Tag Archives: homebuilders


Maracay Homes joins TRI Pointe in blockbuster deal

Phoenix-based Maracay Homes announced that it has combined with TRI Pointe Homes, Inc. (NYSE: TPH) (“TRI Pointe”) as part of the merger between TRI Pointe and Weyerhaeuser Real Estate Company (“WRECO”), which counts Maracay Homes in its family of builders. The transaction, one of the largest in homebuilding history, is valued at approximately $2.8 billion. It positions TRI Pointe as one of the top 10 largest public homebuilders in the United States by equity market capitalization based on the closing price of TRI Pointe common stock on July 3, 2014.

“We are excited to announce that the transaction with TRI Pointe has officially closed and that we are part of a dynamic and highly respected group of companies,” said Andy Warren, president of Maracay Homes. “The ability to tap into the financial strength of our new parent company while still remaining an active decision maker at the local level will give us a heightened capacity to grow our operations in the Arizona market.”

“With the success of this completed merger, TRI Pointe is well-positioned as a leading homebuilder focused on some of the nation’s most attractive housing markets,” said Doug Bauer, Chief Executive Officer of TRI Pointe. “Having built a stellar reputation for innovative design and outstanding quality over the more than 20 years it has operated in the Arizona market, Maracay Homes will continue to be led by the exceptional local, executive team that has helped build its standing as a market leader. Like TRI Pointe, Maracay Homes’ success is largely driven by its entrepreneurial spirit and ability to make decisions on a local basis. That philosophy will stay in place, as Maracay Homes will continue to craft customizable, energy-efficient homes that deliver comfort, style and sustainability.”

Maracay Homes’ beautiful single-family homes are designed for the way premium buyers want to live. The company will continue to offer its suite of proprietary processes and tools, which include FlexDesign® and LivingSmart®, to increase home buyers’ customization options.

Maracay Homes is one of the five WRECO homebuilding companies that have joined TRI Pointe as part of the larger merger with WRECO. With complementary geographic footprints, the new TRI Pointe companies, which will continue to operate under their respective brand names, include:

Maracay Homes – Phoenix and Tucson, Arizona
TRI Pointe Homes – Northern and Southern California and Colorado
Pardee Homes – Southern California and Las Vegas, Nevada
Quadrant Homes – Puget Sound region of Washington State
Trendmaker Homes – Houston, Texas
Winchester Homes – Washington, DC metro area and Richmond, Virginia

The leadership at all levels will remain focused on executing a disciplined homebuilding strategy, including securing new opportunities for growth. Barry S. Sternlicht, Chairman and Chief Executive Officer of Starwood Capital Group, will remain as Chairman of the TRI Pointe Board of Directors, which has been expanded from seven to nine directors. The merger with WRECO is expected to provide TRI Pointe with significantly enhanced scale, with more than 3,400 new home deliveries and $1.6 billion in revenue on a historical combined basis over the past twelve months ended March 31, 2014.

Victory Rendering

Seven homebuilders to construct at Verrado

The newest phase of residential development in the Heritage District at Verrado includes seven of Arizona’s most respected homebuilders, adding more than 630 homes to DMB Associates’ Buckeye community, now celebrating its 10th anniversary.

These seven builders, selected for their commitment to quality and design, will offer a mix of residential options. This group of builders includes national, publicly traded, international and local homebuilders. The builder roster includes: AV Homes (NASDAQ: AVHI), Lennar Homes (NYSE: LEN), Maracay Homes (NYSE: WY), Mattamy Homes, Meritage Homes Corporation (NYSE: MTH), Pinnacle West, and William Ryan Homes. These are the first neighborhoods in Verrado to feature models by Lennar, Mattamy, Pinnacle West, William Ryan Homes and AV Homes.

The combined purchase by the homebuilders encompasses approximately 150 acres, totaling sales of just over $45 million. Pinnacle West’s unique green court homes are an exciting addition to the housing options in Verrado.

“Our builders construct homes that offer flexibility, exceed expectations for today’s modern living needs and create a sense of place,” said Dan Kelly, general manager for Verrado. “In addition, the builders are keeping with Verrado’s hometown spirit by creating front porches and diverse, authentic architecture, ideal for Arizona living.”

