Although its competitors around the country are selling off land and offering big discounts to attract customers, Toll Brothers has tried to keep its pricing steady. And, Chief Executive Robert Toll doesn't expect that to change anytime soon.
"I don't want to get rid of a building site in Bergen County," Toll said at the Credit Suisse 2007 Homebuilder Conference. "I don't want to get rid of a building in Princeton, or right outside of Boston or Philly, or even in a tight-in site in Dallas. We have stuff in Florida that I don't want to give away."
Toll sees it as a waste to sell off property that the company spent valuable time shepherding through the approval process. "Where we have location that took us 10 years to gain approvals, I don't want to see that stuff go through my system and out the door, as long as we're positive," Toll said. "And, we're positive."
Instead, Toll wants to keep the builder's selling, general and administrative expenses under control and focus on land that hasn't gone all the way through the approval process.
"You have to decide what deal, though you love it, requires to be cut, and what deal should be fought for," Toll said.
Also, don't expect to see Toll Brothers to put a lot of tower deals on the market. The CEO wants those projects to represent about 10% of the company's volume. Its doing towers in New York and New Jersey and is planning ones in markets like Chicago and Phoenix.
One reason for the focus on the tower sector is strong demand. The other is relative ease of entitlements. That process can stretch for years and years with conventional properties. With towers, the timeline shrinks. "We can get them approved in a year to around a year and a half," Toll said.