Builder successful competing against resales
By Paul Owers
South Florida Sun-Sentinel
Doreen Cohen can't wait to start slicing and dicing in the big kitchen
of her four-bedroom home being built at Valencia Reserve west of
Boynton Beach.
The retired business owner also plans to visit the community's
43,000-square-foot clubhouse, where she'll swim and play cards with
friends. "This is perfect for my life," said Cohen, 64.
She is one of 172 buyers to sign contracts this year totaling more than
$70 million at GL Homes' 55-and-over development on Lyons Road near
Florida's Turnpike. As the industry tries to recover from one of the
worst housing downturns in decades, no builder has been busier than GL
in Palm Beach and Broward counties.
Sunrise-based GL has closed on the sale of 416 homes in the two
counties during the past four quarters, more than double second-rated
Lennar Corp. of Miami, which had 200 closings, according to the
Metrostudy research firm. Coral Springs-based Centerline Homes was
third with 197 closings.
Considering the still-tenuous economy, Brad Hunter, regional director
of Metrostudy, said the activity generated by GL is "very, very
impressive."
Many builders struggle to compete against low prices among existing
homes. But privately held GL had "the business courage to take on
resales," said Anthony Trella, a home-building consultant in Deerfield
Beach.
While GL says its price per square foot is about 20 percent higher than
an existing home, its customers are willing to pay more for a new home
community, Trella said.
Harry Posin, president of Label & Co. Developments, a Fort
Lauderdale strategic advisory and development firm, said GL "is showing
leadership in the market, and they're being rewarded at the box office."
Prices at Valencia Reserve range from $266,900 to $509,900. GL has
raised prices there by $6,000 to $16,000 in the past year, said Marcie
DePlaza, division president. Construction of the first homes began in
June, and GL expects the project to be complete by 2013.
GL isn't currently building in Broward, but it has three other
Palm Beach County developments: Canyon Springs, Greystone and Equus, all west of
Boynton Beach,
near Valencia Reserve. Another development, Canyon Trails, will begin
sales in July. None of those projects has age restrictions.
Due to the increase in sales and building, GL says it has added 18 new jobs this year.
GL is a master marketer and has acquired well-located parcels for
development in South Florida, said Ken Endelson, chief executive of
Kenco Communities, a
Boca Raton-based builder.
"They have more land, by far, than other builders," Endelson said. "You
have to turn your land into cash, and they're very good at doing that."
Analysts and buyers credit GL for the continued development of the
Valencia brand and for its stable, 34-year history. The 1,061-home
Valencia Reserve marks its seventh Valencia development in southern
Palm Beach County since 1996. The company has built more than 5,000 homes in those 55-and-over communities.
GL also was lauded recently for its aggressive stance in removing and
replacing tainted Chinese drywall in various developments at no cost to
homeowners.
"A lot of it is based on reputation," said Shelly Barnett, who moved
into Valencia Reserve a few weeks ago. "They have a system, and it just
works."
Many of the Valencia Reserve buyers are retirees who are selling their
houses up north and paying for homes here with cash. Because they can
avoid the hassles of financing, very few sales fall through, DePlaza
said.
GL customers aren't as motivated as other buyers by two federal tax
credits that expire Friday, so the builder isn't worried about demand
falling during the rest of 2010, DePlaza said.
"We definitely think the worst is behind us," she said. "We're pretty optimistic about the rest of the year."