Home prices start in the mid-200,000s for the new collection of Heritage District homes:

  • AV Homes – 170 lots, 10 home plans ranging from 1,959 to 4,072 square feet
  • Lennar Homes – 22 lots, 5 home plans, ranging from 1,875-2,515 square feet
  • Maracay Homes – 92 lots, 13 new home plans, ranging from 2,063-4,152 square feet
  • Mattamy Homes – 144 lots, 6 home plans, ranging from 1,627–2,947 square feet
  • Meritage Homes – 123 lots, 11 home plans, ranging from 2,200-4,700 square feet
  • Pinnacle West – 82 green court lots, with 4 plans ranging from 1,875-2,515 square feet
  • William Ryan Homes – 82 lots, 4 home plans, ranging from 1,933-2,806 square feet

In total, the Heritage District now includes 2,175 home sites. The District currently offers residents 16 neighborhood parks, and a fire station.

Verrado is launching new amenities concurrent with the construction of this final phase of the Heritage District, which include the opening of 16 additional new parks (total of 32 parks), the resort-styled Heritage Swim Park, a temporary dog park and the Verrado Coffee Company. Verrado also is partnering with the Litchfield Elementary School District to open a new K-8 elementary school that will accommodate up to 950 students.

The deals were brokered by Nate Nathan, Dave Mullard and Casey Christensen of Nathan & Associates Inc. in Scottsdale.


Steptoe hosts Construction Industry Tax Seminar

Contractors, developers, construction managers, and homebuilders are invited to attend Steptoe & Johnson’s 10th Annual Construction Industry Tax Seminar co-sponsored by the AzBusiness Magazine. Steptoe’s tax lawyers will bring participants an annual update on the latest developments in Arizona’s sales and property taxation.

The seminar will take place September 27, 2013 and the Arizona Biltmore Resort.
The program will focus on new legislation, which if passed and signed by the Governor, will turn the sales taxation of contracting upside down–from taxing the prime contractor to taxing the sale of building materials, except for road and bridge construction where the prime contractor will still be taxed (H.B. 2111). In addition, seminar leaders will bring you up to date on legislation (already signed by the Governor) that does away with the “permanent attachment” test under the exemption for installing exempt machinery and equipment (H.B. 2535).

Speakers include Pat Derdenger, Dawn Gabel, Frank Crociata and Ben Gardner, all members of Steptoe’s Tax Group in Phoenix. Steptoe’s tax lawyers bring to clients decades of consulting, transactional, and advocacy experience in all substantive areas of federal and state taxation.

The luncheon speaker will be Hon. John Shadegg, partner in Steptoe’s Phoenix office and former US Congressman. He will give his perspective on the Affordable Care Act and how it will impact Arizona businesses.

For more information, call 602-257-7708. Register online at www.steptoe.com.

Tax Consequences

Steptoe hosts Construction Industry Tax Seminar

Contractors, developers, construction managers, and homebuilders are invited to attend Steptoe & Johnson’s 10th Annual Construction Industry Tax Seminar co-sponsored by the AzBusiness Magazine. Steptoe’s tax lawyers will bring participants an annual update on the latest developments in Arizona’s sales and property taxation.

The seminar will take place June 13, 2013 and the Arizona Biltmore Resort.

The program will focus on new legislation, which if passed and signed by the Governor in the coming weeks, will turn the sales taxation of contracting upside down–from taxing the prime contractor to taxing the sale of building materials, except for road and bridge construction where the prime contractor will still be taxed (H.B. 2111). In addition, seminar leaders will bring you up to date on legislation (already signed by the Governor) that does away with the “permanent attachment” test under the exemption for installing exempt machinery and equipment (H.B. 2535).

Speakers include Pat Derdenger, Dawn Gabel, Frank Crociata and Ben Gardner, all members of Steptoe’s Tax Group in Phoenix. Steptoe’s tax lawyers bring to clients decades of consulting, transactional, and advocacy experience in all substantive areas of federal and state taxation.

The luncheon speaker will be Hon. John Shadegg, partner in Steptoe’s Phoenix office and former US Congressman. He will give his perspective on the Affordable Care Act and how it will impact Arizona businesses.

For more information, call 602-257-7708. Register online at www.steptoe.com.

Fulton Home building

Fulton Homes increases building

The first day of spring brought news for homebuilders that in cities across the nation potential home buyers suddenly find themselves with a low inventory of available homes to choose from. On Wednesday, The New York Times reported that many homebuilders are scrambling to find construction workers and obtain permits to keep up with the spike in demand.

While many homebuilders may have been caught by surprise, Tempe-based Fulton Homes was not.

“We started construction of nearly 100 homes months ago in anticipation of this housing shortage,” Doug Fulton, CEO of Fulton Homes, said. “Fulton Homes currently has the most move-in-ready homes of any builder in the Phoenix market.”

