When Buz Hoffman finally signed on the dotted line to make his company a strategic partner with Del Webb, the leader in active adult housing, he could barely contain his joy.
"I couldn't sleep for a week," says Hoffman, whose decade-old Lakewood Homes is the fifth-largest Chicago home building company. "Having Del Webb's name attached to the community gives us instant credibility." Hoffman's company, which has never attempted an active adult community, will have a pretty good partner for its first.
What does Phoenix-based Del Webb get from the deal? It gets to develop communities for active adults without taking down so much land on its books. The alliance is part of a company strategy to improve shareholder value, one that it says will continue after its merger with Pulte. Del Webb wants to create new business models, expand its brands, build out existing properties faster, and introduce new products.
Split the difference
The alliance announced this spring will lead to the creation of Grand Haven, a 185-acre adult resort in the community of Romeoville, 30 miles southwest of Chicago. The community is Del Webb's first venture into Chicago's southwest corridor, but its second in Chicago.
Del Webb and Lakewood sales representatives sit side-by-side in the Grand Haven sales office. Because the two companies are offering different products, buyers will work with either a Del Webb or Lakewood representative, depending on the purchase. And for efficiency, the two companies are joining together in advertising and marketing efforts and will likely share some of the same trade contractors, says Harriet Ford, director of public affairs for Del Webb's Illinois developments. In addition, while Del Webb will manage the Grand Haven recreation lodge, Lakewood will still be involved in planning activities.
When completed, Grand Haven will include 258 town homes and 419 single-family homes. Lakewood Homes is offering three 1,300-square-foot townhouse plans starting at $140,000 along with five 1,300-square-foot single family detached plans starting at $150,000. Del Webb will build five single-family designs starting at 1,600 square feet that will range in price from $165,000 to $220,000. Of the 419 single-family homes, Del Webb expects to build about 200.
"Frankly, it's good business," says Dave Schreiner, Del Webb senior vice president and general manager of Sun City Huntley, a community located 55 miles northwest of Chicago with homes starting at $170,000. "It helps us bring the Del Webb lifestyle into a slightly lower cost product."
"We signed a joint venture with Lennar last year in Phoenix, which was the first in many years," Reaves says. "This is a significant change for us." Along with more immediate benefits, alliances are valuable learning experiences, notes Lakewood's Schreiner. "They're fast, they're decisive, and they know the market," Schreiner says. "They pick up skills from us in lifestyle planning, while we pick up skills from them in efficiency."
Learn more about markets featured in this article: Chicago, IL.