Builder - February 2009 - (Page 24) INSIDE STORY to go into its Spanos Park West project, in two other developments, Crystal Bay and a 1,500-unit subdivision called The Preserve, the latter of which the city approved in December. David Stagnaro, Stockton’s planning manager, thinks one project that has a good shot at moving forward is Sanctuary, a 1,728-acre mixed-use community on nearby Delta Island that, when built out over the next 16 years, would include 7,070 homes (see “Walkable Living,” page 26). This is the biggest project to date for Stockton-based NOT SO The Grupe Co., which has been developing locally for 43 years and is known for its amenities-rich communities. Grupe hasn’t been doing much in the way of residential lately. It sold most of the land it owned by June 2006 and “stopped all construction in June 2007,” says Shane Hart, its senior vice president of acquisitions, land development, and marketing. “In fact, we’ve been focusing on our ministorage business.” Before it starts building houses at Sanctuary, Grupe has at least 2 1/2 years of site improvement and environmenSTRANGE tal impact review ahead of it, which Hart estimates will cost at least $500,000. To get Sanctuary off the ground, Grupe had to answer to two masters: the city and a local anti-sprawl group. Stockton’s General Plan stipulates that no new development can have a negative impact on the city’s general fund. So Grupe had to submit its plan with lower pricing and absorption estimates, which was tough, says Hart, because “we need volume of at least 450 homes per year at an average selling price of $500,000 (see page 26) just to start.” BEDFELLOWS Desperate Times, Innovative Measures the alliance even more feasible. Legend, which fi led Chapter 11 last June, and Pacific expect to come out of bankruptcy as operating entities. Both plan to submit reorganization plans to Two bankrupt builders hook up to market unsold and the courts this spring. Meanwhile, each continues to build homes under cashnew homes. collateral agreements with its banks. ou know business is tough cent below what that same home (with The companies expect to complete the when two builders in adjacent $7,000 in options) sold for before the liquidations by early March, at which Western states, both in Chapter 11, housing recession. point the marketing campaign would join forces to launch a multimedia Kevin Wann, Pacific Lifestyle’s presi- evolve to pique curiosity and drive marketing campaign to dispose of dent, says his company sold 27 homes traffic for their new homes. existing unsold inventories and to gener- through this Web site in the fourth quarDepending on whether it can negotiate ate buyer interest in new homes they ter of 2008 at discounts 15 percent to 20 new bank financing, Legend—which has continue to build as each moves toward percent below peak prices. But after his shown positive earnings while in Chapter coming out of bankruptcy this summer. company fi led for bankruptcy protection 11 and had $12 million in cash on hand at In the second week of January, that on Oct. 16, Wann says his marketing dol- the end of 2008—expects to build between campaign, developed by the advertising lars shrank, which made hooking up 60 and 120 homes in 2009. Already, it is fi rm Art Form, started using TV, radio, with another builder to market products changing its product mix to target more print, and billboard ads to direct more appealing. The fact that Legend customer niches than before, says Chappotential buyers to a Web site—www and Pacific don’t compete directly made man. As it moves forward, the builder will .newhomesale.org—that features emphasize the affordability and susexisting homes being liquidated. tainability of its homes and commuThe two builders involved in this nities, although Chapman does not campaign—Portland, Ore.–based foresee his company going after firstLegend Homes/Matrix Developtime buyers. ment and Vancouver, Wash.–based Wann says Pacific Lifestyle, Pacific Lifestyle Homes—posted which in its best year (2005) sold 62 and 35 of their homes for sale, 350 units, expects to sell 110 homes respectively, on that site. in 2009. Over the last year, the “The normal methods of marbuilder has been moving away keting aren’t producing anything from homes in the 3,300- to right now,” says Jim Chapman, Leg3,700-square-foot range toward end’s president. “To generate traffic smaller houses sized between and to move inventory we have to 2,200 and 2,400 square feet and do something extreme to drag priced at $250,000 to $300,000. people out of their homes and back Wann is hopeful that the marketinto the market.” Chapman points ing effort, coupled with “a low– to one home on the site whose LIQUID ASSET: Legend Homes discounted the price interest rate environment,” will $369,900 liquidation price is 15 per- of this home in Wilsonville, Ore., 16 percent to $299,000. stimulate greater demand.—J.C. Y 24 ■ B U I LD E R f ebrua ry 2 0 0 9 W W W.BUILDERONLINE.COM http://www.newhomesale.org http://www.newhomesale.org http://WWW.BUILDERONLINE.COM
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