According to the Times story, the National Association of Realtors reports that the raw number of homes for sale across the nation is at its lowest level since 1999.

In January, Fulton Homes sold 52 homes; in February that number jumped to 87. These numbers compare to 43 and 72 respectfully, a year ago. Closings for January were 57 and 61 in February, compared to 41 and 31 last year.

“We expect to see a continual rise in the number of new home buyers who are purchasing their first home or upgrading with a new Fulton Home, “said Fulton.

According to the Standard & Poor’s Case-Shiller index earlier this year, sales prices of homes in the Phoenix area surged 23 percent in 2012. Rising prices often parallel the rise in the number of people looking for new homes.

dmb associates

DMB Associates Names 7 Builders To Be Part Of Eastmark

The first phase of residential development at DMB Associates’ Eastmark includes seven of Arizona’s most respected homebuilders, adding more than 700 new homes in Mesa, Arizona. In keeping with Eastmark’s commitment to create a mix of residential options for its neighborhoods, the mix of builders includes national, publicly traded, regional and local homebuilders. The builder roster includes: Maracay Homes (NYSE: WY), Mattamy Homes, Taylor Morrison, Woodside Homes, Trend Homes, Standard Pacific Homes (NYSE: SPF) and Meritage Homes Corporation (NYSE: MTH).

“The commitment of these builders represents an unprecedented level of confidence in Arizona’s residential market backed by promising economic indicators,” said Dea McDonald, DMB Senior Vice President and Eastmark General Manager. “We are seeing a resurgence in homebuilding activity in Arizona and in the East Valley. These builders see the value in Eastmarks’ strategic location and integrated plan, which positions this community to be an economic and employment engine for the East Valley and greater region.”

According to a report by Arizona State University’s Center for Real Estate Theory and Practice at the W.P. Carey School of Business, the inventory of previously owned houses for sale in the metro Phoenix area dropped 54 percent in April 2012 from a year earlier. This lack of supply is driving the demand of new homes, sales of which surged 43 percent from April 2011.

“As the first large-scale community to launch in Arizona in nearly a decade, Eastmark is being closely watched,” said Charley Freericks, DMB President. “We are designing the community with the ‘new normal’ in mind. People are putting higher values on a sense of community, proximity to employment and environmental stewardship. Each building partner is creating designs specifically for Eastmark and all are equally committed to the vision of this community.”

Homebuilders are accredited at the Energy Star 3 level for constructing energy efficient homes. They will soon break ground in preparation for Eastmark’s grand opening in May 2013. The seven builders’ combined investment in land and improvements is nearly $50 million and hundreds of jobs are expected across the ten neighborhoods within this first phase.

Each neighborhood will take advantage of the planned 100-acre Great Park and their own community parks, while also encouraging connections to the planned employment and retail centers. The first phase of development features 12 parks throughout Eastmark, providing gathering points for neighborhoods and enhancing the sense of community.

DMB’s Eastmark Phase One Builders and Number of Homesites:

  • Maracay Homes (NYSE: WY) – 165
  • Mattamy Homes – 163
  • Taylor Morrison – 103
  • Woodside Homes – 96
  • Trend Homes – 84
  • Standard Pacific Homes (NYSE: SPF) – 58
  • Meritage Homes Corporation (NYSE: MTH) – 40

At five square miles (3,200 acres), Eastmark is a vibrant, integrated and evolving regional community poised as “The Heart and Hub of the East Valley.” Eastmark sits at the center of a major transportation hub anchored by the Phoenix-Mesa Gateway Airport, three major freeways, numerous businesses and acclaimed educational institutions. An expansive 100-acre Great Park connects residential areas, resort components, employment cores, recreational spaces and commerce. Eastmark is the largest privately held, contiguous property in the Southeast Valley.

To learn more about Eastmark, visit www.Eastmark.com. Visit DMB Associates at dmbinc.com.

valley partnership - AZRE magazine May/June 2012

Valley Partnership Past Chairmen Discuss Phoenix Development – Part 2

Valley Partnership is celebrating 25 years as Metro Phoenix’s premier advocacy group for responsible development. In looking back – and also looking ahead – AZRE magazine brought together six former chairmen to discuss goals the group has successfully achieved and challenges that lie ahead. This is part 2 of this discussion.

Go to page one of this article.

RH: We asked this question more than 20 years ago: Do you feel the local and state government officials have a good understanding of the current real estate and banking problems in Arizona? Can that same question be asked today?

