Credit: Courtesy the Catskill Farms
Green acres: Specializing in what he calls “new old” homes in Sullivan County, N.Y., builder Charles Petersheim offers a mini-alternative to vintage fixer-uppers for less than the price of a New York City parking spot. Many of his clients are professionals and first-time buyers who rent in the city.
Imagine a diner whose reputation for homemade pies extends far and wide. The place has folks lined up around the block, mouths watering, every day of the week. Resisting the temptation to expand into cakes, muffins, or lattes, the owner has stuck with what he knows best, ever fine-tuning his recipes while other restaurants have come and gone.
Now parlay that same model to burgers. Or steamed crabs. Or home building. Amid the perfect storm of mounting foreclosures, credit tightening, stagnant inventory, and timid buyers, there are builders among us who can’t seem to build fast enough to satisfy their cadre of hungry followers, even though the overall market has come to a virtual standstill.
If there’s one thing these builders have in common, it’s likely that they are specialists who have found their sweet spots and are sticking to the recipes they know best—be it for a historic architectural style, an alternative construction method, a unique buyer segment, or an unmet price point. Like the owners of the nation’s most recession-proof eateries, they aren’t pretending to be all things to all people, and they aren’t even trying.
Credit: Courtesy the Catskill Farms
Builder talked with four such builders who’ve carved out some nice slices of the home building pie and are doing just fine, thank you, in spite of stormy weather. What does your company do best? It may be time to simplify your menu.
Credit: Courtesy the Catskill Farms
rustic restraint: Reclaimed barn beams used sparingly—as mantels or banisters, for example—provide vintage character without blowing the pricing structure.
Escape from New York
Small homes on big land lure urbanites out of Gotham.
There are certain truths about New Yorkers that Charles Petersheim just gets. They are accustomed to living in small spaces; they often feel nature-deprived; and they have an eclectic design sense—no doubt shaped by the architecturally layered smorgasbord that is Manhattan.
A former commercial construction manager, Petersheim left the island borough after Sept. 11, 2001 and headed for Sullivan County, a remote stretch of the Catskill Mountains. Specializing in what he calls “the brand-new 100-year-old farmhouse,” he now offers weary urbanites (many of whom rent in the city, but want to buy a weekend place) an alternative to old houses requiring extensive remodeling.
Credit: Courtesy the Catskill Farms
New homes under the brand name The Catskill Farms blend vintage elements such as clapboard siding, wide-plank floors, cast-iron radiators, and clawfoot tubs with modern comforts such as whole-house audio and automated security systems. The houses aren’t big (the largest is 2,100 square feet) but the average “house spot” is four to six acres, and a meandering driveway through the trees is included in the price tag. “Most builders start with a floor plan and then think about elevations,” Petersheim says. “I start with what the outside of the house will look like and then figure out what we can fit inside.” The Catskill Farms sold two homes in 2004 and 10 in 2007. The builder expects to do 12 this year.
Homespun details are a key ingredient. “One of the traps builders fall into when working with salvaged material is they use too much of it, which costs too much and slows down the construction process,” Petersheim says. But in small doses, shabby chic touches such as salvaged plank ceilings pay dividends. The cracks, butt joints, and old trim nails in reclaimed lumber give a house a comfortable worn feeling, like a favorite pair of jeans, that buyers can’t resist. “You can’t tell a carpenter to do a bad job, so you have to use products that are imperfect,” he says. “It does away with the feeling the house has just come off the assembly line.”
Competitive Advantage
The Niche: New Old Farmhouses
So you’re building off the beaten path, 100 miles from the Holland Tunnel. How do you let city folk know you exist? Builder Charles Petersheim lets his Web site do the heavy lifting, using search engine optimization and pay-per-click advertising to attract buyers (cost: about $8,000 per month). “There is no one searching for upstate real estate online who doesn’t come across our Web site,” says the builder, who doubles as his own webmaster.
