by Michele Newbern Gillis
Staff Writer
Concentrating on finding land and creating partnerships are two things that developers say will help continue the longevity of the home building industry in Jacksonville.
About 500 attended the Northeast Florida Builders Association’s Sales and Marketing breakfast last month — so many that the meeting had to move to a larger facility — to hear from local developers who discussed their business on the First Coast.
Paul Fletcher of Fletcher Land Corporation, Walter O’Shea of Hines Interest Limited Partnership, Mori Hosseini of ICI Homes, Greg Matovina of Matovina & Company and Chester Stokes of Stokes and Company participated in the panel discussion.
The meeting was originally scheduled at the Marriott Southpoint but the space there wasn’t enough, so it was moved to the Marriott Sawgrass.
With national builders entering the market, local builders need to be faster and more flexible to compete and stay in business, they agreed.
“The market is so good right now, the local builders are not having a difficult time competing with the national builders in terms of sales,” said Matovina. “The competition comes in, in terms of acquiring lots of land. It has gotten much more difficult for a local builder to buy lots or land to build on because the nationals come in and have the ability to buy the land.”
He said in order for local builders to stay alive, they need to change their tactics a little bit.
“They have to look at what the customers need and be very fast and very flexible,” said Matovina. “Also, they have to focus on locating lots more than sales and they are going to have to focus on being in smaller communities as opposed to being in a larger community with a couple of other builders.”
The developers said that the national builders come in and try to intimidate the local builders by trying to buy their company. They tell them if they don’t sell, they will be out of business.
“We have to work outside of the box,” said Hosseini. “We have to work on partnerships, getting together with other builders and developers, to be able to withstand a major builder coming into the market. Builders should get together and have partnerships for all projects of home building and developing.”
The other developers concurred that partnerships are the way to go for the local builder when competing with national builders.
“I think there will always be a place for local builders,” said Stokes. “The way we have been able to do some fairly sizable things was to bring in equity partners in almost everything we do. Our philosophy is that we may have to do twice as much and make the same amount of dollars, but we know we will be here tomorrow. Also, the local builders are much more willing to work with the customer and make changes than the national builders are.”
O’Shea brought up the point of “Juno” marketing when you use a strength of your opponents against them. He said the local builders can do things to attract buyers that national companies can’t.
“They can focus more on local architecture, bring a better quality product to the plate and be more responsive to structural changes,” said O’Shea. “Using those strategies, builders can find a niche for themselves in the marketplace and be successful longterm.”
Many new communities are coming online and O’Shea shared some survival techniques he learned while developing Palencia.
Instead of guaranteeing success, he focused more on minimizing risk.
“One is to find a site with unique characteristics or unique location advantages,” said O’Shea. “Seek out local partners and maximize the price range and product that you offer. Also, develop a master plan that is very flexible so over time as your market moves you have flexibility to meet the needs of your buyer and focus on selling.”
Getting more involved with government regulations which get in the way of future developments is a goal of local developers.
“Every county commission in the country, with a few exceptions, is doing everything it can do to block you,” said Fletcher. “Developers and builders are finally realizing that we need to do something to counter that. We are now in the process of raising a huge amount of money to get more politically involved than we have ever been. I think you will see some huge changes in the legislature.”
Growth was a major issue tackled by the panel.
“One of the most difficult things for us is finding developable land,” said Stokes. “Jacksonville has the unique distinction of having more public reserved land than any other city in the country. Because of that, development is being dictated by where we can find land.”
Stokes cited the Northside of Jacksonville and St. Johns, Clay and Nassau counties as good places to still find land to develop.
“The south side of Jacksonville is where growth would like to be, but there just isn’t any available land,” said Stokes.
Matovina said he sees Nassau County as a real force in development.
“I also see growth heading even further south,” said Matovina. “Palm Coast had an incredible year last year, maybe because of the availability of affordable land. I see growth getting farther and farther out because of the lack of concurrency closer in on the available land and because of the expense to develop closer in and the cost of the land.”
Golf course communities are all over Northeast Florida, mainly because of the enhancements they add to communities.
Fletcher, who has developed many golf course communities, said golf courses aren’t going away anytime soon.
“Golf is a great real estate answer,” said Fletcher. “Golf courses used to be built because there was a demand for golf access. About 30 years ago, real estate developers found out that they could enhance real estate by using golf courses. I think we are getting a little bit over-golfed right now. We gain about 2.5 million golfers a year and lose about 2.5 million golfers, so it is a little bit flat right now, but you will continue to see golf course communities built at this point.”
Demographics play a big part in developments. According to O’Shea, the type of buyers is changing.
In Palencia, O’Shea said they expected to have more high-end buyers as places like Ponte Vedra Beach were built out, but not right away.
“Two changes in the demographics have occurred that we did not anticipate,” said O’Shea. “When we planned Palencia in 1997, we knew that the buildout in Ponte Vedra Beach was a good opportunity for us to capture some of the high-end market eventually. It occurred a lot sooner than we anticipated so we are seeing a shift toward more high-end buyers a lot sooner than we anticipated.
“The second thing that surprised me was the number of buyers we are seeing in the custom home market place that are in their 30’s and 40’s. We would have expected to profile that buyer to be older in general.”
Where are these younger buyers coming from?
Hosseini said they are coming from right here in Northeast Florida as lower interest rates are allowing younger homeowners to sell and use the equity to purchase their next home easier.
“Not only do they have the cash from the first house, but the interest rates are lower. So, though their first home cost $250,000, now they are able to buy a $500,000 or $600,000 home,” said Hosseini. “That’s where it makes the difference with customer service because now they come back and buy a new home from us. Also, we are seeing a lot of early retirement. For the first time in Jacksonville the young retirees are coming to Jacksonville. If Jacksonville becomes a place of retirement, then we will not only have the relocation, but also the retirees.”
At the end of the forum, the developers were asked to reveal lessons they have learned from their many years of experience.
Fletcher said that business has never been as good or fun as it is right now, so people need to be a little cautious.
“There is a feeding frenzy going on right now which makes me a little concerned,” said Fletcher. “You have to remember it is a cyclical business. These are unusual times and it can’t stay this good, but we sure are enjoying it right now.”
O’Shea said his focus is now on land that already has entitlements in place.
He said it takes a long time to take a raw piece of land through the entitlement process rather than purchasing land already set up.
Hosseini said to get partners and make sure a project can stand on its own two feet for a few years.
“I do not see the value of land going down. It will either go up or it will stay the same,” said Hosseini.