JP: I think they understand it because it is affecting their revenue significantly. Development to cities is a mixed blessing. They appreciate all of the sales taxes and the fees paid by the developers, but they have to contend with all of the complaints. Charley made an interesting point dealing with cities. Sometimes what I call the newer cities, the ones on the outskirts, don’t have the staff , the continuity or the maturity that some of the older cities have, so it’s sometimes more difficult to deal with the smaller cities. But most governments are strapped right now. That’s due to the economy and a city that is accustomed to the fees and the taxes that are derived from development. I don’t think we are ever going to have the kind of economy we did between 1994 and 2006-2007. We all have to make adjustments. Our industry has to make adjustments in terms of what we do and how we do it. We have a product to produce. Cities are going to have to make adjustments. Should cities be totally sales tax dependent? Shopping centers produce a lot of sales tax, and they welcome us with open arms. Car dealerships produce a lot of sales taxes. Shouldn’t we have a more level playing field in regards to tax generation? Just because Scottsdale has more commercial than an adjoining city, does that mean that they are going to have more revenue to support their services? I think that it is a global approach, and our cities are going to come together and address some of those concerns.

JG: I don’t think there is any question that they understand the depth of our problems. It’s all the way from their fiscal problems to the operational issues of not seeing zoning cases and their staff being cut down to skeleton-type levels. I think it is obvious that they understand that part of it. I think that when something bad or negative happens, something good comes out of it. One of the things that we are all going to benefit from in the future is that the cities are more reticent to restaff and go back to business as usual. I think from the standpoint of processing procedures, processing costs, processing time frames, and some of our worst enemies over the last decades, some of those will see some level or relief. We are also seeing some of the cities are courting us to do something in their communities. Not that they have much to give us, other than a friendly hand and encouragement to do something. But it is nice to see that they are reacting to figure out how to jump-start their own economies and their own development of their communities.

CF: I gave this question a lot of thought. We are in these long-lived projects; 20-plus years projects so you are guaranteed to have cycles. It was early in my career somebody gave me the analogy of real estate cycles. When you’re on the downhill slide, no one ever believes that there will ever be an uphill again. So the reaction is that when I talk to most of my peers, like you guys, we are starting to observe that our days are spent on positive activities or improving activities, whereas a year ago we were slugging through tenant failures, defaults and bank loans and all of that stuff . The cities are still in that downhill-looking position, so their reaction time is slower, which is frustrating. At the other end of it nobody ever thinks there is going to be a downhill again. So I love the industry. We have a balancing act; you want to take advantage of those mood swings when they work for you. But when you step back as a responsible player in this industry, you’d like to see a little more perspective and a little less reaction on the staff level. We have been fortunate. We have been in very difficult cities to deal with, which is a blessing because their staff level thinking is very good. Mesa has been through an amazing evolution with its entire team — from mayor down through the ranks. Scottsdale is a very challenging city, but it is very sophisticated and a lot of time they have a really good point. I like being held to that higher standard, even on the days I’m complaining about it. It’s nice to have lots of examples to refer different towns and cities to, and it’s nice to have Valley Partnership as a sounding board for some of those revolving towns, too.

DS: I think when the savings and loans crisis hit, maybe because it was my first downhill cycle, it seemed that more people were sort of “deer-in-the-headlights-look” than when this crisis hit. A lot of people said, “I know what mode to go into,” and even the cities knew that it was going to be a tough 4-5 years to get through. At least for me the memories of the late ‘80s early ‘90s, those that are veterans knew what you had to do and what was required at that point in the cycle.

CH: I’m going to go on a little twist. I thought Pete was going to go there first, but I’m going to the first one to throw a question back. The question is good. We talked about local and state, but what about the Feds? Is it different now than 20 years ago with the Fed? I know that for the homebuilders and mortgage regulation, it has been a lot harder on them.

PB: John made a comment about the municipalities understanding current real estate. That hit pretty solid. I don’t think what anybody understood is the way the banking system has changed and how many assets that were initially were held under the CMBS, and it is daunting to look at the RTC days and look at the special servicers of today. The banks play a role in the recovery in the downturn, and the bank’s FDIC, but the real power is coming out of Wall Street. You know what, the fascinating part of this is that they are just rebranding and heading back into something else. I mean it really is amazing to watch that place operate. And 90% of the population does not even know what is even going on in those four city blocks.

RH: What are the greatest challenges that lie ahead for Valley Partnership?

