Many in the housing industry believe that success in this market means meeting the needs of value-driven buyers. But the management team at John Laing Homes is challenging that by betting a rebound on the luxury buyers. The company's most recent move to capture more of these high-end home seekers is to add a bolt-on custom operation to its luxury brand.
The new business, called Custom Residences, falls within the realm of the company's Laing Luxury division and has a footprint limited to the coastal areas of California in Orange County and northern San Diego County. Craig Delahooke serves as director of the custom operation, working with Laing Luxury director of sales Jeff Golden to drive the new business venture. Delahooke has been the luxury division's landscape program manager since 2005.
The launch, while a move to generate revenue during the slow market, also reflects a push from parent company Emaar Properties to diversify the luxury brand. Already, Laing Luxury has branched out into several new product types. It ventured into podium building with its Icon at Playa Vista community and is in the process of completing a 21-story luxury tower in Beverly Hills for Emaar, which purchased the property last fall from Fifield Cos. for $95.8 million.
But whether Emaar's thrust toward higher price points will extend to John Laing's core production home operations is debatable. Recently-appointed chief executive Robert Booth, who replaced longtime CEO Larry Webb in May, has been tightlipped about his plans for the company. However, high-end is where the bulk of Emaar's residential real estate portfolio lies and supports the diversified company's mission to become a "global provider of premier lifestyles."
However, Delahooke said that the custom-home program was a new business idea that had been kicked around for years. People often approached the semi-custom luxury division, requesting a custom home. But the high-velocity times of old prevented the division from pursuing it; semi-custom buyers were too plentiful and production schedules too taxed to add a custom building component to the business.
But all that started to change about a year ago when one particular Laing Luxury buyer wanted a pool house. Delahooke worked on the project, which started out as a reasonably sized detached pool house and grew to an attached 10,000-square-foot pool house with subterranean access. Then another buyer bought an inventory home and wanted to do an extensive custom conversion of the interior.
Delahooke stressed that the company is not headed into the remodeling market but said that the complexity of the two projects helped the custom home building program gain traction. "The only difference between what we are doing now and custom was that the client owns the property, decides the architecture, and drives the schedule," he said.
Because there's overlap between the custom and semi-custom businesses--the two share design, building, and trade partners--the company gains access to additional revenue streams without adding operational costs while buyers get a turn-key custom home experience.
And these days, corporate has a tight focus on streamlining the company. Recently, executive management restructured some of its divisions, consolidating divisions in California and Colorado. According to company sources, operations in the Central Valley, Sacramento, and the San Francisco Bay Area have been combined under the Northern California division mantle while four divisions--Inland Empire, Los Angeles-Ventura, Orange County, and San Diego--have been consolidated into a single Southern California division, headed by former Southern California regional president Steve Kabel.
"Everyone has closed a division or two in Southern California," said Peter Dennehy, a senior vice president with Sullivan Group, a real estate advisory firm.
The restructuring aims to reduce redundancy, which translates to layoffs on the local level. For example, the newly-merged Colorado division, to be headquartered in Denver, counts little more than 20 staffers total, according to local sources familiar with the restructuring. Roughly half were with the Denver operation while the other half came from Colorado Springs.
A final tally on the exact number of employees laid off as a result of the restructuring is currently unavailable; Big Builder's requests for an interview with Booth were declined.