Credit: Hedrich Blessing
Invisible Touch: The modern residence of architect Brad Lynch (Brininstool + Lynch) was built on the property’s existing ranch house foundation. Mechanicals were painstakingly tucked inside wall cavities (no bump-outs or soffits for ducting) so as not to interrupt the home’s ultra clean lines.
Bespoke Built
Architects’ abodes showcase a high-end builder’s virtuoso craftsmanship.
There’s the cheap blazer off the rack at discount store X, and then there’s the tailored suit with the hand-stitched lining that fits like a second skin. Goldberg General Contracting (GGC) specializes in the home building equivalent of that perfect suit. And to underscore the artisanal nature of its work, the Chicago-based builder has cultivated a favorable track record with the most discerning clients around—architects who have designed their own dream homes and expect no less than perfection in the execution. Of the two or three new-construction custom homes the builder takes on annually, roughly one per year has been for an architect or interior designer since 2005. (Remodeling and historic renovation projects bring the firm’s annual job tally to about 30.)
“When you do quality work, an architect becomes a repeat source of referrals, but the ultimate acknowledgement comes when they ask you to build their own house,” says GGC founder Jake Goldberg. “That house becomes their calling card. We flesh out how it’s actually going to be built.”
Of course architects have their eccentricities, and their creativity knows no limits (they always have to be value-engineered back to earth, Goldberg says), so each project is unorthodox in its own way. Take the Lincoln Park home of commercial architect Avi Lothan (DeStefano and Partners), which parlays many of the same structural materials found in the downtown skyscrapers the architect designs for a living.
Credit: Hedrich Blessing
“The steel façade material was one that’s rarely if ever used in a residential setting,” says GGC vice president of marketing and sales Keith Dinehart. “The challenge was using union metalworkers who were accustomed to working on façades that are 20 stories above the ground. Here we were asking them to meet design tolerances within a fraction of an inch, when they are used to people seeing their work from way down on the sidewalk, looking up.”
Unequivocal proof of GGC’s reputation as an “architect’s builder” came in 2006, when the company was entrusted with the historic renovation of legendary architect Louis Sullivan’s last building, the Krause Music Store, originally built in 1922. The stunning Chicago landmark is now listed on the National Register of Historic Places.
“We feel we are part of something bigger than us,” Goldberg says. “Regardless of the balance sheet, when we look around the city and see art forms that we helped bring to life, that’s payback.”
Competitive Advantage
The Niche: Architects’ Homes
There’s a side benefit to doing super high-end work that’s cumulative: Every contract involves something new, and that creativity engenders loyalty. “Each house has specialty products and materials executed in a new way,” GGC’s founder Jake Goldberg says. “Instead of training our people to be skilled at doing things repetitively and quickly, we’ve trained them to be comfortable problem-solving.”
Credit: Bob Narod
Up to Par: Several Ellis Denning projects have responded to the city’s desperate need for affordable housing, while others, such as Fennessy Lofts in D.C.’s revitalized Logan Circle area, have skewed upscale.
Urban Sherpas
Price-consciousness drives design in D.C.’s up-and-coming inner-city neighborhoods.
Big builders doing condos in the ’burbs sometimes run into trouble when they try to parlay the same systems inside city limits. “The beauty of the suburbs is there is a ton of repetition,” says Kevin Ash, president of Ellis Denning, a developer and general contractor working in and around the District of Columbia. “But when you get into the city, you’re dealing with constrained spaces in all different shapes and sizes.” No two projects are alike.
Specializing in infill housing in emerging neighborhoods, Ellis Denning (which does work for hire, but also develops many of its own properties) has found ways not only to squeeze hip residences into seemingly unbuildable lots, but also to make the math work on projects hitting a range of price points—including some targeting working families with incomes of $90,000 or less.