PB: Wall Street financing and the influence they have on our businesses. I think it would be a great seminar sometime. Bring in people who know how to chat about it. It’s something that now. As far as greatest challenges, I think nimbyism is right up there. We got to go vertical. The density is an issue. The economics of density is an issue. What Scottsdale has been doing lately is almost unbelievable with the 6-, 7- and 8-story apartment buildings. I thought I’d never see this. I think the downturn has some fascinating outcomes much to so many people’s dismay. But from the standpoint of Valley Partnership, how do we start switching that mentality? I don’t know if all of you agree with this, but I think that horizontal development has got to take a leap vertically, forward. And we need the politicos to support us with that.

Rick Hearn - AZRE Magazine May/June 2012

Rick Hearn

CH: I agree with that sentiment. What you’ll find is that you’ll get a number approved and then they’ll shut the door. I think it is erratic. I don’t think that they will be consistent necessarily when they determine density. I’ve already seen just in Scottsdale, with apartments, it’s a four-letter world. Even though they have enough planned, everybody is getting afraid of what’s planned, even though they won’t all show up. I think that when you have erratic behavior in a city, it’s impossible which direction. It is an opportunity to keep them educated and keep in front of them as it relates to what are the benefits.

DS: Most of the built environment that you see every day in this town has happened in the past 60 to 65 years. One of the biggest challenges that Valley Partnership has is that its membership must go forward, make a change and start addressing vertical construction. Our industry will have to start becoming better at harvesting tougher deals. I think that the days of “blow and go” at the surface is coming to a stop. In 1985, we all decided to pass a bill that we invest billions and billions into a freeway system and I don’t see a next super giant equivalent economic development dump of money like that was. I do think one of the biggest challenges for our membership, and therefore for us, is this change that is going to have to take place and really look into more sophisticated ways to do a better job.

CF: John and I were talking at a ULI gathering, saying we have a foot in each camp because we are both in very urban projects in Downtown Tempe. Pete’s right that vertical development is here to stay and it is the wave of the future. It’s complicated because the infrastructure in the cities was not sized to take on big vertical projects, so it really drives a complicated bargain for the cities and the municipalities. It has been really fun the past 5 to 6 years watching Phoenix, Scottsdale, Tempe and Mesa. When they get into that infill, they have to throw their zoning codes out and go to form-based management or some type of regulatory procedure. It is really fascinating to watch because some of these old style, stodgy cities have brought in these new-style thinkers and they’re throwing the books out and starting over. It’s really what it requires. They are going to have address the infrastructure because most of it is not sized right to go that dense.

JG: I have a general answer that I give to any organization to start with. I think that anybody that doesn’t continually evaluate purpose, value and leadership will go the way of a dinosaur at some point. The thing that Valley Partnership has actually done a good job over the past 25 years is constantly asking those questions and generating legacy-type leadership. First and foremost my hope is that we continue to adapt – as an organization. I do think, and Charley is right, that we have talked about it a lot. One of the interesting things that we can and should weigh in on is this more densification of the city and change the urban form. I think it is going to happen and if it is not done thoughtfully, the result is going to be much less fulfilling and rewarding.

JP: Maybe we are using the wrong words. I have heard vertical. What about the context of urban? Urban applies to a lot more things than verticality. It applies to design. It applies to use. It’s a small example, but look what has happened on 7th Avenue and McDowell. By converting the property, it’s jobs. It’s a planners dream. Jobs, housing, entertainment, and shopping in one spot. I don’t think that if you have a well-conceived project like that, then maybe they (cities) will have to redo their codes and maybe they might have to redo their outlook. But they get it. It’s what they were taught in school and if you can generate that excitement not only on the city level but on the community level, I think most people would get it instead of being absolutely terrified.

RH: What are the greatest opportunities that lie ahead for Valley Partnership?

JP: We are going to have to understand that our industry is going to change, I think, drastically. I don’t think we are going to Buckeye or Queen Creek anytime soon. We are necessarily talking about infill development; we are talking about the more urban concepts. That is going to involve a transformation of thinking and that is going to involve everyone in our industry. I’m excited about it. I can see opportunities within 4 or 5 miles from where we are sitting now. Same thing in Downtown Tempe. Same thing in Downtown Glendale. The same thing in any area that has a great mass of density. Hopefully an income level that would sustain a good quality development that needs the services that I provide; the need for services that all of us provide. That is the exciting challenge. It was pretty easy back in the day. You go out and buy 20 acres and put down a grocery store, some shops, and a couple of paths and you go on your way. But 6 months later you have Walmart pouring footings across the street. Our experience with infill, once is happens, it is tougher to do. You’re dealing with land assembly. You’re dealing with environmental remediation. You’re dealing with high-priced land. If you can get it done, your competition is limited.

