In the chill of a Minnesota winter, the Woodbury, Minn., community of Dancing Waters could easily be nicknamed Frozen Waters. But underneath the snow and ice, something quite hot is happening at this suburban St. Paul development.
With one notable exception (David Bernard Homes, a division of former public builder Rottlund Homes, which is based in Minnesota), all the companies at Dancing Waters are smaller, local builders. Many deliver between 30 to 50 homes annually, a volume that puts them at a disadvantage, purchasing-wise, compared to their national counterparts.
But led by developer Terry Forbord, the 14 builders at Dancing Waters are leveraging not each individual company's size, but the development's volume (1,148 homes) for improved purchasing power and more marketing muscle from select manufacturers than they ever could have obtained alone. “We're giving small builders an opportunity they would otherwise never be able to have,” Forbord says, who is so committed to this project that he has agreed to take me out on Christmas Eve day to show me around. Forbord's enthusiasm is contagious—five builders also have given up their busy holiday morning to show me their model homes and share their experiences.
Manufacturers are just as excited about Dancing Waters. “This helps these guys be more efficient and deliver more value by grouping them up and making them look bigger than they are,” explains Patrick Janes, marketing manager for new residential construction at Andersen Corp., the Bayport, Minn., window and door manufacturer. “They get a taste of what the big builders are enjoying because of their clout.”
A New Deal The initiative is the pet project of Forbord, president and managing partner of Laurent Development Co., the Shakopee, Minn., developer responsible for the creation of Dancing Waters. From the start, the energetic developer envisioned the 450-acre community as a showcase for Minneapolis and St. Paul's independent builders, parceling the land into a series of neighborhoods, each with its own identity; building a network of trails, and even spending thousands of dollars on original sculptures commissioned for the entrance and pool area. “It's really how our business model works,” says Forbord, “to provide independent builders with communities like no other.”
The cheery Forbord takes obvious pride in the Woodbury development. As he drives his SUV through the curving streets, he directs my attention to the clubhouse, the central park, and the children's sprinkler play area. He talks about how special these builders are, how high quality their homes are, and how difficult it can be for smaller builders to stay competitive in land and other areas.
In Dancing Waters, Forbord already had created a distinctive community for these independent builders, but he wanted to do even more for them. So he went to the builders, asking them to use certain products exclusively within the development, an arrangement that would result in advertising promoting the builders and the community, collateral materials for model homes, support for a sales seminar with trainer Tom Richey, and more. The manufacturers and their products: Andersen (windows), James Hardie (fiber-cement siding), and CertainTeed (roofing), all of whom offered materials appropriate for Dancing Waters' move-up homes and builders.
The manufacturers loved the idea. “There were a lot of things in this project that made us excited,” says John Dybsky, marketing manager for James Hardie's northern division, who says the company saw Dancing Waters as a great place to raise the profile of its product in the Twin Cities.
To CertainTeed, the concept offered two benefits. First, it represented a chance to explore new business relationships. “We don't know developers. We know builders,” says Mark Bayley, director of sales at Certain-Teed. Second, it also promised more deal-making efficiency. “This is a unique opportunity for us to get our product specified in the entire development,” Bayley says. “Usually we have to get specified by each builder, which can be time-consuming.”
And at Andersen, the Dancing Waters proposal opened up a host of opportunities for the supplier and the builders. “This is 1,148 homes at one time, so there is a huge advantage to working with this opportunity,” says Tim Carlson, a district sales manager for Andersen, who worked with Forbord and Janes on the program. The builders “now have enough scale as an organized group. They're big enough to do something really creative with, something we can truly get our arms around.”
Building Trust The builders, wary of what tradeoffs might be required, took longer to convince. “There was some fear at the beginning that we'd be limited in our choices,” admits Gary Laurent, president of Laurent Builders (a home building company affiliated with Laurent Development Co.) in Shakopee, Minn., walking through a model filled with natural light and rich woodwork. “But it worked out fine.”
My trip through the models at Dancing Waters, many priced in the $500s, suggests why this was such a worry. From house to house, each one contains features establishing its status as no ordinary production house. In Pratt Homes' empty-nester house, furniture-grade birch paneling brings warmth and craftsmanship to an office nook. At a Laurent model, knots add character to a hickory floor. Full-length windows in a master bedroom draw light and attention in a McDonald Construction home.
But the Dancing Waters builders soon realized the advantage of banding together. The builders liked the look and performance of Hardiplank, for example, which they believed would bring a more upscale image to the development. They wanted the marketing support the manufacturers promised to provide: thousands of dollars in radio spots, direct mail, and advertisements in daily newspapers, local home publications, and even regional magazines such as Midwest Living. “It's a pretty extensive campaign,” says James Hardie's Dybsky.
The builders welcomed the idea of creating a new-home community that supported, rather than sabotaged, their focus on quality and finish. “The difference here is a quality consistency in all the houses” that puts all the Dancing Waters builders on the same level, says Mike Rygh, president of Custom One Homes in Cottage Grove, Minn. He tells me this as we stand in a $575,000 home with alder-wood cabinetry, a generous fireplace, and giant picture windows overlooking a very snowy backyard. “It's hard to compete in [other developments where finish and price points vary dramatically] because the buyer is looking at the initial price.”
And the group approach gave the builders the opportunity to use products that they previously could only afford to offer as customer options, not standard specs. When the builders finally took the leap, they immediately saw the impact of their Dancing Waters connection on manufacturers. When Pratt Homes, a Vadnais Heights, Minn., builder that does 40 homes annually, met with Andersen, about the project, the window manufacturer was “very responsive,” says company president Len Pratt, who had previously offered Andersen only as an option. “Everyone had everyone's attention. They were working with us and listening to us.”
Still, cooperation has its limits. Pricing issues are being handled individually between builders and the manufacturers' existing distribution network, with dealers and suppliers providing additional services, significant advertising for the builder and Dancing Waters, and, depending on negotiations, new pricing on the products.
The arrangement has already begun paying off for the builders. Thanks to his Dancing Waters involvement, Pratt, for example, estimates he saved roughly 5 percent on his windows, with another 5 percent in value added through the extensive promotional campaign. “There's a real benefit, which I saw right away,” he says. “In this particular case, I got a commitment I haven't had before.”
The Bottom Line Company: Laurent Development Co., Shakopee, Minn.
Goal: Boost manufacturer interest and commitment to independent builders by treating the builders as a group and leveraging their total (and significant) volume within a community.
Looking to leverage your development's volume into greater buying power and more attention from manufacturers? Here's a handful of lessons from Dancing Waters.
Learn more about markets featured in this article: Minneapolis-St. Paul, MN.