VOORHEES, N.J., Oct. 5, 2009 – A group of eight real estate-related companies have taken a fresh approach to doing business in today’s competitive environment by forming a Strategic Alliance. The members encourage the cooperation and sharing of resources to take advantage of new opportunities. This Alliance brings together firms from different sectors of the real estate industry: an architectural firm, two marketing firms, a construction financing firm, and structural, civil and environmental engineering firms. By pooling resources they can offer a full scope of services, helping builders and developers rethink and repackage projects in today’s changing business landscape.
 
The following is a Q&A representing key questions and responses from “Boot Camp for Builders in a Troubled Economy,” a presentation by the Alliance featured at Atlantic Builders Convention in Spring 2009. Each member shares their views and perspectives on the current state of the economy, buyer trends and builder options.
 
Question: The economy has slowed some projects and left a glut of existing inventory on the market. How can developers move their product?
Answer by Bill Feinberg, president, Feinberg & Associates:
When properties are sitting on the shelf, it is a good time to invest in redesigning and repositioning existing and future products. Builders and developers need to determine their buyer, the price point and, most importantly, what their strengths are likely to be two to three years from now. Re-approvals and new approvals in the Tri-state area can take up to three years.
 
Question: What is the long-term effect of this economic downturn on the real estate business?
Answer from Joe Di Bernardo, president, Joseph L. Di Bernardo & Associates:         
It’s a new ballgame. Developers have to be flexible and face the challenges of this market with new approaches. Everyone is re-evaluating all aspects of their development plans, re-positioning market approaches, re-designing product lines to adapt to new changes in pricing, and remarketing.

Question: How can developers secure financing in light of current conditions?
Answer by Charles Kauffman, president of C.H. Kauffman & Associates:
Building a relationship with a trusted financial institution in this environment is a good idea. Regional, local and smaller banks have emerged as an alternative to large financial institutions. They have money to lend for projects, and are looking to develop new customers. Working with a reputable commercial mortgage banker who has a good relationship with many diverse lenders is an excellent way for developers to locate necessary funding for their current or future needs.
 
Question: Considering changing demographics and product types, what key trends and growth opportunities exist today?
Answer from Bill Becker, president, The William E. Becker Organization:
Companies are looking to cut costs, and one way is through the building of smaller projects while taking a creative look at square footage and designing open floor plans, which consumers prefer.
 
Also, in the “active adult” housing market, the Baby Boomers and Generation Y have been influential. Years ago, there were less choices but today there are hundreds of communities that cater to the 55+ housing market alone. Also, an influx in single ‘boomers’ who have never been married, now comprise about 20 percent of the marketplace. Many of these buyers are single women who are looking for more square footage and are motivated by a lifestyle change.
 
The other emerging trend lies with Generation Y buyers who are looking for condominiums or townhouses in urban settings. They like the idea of less maintenance and are very interested in green amenities.
 
Question: Which marketing tools are effective in promoting a community?
Answer from Don Smolev, president, The Marcon Group:
In today’s market every prospective purchaser is focused on getting a great deal. The marketing thrust has to convince the prospect that they are getting the best possible deal before prices and interest rates start rising. Since April of this year, sales velocity has improved month to month but it will take many more months before the prices will move up significantly. So, whether it’s price reduction, free upgrades and/or options or paying taxes, mortgage payments or whatever, today’s buyer wants to feel that he is getting the most for the money.
 
Additionally, the rules of marketing have changed dramatically. Newspaper and magazine advertising are playing an ever decreasing role in marketing of homes. Today, in addition to carefully focused ads, we employ dramatic web sites and email blasts and we use blogs, Facebook and even Twitter where appropriate and who knows what will be tomorrow.
 
Question: What are the consequences of revising a development program?
Answer by Rod Ritchie, technical director of AKRF:
Revisions such as changing product types or layouts result in changes to site and subdivision plans. While that may be a good business decision, it will impact approvals. So I recommend starting the revision process early so that you’re not stuck trying to get an approval for a revised development program when the market turns around.
 
Question: Where and how will the industry grow when it gets started again?
Answer from Scott Wolford, vice president, Patton Harris Rust & Associates:
In the immediate term, developers need to stick with approved projects that are available, ranging from urban mixed-use, to suburban and even rural centers and products.
 
We are at a point where the market is moving toward more traditional urban style product, mixed-use, near transit when possible. Older and younger buyers are talking about sustainability, livability, amenities – searching for great places to live, work and play.
 
Question: When designing structural systems for large scale projects how do you keep costs in line?
Answer by Anthony Naccarato, principal, O’Donnell & Naccarato:
We advise clients to spend only what is required on structure. Anything more reduces the amount of cash available to generate sales or income. The first step is identifying the structural system that works best for a project. Clients should also think about off-site pre-fabrication to save time.
 
The use of Building Information Modeling software allows us to construct a virtual structure in three dimensions. This helps troubleshoot projects digitally and resolve building component clashes, reducing constructability-related change orders.