JG: The issue is – and I have seen this a lot recently – is who is waiting for the momentum play versus things just getting better regardless of what you do? Prosperity versus the creativity play. I do think that this urbanism issue is one that will give us more lengths to recovery; a better place to live. It isn’t the only thing that Valley Partnership should focus on, but I think it is uniquely qualified to do a lot in that discussion just because of the cross section and the diversity it has in its membership.

CF: There is another dimension of redevelopment that we haven’t really touched on. Our first big project as a company was Centerpoint in Downtown Tempe. When I was going to ASU there was a lot of old, rundown stuff there. It is immensely rewarding to just go see a re-creation of things that have deteriorated and were once rundown. My personal experience, I was on the front of what was the old Caterpillar Tractor Desert Proving Grounds, and now we are doing Eastmark. We are taking these vast pieces of really underused infilled properties.

CH: There may be the need to guide the committee structure and leadership toward urban redevelopment and higher density issues. How do you back fill for infrastructure? Water lines need to be this big. There needs to be more priority put on the types of issues that Valley Partnership needs to focus on. Valley Partnership has never been a self-policing type of situation. If there was a way to get a grassroots raising of the bar in our industry, have a position and a dialogue that causes the membership to say that they want to operate at a higher bar than they are used to, a lot of good leadership could come out of it. Valley Partnership could drive the message of its own.

DS: When I look at the greatest opportunity or challenges, I have two thoughts. One is I continue to believe that the best work that Valley Partnership does is at the grassroots levels and what it does with all of its cities and towns and educating the staff and working with them to write new ordinances. Urban infill is a green field. They are going to have a lot of homework to do. In the job of being the communicator and sharer of great ideas, Valley Partnership can really play a great leadership role. I think that the challenge and opportunity is to make sure that you have the right staff and have the right committees and have people who are committed and engaged to get in there. I have been blessed to see the impact we have on city managers and planning directors and staff people by just having a dialogue and saying this doesn’t work and let me tell you why. I think that there is great opportunity.

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5 Most Important Advocacy Issues
1. Passage of Proposition 303 in 1998, which created the Growing Smarter Act and allowed for municipalities to purchase Arizona State Trust Land for Conservation. This combined with the all-out effort to defeat a Portland-Style Growth Boundary Proposal, Proposition 202, which was on the ballot at the same time.

2. Collaborated with the City of Phoenix to draft the “Big Box Ordinance,” which protected the ability of retailers to operate facilities larger than 100,000 square feet.

3. Revised the Arizona State Statutes, which regulate municipality’s ability to use sales tax revenue to reimburse commercial real estate developers for the installation of public infrastructure.

4. Revised the Arizona State Statutes to preserve the Government Property Lease Excise Tax (GPLET) to promote redevelopment in blighted areas of municipalities.

5. Supported the City of Phoenix at the Arizona Supreme Court by filing an Amicus Brief in Turken v. Gordon. The Amicus Brief helped persuade the Supreme Court that a municipality’s use of sales tax to reimburse developers for the cost of public infrastructure was not in violation of the Arizona Constitution.



For more information on Valley Partnership, visit Valley Partnership’s website at valleypartnership.org.

AZRE Magazine May/June 2012

Who To Watch: John Chadwick

John Chadwick
President, Southwest Area
Pulte Homes

John Chadwick knows there have been better days in Arizona’s home-construction industry. Last year was a challenging time for homebuilders and he believes this year will test their mettle, as well. But he’s convinced that builders with sufficient resources will find opportunities as the state’s residential real estate sector begins to crawl out of a deep hole.

Chadwick is Southwest area president for Pulte Homes, the largest homebuilder in the nation and one of the largest in Phoenix and Tucson. Looking back on 2009, he references well-documented woes – deteriorating consumer confidence and job losses that sapped demand for housing and sparked an increase in foreclosures. Noting the impact of the real estate slowdown on the industry’s families, Chadwick says, “the contraction has led to painful and necessary reductions in our work force the past year.”

Looking for a toehold in a rocky economy, homebuilders are constantly assessing consumer needs and making adjustments in designs and floor plans and price, Chadwick says.

