SUCCESS IN TODAY'S hyper-competitive home building industry is measured by one thing: land. Whether it's acres owned or lots optioned, it all comes down to who's got what and where. No lots to build on, no houses to sell. It's as simple as that. With a company's growth riding on its ability to procure good land, a talented land acquisition team is critical. Home builders everywhere are trying either to clone the quality land acquisition people that they have or lure talented ones from a competitor.
However, neither approach is totally doing the trick, especially in sizzling markets like Florida and Las Vegas. The acute imbalance between the supply and demand of first-rate land people is something more than one senior operations manager is losing sleep over.
ACQUISITION FOCUS Although the industry leans heavily on land development managers to make land saleable while suffering from a deficit of entitlement managers, builders' focus gravitates to the acquisition side of the land business. As Crystal Miller, search consultant for residential construction at the recruiting firm Kaye/Bassman International in Plano, Texas, says, the negotiation skills of a land acquisition manager are more valued in today's aggressive market.
Land acquisition managers' high-profile jobs make them appear playboys next to the engineering types populating land development and the municipal types in entitlement. As people people, they have a certain je ne sais quoi that seals deals with everyone from reticent sellers to stodgy community leaders. A land acquisition person is “someone who can smile and dial and press the flash,” says Bill Carpitella, CEO of the Sharrow Group in Rochester, N.Y. These savvy social skills and a flair for networking make them crucial assets, because they leverage relationships for the builder's benefit.
Miller says that, depending on experience, a land acquisition manager often bumps up through to a vice president of land acquisition after roughly five to 10 years. At that point, a vice president looks to segue into operations as a division president.
FINDING PROSPECTS When looking for a land acquisition manager, builders often run up against brick walls. Great acquisition people typically are difficult to entice with straight-up more cash because their coffers already are well lined by increasingly sizable salaries and hefty bonuses. James McGuire, director of Pittsburgh-based Specialty Consultants, a construction and real estate executive search firm, says that “most of these guys [already] are making twice as much as they were three years ago.”
Moreover, because a land acquisition manager's success is directly proportional to the depth of his or her local network, he or she is tethered to a specific market. “Within two to three years, if they're pretty good, they're not movable,” Miller says. However, once at the vice president level, builder expansions create new opportunities for these people to head up a division in a new region.
Even with this potential, some land acquisition people still won't bite. They know they can leverage their contacts independently. McGuire explains, “If someone gets real good at [land acquisitions], they're going to go out on their own.” He estimates that someone would only have to do one or two deals a year to rake in anywhere from $500,000 to $1 million.
Yet because so many builders strike out instead of luck out in luring land acquisition managers and vice presidents from competitors, some builders are now culling from commercial building. Carpitella says that “it's not ideal, but when the market is tight, [it can be done].” He estimates that commercial and residential land acquisition people have roughly 60 percent overlap in their competencies.
Although the need for land acquisition people is dire today, down the road experts anticipate the pressure to ease. Miller says universities with undergraduate or graduate programs in construction or real estate have caught on to the fact that land acquisition is an area in desperate need of development. They're starting to turn out talented young people with decent experience, ripe for builders to snatch up and mold in the ways that best suit their businesses. “In the next five years, [builders] are going to a have a good bed [of junior land acquisition people] to pull and steal from.”