ATLANTA-BASED MORRISON Homes is no longer building in its home market—one of the nation's hottest—and as of early March was in active discussions with several builders to sell off its Atlanta division.
Kathi James, vice president of sales and marketing, says Morrison determined it would get a better return on its investment by focusing on its 10 remaining markets (see “Pick Your Spots,” below).
Morrison did well in Atlanta—the company closed on 312 homes last year, netting $4 million in profits. However, James says the combination of expensive land development costs in the region and the fragmented nature of the Atlanta market led the company to conclude that it made sense to pull out.
“There's a lot of rock in the terrain in Atlanta, so there's not a lot of flat lots,” James points out, alluding to the high land development costs. “Even so, we had a great year in Atlanta, which is what makes this such a difficult decision,” she adds.
In a published report earlier this year, parent company George Wimpey said Morrison is caught in the middle. The result is companies the size of Morrison are not successful in generating longer-term returns in excess of the costs of capital.
Morrison closed 4,422 total units and had $1.3 billion in 2004 revenue.
Pick Your Spots Going up against Pulte and D.R. Horton is tough for mid-tier builders like Morrison Homes, which is why the company stopped building in the Atlanta region and is targeting these 10 top home building markets instead: Phoenix, Central Valley, Calif., Sacramento, Calif., Denver, Jacksonville, Orlando, Sarasota/Tampa, Fla., Austin, Dallas and Houston.
Learn more about markets featured in this article: Atlanta, GA.