“Despite difficulties in market conditions, Pulte still performs at or near the top of the industry,” Chadwick says. “That’s because our strategy remained the same – providing high-quality products, providing buyers with affordable housing options and maintaining a strong commitment to customer satisfaction. Those are the things that make the greatest difference in the long term – a willingness to stick to strategies.”

Another key factor in Pulte’s survival and its increasing market share is its diversified lines of business.  Pulte acquired Phoenix-based Del Webb in 2001, and last summer paid more than $1 billion for Centex Homes.

“Centex targets the first-time home buyer,” Chadwick says. “Pulte is targeted to the first-time move-up and move-up buyer. Del Webb delivers lifestyle communities principally to the active-adult buyer.”

There is hope for homebuilders with strong financial backing, Chadwick says. Thus the Centex acquisition and Pulte’s purchase last year of the 480-lot Rancho del Lago in Vail, southeast of Tucson. It now is a Del Webb active-adult community.

“There will be more to come.” Chadwick notes, adding that he is optimistic about the outlook for Arizona’s residential market.

“On a competitive basis, the Southwest – and that includes Phoenix and Tucson – has returned to affordability,” Chadwick says. “Price declines in housing have positioned Phoenix and Tucson for long-term growth relative to other Western states. They have a great quality of life and strong employment prospects and that makes those markets attractive on a long-term basis. Clearly, we are still in a challenging market environment, but I am encouraged by some signs that a recovery is in sight.”

Those signs include stabilizing prices, an increase in existing-home sales, demand for appropriately priced homes in good locations, a slowdown in foreclosures and a welcome reduction in inventory, he says.

“There is far less new-home inventory in the market and that is a great indicator of an improving supply-and-demand environment,” Chadwick says. “For builders with the resources, yes, 2010 will bring new opportunities to them.”


Arizona Business Magazine

January 2010

Stimulus Effect

Infrastructure Companies Are Big Winners Under Plan To Jumpstart Economy

Construction companies, big and small, figure to be the primary beneficiaries of some $4.2 billion in federal stimulus money that will flow into Arizona in the months ahead. But economists and industry officials say businesses across the board will share in what could be a spending bonanza.

Clearly not everyone is in construction. Yet, as major projects move from drawing boards to construction sites, laborers and management teams are in a better position to perhaps buy a car or get an old one repaired, purchase a needed washer or dryer, go out to dinner, or shop for clothes for their kids. That’s what many see happening as the money flows downstream.

Industry experts say estimates of the multiplier effect range from 3.5 to 5.5, meaning that for every dollar spent on construction, the impact on the rest of the economy is $3.50 to $5.50. Others say that every $1 billion spent on construction results in 35,000 to 40,000 jobs.

Other businesses in line to benefit include those related to health care, energy efficiency and home improvement. And it will help if a business is savvy about coping with government bureaucracy.

There are debates about whether the Obama administration’s $787 billion stimulus package involves too much government or not enough government, but everyone seems to agree that government has to do something to pull the nation out of the worse economic downfall in decades.

Economics Professor Dennis Hoffman, director of the L. William Seidman Research Institute at Arizona State University’s W. P. Carey School of Business, is among those who expect stimulus money targeted for indigent health care to have a ripple effect, impacting hospitals and health professionals. But, says Hoffman, who has done projects for Del Webb Construction, the Arizona Department of Transportation, the Arizona Department of Environmental Quality and APS, there is more.

“Any private sector business that supports K-12 and to some degree higher education, will benefit,” Hoffman says.

He includes suppliers, and maintenance and construction firms that serve the education field. Above all, construction companies involved in infrastructure and road building will receive what Hoffman calls “a needed shot in the arm.”

“The general contractors have been begging for this,” Hoffman says. “They were absolutely on the front lines working for this injection, because their businesses were dead in the water.”

Of the $4.2 billion in stimulus money, $522 million is allocated for transportation.

David Martin, executive director of the Associated General Contractors, Arizona Chapter, echoes Hoffman’s assessment. “All highway and heavy construction firms will be beneficiaries,” Martin says.

Additionally, contractors who work on education facilities, particularly in lower-income areas, and those that build water-treatment facilities, emergency shelters, and public infrastructure projects, such as streets and sidewalks, should benefit. Martin calls it “neighborhood stabilization.”

David Jones, president and CEO of the Arizona Contractors Association, says companies with experience in public works projects will benefit, especially those that “historically understand red tape and the bureaucratic levels of federal contracting.”

