It’s similar to building a custom-made DOUBLE DUTY: Rachel Matthew Homes in New Mexico is tapping into buyer demand for office space that features the same ornate interior architectural design as their homes. house [in terms of] scheduling requirements. Plus, the owner is living in the house,” so on-site supervision of the project is more intense. ACCOMMODATING REQUESTS During the downturn, some builders stumbled into renovation and commercial work. Two years ago, for example, Rachel Matthew Homes in Corrales, N.M., built a 4,500-square-foot office for itself that included many of the flourishes found in its high-end custom homes: granite countertops, Viking appliances, and fine trim details. Its president, Steve Nakamura, says he intended to use the office as a showcase for the options his company offers to its home buyers. “We realized there was a market for this kind of building,” he recalls, when a commercial broker brought one of his clients to the office, and that client offered to buy it. Nakamura accepted that offer, acquired another lot, built a 6,500-square-foot office that was even more ornate, and then sold that building in November for more than $1 million. Now, Rachel Matthew Homes is buying land for 25,000-square-foot office/ condo complexes. “The people we build our McMansions for are their own bosses and want to work in an amenable environment,” Nakamura explains. And his appetite has been whetted for commercial work in general: This fall, his company negotiated to build a 7,000-square-foot fi re station for the city of Rio Rancho, N.M. Other builders are acquiescing to the requests of existing or former customers. Last summer, T.W. Lewis, a custom builder in Tempe, Ariz., received a call from a buyer who had purchased a home from the company in 1996. The owner wanted Lewis to remodel his master bath and kitchen. T.W. Lewis had turned down similar requests from owners in the past, but its COO, Kevin Egan, thought remodeling might offer a welcome revenue stream in the down market and accepted the job. Thanks to T.W. Lewis’ Design Center team, what began as an $85,000 job expanded into a $190,000 whole-house renovation that included new wiring, doors, stairs, and flooring. Egan adds that the owner was “most impressed” with how quickly the builder got the job done. “We signed the contract on June 3 and were fi nished by July 15,” with the actual construction work taking only three weeks. Egan now sees remodeling as a “natural progression” of the T.W. Lewis “Trade Up to Luxury” program it began in the summer of 2007, through which it purchases buyers’ photos: courtesy r achel matthew homes 62 ■ B U I LD E R de c e m ber 2008 W W W.BUILDERONLINE.COM http://WWW.BUILDERONLINE.COM
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