Jefferson Commons, a pocket of 24 condo units with prices ranging from $175,000 to $250,000, was one such success. “The market was cooling and yet we sold out in five months with no model,” says managing partner Marc Weller. “It proved our theory that the focus has to be on price point, not cost per square foot. At the end of the day, it’s not about the size of the unit, but rather what can people afford. You have to figure that out first and then work backward.”
Credit: Bob Narod
One practice that has given the builder some leverage in recent months is what Weller calls “an urban attitude with a suburban application.” That is, mid-rise city condos built with the same bearing wall construction typically seen in suburban garden apartment properties in the Northeast. Under the D.C. building code, the combination of light-gauge metal and wood frame is allowable in structures that are five to eight stories, but most downtown developers use concrete instead. The cost differentials between materials are substantial. (Wood is roughly $70 less per square foot than concrete, and light-gauge metal is $35 less.) Reducing density to accommodate this structural approach can turn a financially unfeasible project into a lucrative one, Weller says.
Competitive Advantage
The Niche: Mid-Rise Infill Housing
Even a slight miscalculation can sink a project with tight margins. To downscale the financial risk, Ellis Denning places the builder at the table during the design phase and uses pricing models to assign a hard cost to each design element. “In the old model, the developer and architect would create the plan, submit it for bids, and then say the plan costs too much and value-engineer it,” explains president Kevin Ash. “In our model, you’re not going back after you get a price from a contractor and taking stuff out.”
Credit: Linc Lippincott
Urban Export: Brighton Park at Issaquah Highlands offers live/work townhomes with commercial entrances at street level. Noland Homes closed on 73 homes in 2007 (its best year on record) and expects to close 80 this year.
Village Vibe
Old urbanism fills an entrepreneurial void in a best-selling master plan.
When you’ve got the right stuff, sometimes a winning niche finds you, as Seattle builder Jim Noland can attest.
For eight years, Noland Homes focused almost exclusively on infill townhomes within a three-mile ring of downtown Seattle. Catering to young, eco-minded buyers with a penchant for dogs and sidewalks, Noland knew a thing or two about small footprints, walk scores, sustainable building methods, and mixed-use.
At first, when master plan developer Port Blakeley Communities approached Noland with an offer to do Brighton on Park, a 16-unit live/work project in its award-winning Issaquah Highlands community (some 17 miles outside city limits), Noland was a little perplexed, given his company had no experience in a master planned environment. But Port Blakely president Judd Kirk knew what he was doing; he wanted a builder partner who could authentically carry an urban village prototype into a suburban setting.
“Judd Kirk was the one who steered us toward live/work. It’s hard to find office space when you’re a start-up, and there are lots of them here,” Noland says, referencing the region’s fabled history of incubator ventures, Amazon and Google among them. “Ultimately this was a simple case of old urbanism versus new urbanism. Issaquah has small lots in a compact environment ... so what he was asking for wasn’t monumentally different than what we’d been doing.”
Credit: Kevin Reuter
The townhomes at Brighton on Park are Built Green four star and Energy Star certified with standard features including hands-free faucets, high-performance appliances, RainScreen technology, and tankless hot water heaters. Units ranging from 1,995 to 2,100 square feet include two-car garages, but are walkable to shops, bistros, and acres of parks and trails.
Riding this success, the builder recently broke ground on Brighton on High, a promenade of 24 live/work brownstones with ground-floor retail. Once complete, they will serve as a gateway to the Issaquah neighborhood of Vista Park. “Now anyone who drives into the community has to go by one of my buildings,” Noland says. “We’ve become part of the urban fabric here.”
Competitive Advantage
The Niche: Urban-Style Townhomes
What prompted Port Blakely to pursue Noland Homes? The builder’s third-party Guild Quality customer satisfaction rating of 97 percent surely didn’t hurt. “Our best salespeople are our homeowners, so we bend over backwards to make sure they are happy,” says Noland Homes founder Jim Noland. “We will go into homes that we built six years ago and fix things if needed.”