Utility companies should be able to take on energy-related projects, and work should be available for companies that retrofit residential, schools and government buildings to solar energy, Jones says. Women, minority and disadvantaged business enterprises, plus businesses run by war veterans “will have a place at the table,” he adds.

Homebuilders could benefit from projects on military bases, such as single-family units or replacing aging barracks.

Doug Pruitt, president and CEO of Sundt Corp., says contractors such as Sundt are positioned to do well in the stimulus world because of the company’s broad market diversification.

“We do highway work, industrial, water and sewage treatment, university work, K-12 — a whole host of building work,” Pruitt says.

He doesn’t expect much school construction, however, because nationally only 8.3 percent of the $143 billion allocated for construction is set aside for schools. Most of the money will go for highways, bridges and water-related projects, with funds funneled through such federal agencies as the General Services Administration and the Army Corps of Engineers.

Pruitt says Sundt is focusing on its federal divisions and moving personnel from other units that have suffered because of the economy.

At Sunstate Equipment in Phoenix, which rents a full line of hand tools to heavy equipment, CEO Benno Jurgemeyer says it all comes down to “job creation and getting consumers back in a spending mode.” He says his company would benefit directly from highway or vertical construction, and indirectly if the stimulus package keeps office buildings and retail centers rented and full of employees and customers, thus accelerating the development process.

Jeff Whiteman, president and CEO of Empire Southwest, an authorized Caterpillar dealer for heavy equipment including off-highway tractors and trucks, says his firm should see some benefits, but adds: “I think it falls far short of being a true stimulus package and truly creating jobs. What we have is better than nothing. It will help us as construction picks up and hopefully some highways are built.”

Typically, businesses such as Empire Southwest are the first in and the first out of a recession. When housing construction stops, site preparation and development stops, and when housing is ready to resume, site preparation resumes. But in today’s economy, so many improved lots are ready for building that Whiteman says his industry’s recovery will be tied to heavy and highway construction.

Pulte Homes - Best of the Best 2009 presented by Ranking Arizona

Best of the Best Awards 2009: Real Estate Residential

Real Estate Residential Honoree: Homebuilders: 12 developments or more

Pulte Homes and the Communities of Del Webb

Pulte Homes and the Communities of Del Webb - Best of the Best Awards 2009 presented by Ranking Arizona

Photograph by Duane Darling

Building on a reputation of quality home construction and commitment to superior customer satisfaction, Pulte Homes and the Communities of Del Webb provides customers a home buying, building and living experience second to none. With more than 90 years of combined experience, Pulte Homes is positioned for success in Arizona with neighborhoods such as Anthem Parkside and Anthem at Merrill Ranch, Bella Via, Stetson Valley, Festival Foothills, Cabrillo Point, Red Rock and Vista at Fireside at Norterra. The company’s Del Webb communities, such as Sun City Anthem at Merrill Ranch, Sun City Festival, Fireside at Norterra and Fireside at Desert Ridge, Solera at Johnson Ranch and Sonora, are known for their unparalleled amenities and programs for residents.

Pulte’s Arizona presence includes two Phoenix divisions and one in Tucson, as well as the Pulte Building Systems Division in Tolleson.

16767 N. Perimeter Drive, Scottsdale

Year Est: 1956
Developments: 89
Principal(s): John Chadwick
Price Range: $100Ks – $800K+

Real Estate Residential Finalist: Architects: Residential

Carson Poetzl Inc.

Carson Poetzl Inc. is a fullservice architectural firm with a rich history and focus dedicated to high-end custom residential architecture. It approaches the highest level of design and service by closely working with builders, interior designers, landscape architects and engineers. It offers a wide range of talents that are represented in designing styles ranging form cutting-edge contemporary to historically accurate. It tailors each project around the clients’ needs and desires, while working to create a blended harmony between the architecture and its surroundings.

7522 E. McDonald Dr., #G, Scottsdale

Real Estate Residential Finalist: Nurseries: Plants/Trees

Moon Valley Nursery Inc.

An Arizona native, Les Blake started Moon Valley Nurseries in 1995. Realizing a demand for affordable planting services, Blake implemented the “You Buy It and We Plant It” strategy for marketing trees and plants. The strategy was an instant success. As the volume of sales increased, so did the demand for quality trees. Blake expanded the growing operations to maintain the supply needed to keep up with increasing sales. This promoted a higher level of quality control and increased cost effectiveness. Moon Valley Nurseries has nine Arizona locations, serving all cities in the Valley.

18047 N. Tatum Blvd., Phoenix

Best of the Best Awards 2009 presented by Ranking Arizona