Houston topped the U.S. charts in job growth, household formation, and population last year. It also—no surprise—logged the most housing starts with more than 28,000 homes, one-third of which were in master planned communities (MPCs). In an increasingly urban-centric world, the development patterns these communities offer have become a hot commodity. Average pricing among the top 20 MPCs rose a combined 16 percent over the past year and increased more than 24 percent compared to two years ago, according to Metrostudy, Hanley Wood’s research arm.
MPCs also protect values during market downturns. “Historically, we’ve found that during a recession, home values in master planned communities have held up better because of thoughtful planning that includes mixed-use development with jobs, retail, and professional services,” notes David Jarvis, Metrostudy’s regional director in the Houston market.
“They create some certainty for buyers, compared to subdivisions where there are no constraints on land use patterns,” agrees Laura Cole, vice president of marketing at Corbelis’ Willowsford MPC in Ashford, Va. “People are looking for a different suburban experience through town centers, a mix of uses, or thematically, such as a farm.”
Johnson Development’s communities nabbed four spots on the John Burns Real Estate Consulting list of the nation’s top 20 best-sellers for 2013. How did it accomplish this? “There is no secret formula,” says company COO Douglas Goff. “It all boils down to such critical elements as a developer’s track record, a project’s location, the local economy’s vibrancy, job growth, and having solid private and public home builder commitments.”
The MPCs it is opening today, however, are different from those scoped out 20 years ago. Walkability and mixed use are becoming more important as lifestyle amenities, Goff says. The mixed-use component is developed as soon as it can be supported by the residential population or the larger area. Proximity to employment opportunities is a selling point, too.
“If we’re in a location that can support employment and generate jobs, that’s best of all,” Goff says. “Mostly our communities are near major arterial roadways and within a 30-minute drive of business centers around Houston.”
Here, we outline the partners’ take on how to create master planned communities that have the best chance of a successful run, and offer a peek at three of Johnson Development’s best-selling communities.
CAST A WIDE NET
MPCs used to be primarily family-oriented, but now they have to offer homes and amenities that attract the fullest spectrum of potential buyers. “Family units are changing, so you want a broad array of housing types and price points in one community,” Goff says. “We call this vertical integration, with family housing on various lot sizes to town homes and zero-lot-line patio homes that young professionals, single parents, and move-down empty-nesters are interested in because they’re low maintenance.” While the pro formas don’t usually pencil out for first-time buyers, Johnson Development offers upscale rental housing to meet the large market of folks who don’t want to make a home commitment.
MINE THE DATA
Johnson Development uses sophisticated marketing and analytics tools to reach the right people in their consideration set. Data collected from website traffic and on-site visits tell the company where people live and work, what electronic devices they’re using, and their gender, age, ethnicity, number and age of children, and number of elderly in the household. Keyword searches are monitored to understand lifestyle preferences. The company targets email to prospect lists and direct mail to ZIP codes that are proven traffic drivers.
This information is proactively shared with builder partners to design and pace the different neighborhood segments and anticipate market shifts. “Our builders have designed new product lines that speak to the needs of various ethnic groups—sometimes a majority,” Goff says. “Many builders are very sophisticated and doing the same things we are.”
Johnson Development also is testing the use of virtual information centers to help sell its vision. Visitors are directed to specific locations within each community that have QR codes they can use to get maps, background information, and inventory sheets—eliminating the need for a fully staffed welcome center.
FAST-TRACK THE AMENITIES
Focus on creating a sense of place by investing more upfront in community anchors and enhanced natural features. While Johnson Development used to phase in some of the improvements, in today’s ultra-competitive market it’s important to have something physical to show right away. “You need to make a major statement with an amenity package on the ground,” Goff explains. “When we open up, our buyers want to know we have plans in place and are moving forward with construction.”
But even that is not enough. Every Johnson Development MPC has a full-time “director of recreation and fun” who is responsible for programming that appeals to every demographic in the community. “We see our role as shepherds, tending to every detail and creating a place our residents are proud to call home,” Goff says.
PLAN FOR DOWN CYCLES
Company founder Larry Johnson follows a few simple principles to weather the cycles that all large-scale communities experience. These include never falling in love with the land; negotiating the best price and terms possible and being prepared to walk away if they don’t meet your requirements; and acquiring land with equity, using debt only as working capital going forward.
“We finance our infrastructure with bank debt, but as soon as it’s completed we have builders taking those lots, so things turn over,” Johnson says. “And we monitor building inventory closely to make sure we don’t have too many ready-to-go lots on the ground at one time.”
Cultural and economic shifts are always on Johnson Development’s radar. “Really know your market via continuous research and attention to shifting consumer preferences,” Goff adds. “Keep tabs on locational characteristics such as future mobility plans, the quality of school districts, the entitlement environment, affordability, and growth projections.”
One of the nation’s top-selling master planned communities in 2013, according to the John Burns Real Estate Consulting Group, Sienna Plantation lies a few minutes southwest of Houston’s employment, entertainment, and cultural centers along the Fort Bend Parkway. The still-growing 17-year-old community encompasses a well-developed network of destinations and activities, including more than 1 million square feet of commercial and retail space and a public library, community college, and six places of worship. On site are three elementary schools, a middle school, and a new high school. Residents enjoy three major water parks, 36 parks and playgrounds, a 150-acre Camp Sienna sports complex, a golf club, an amphitheater with lakefront seating for 5,000, and acres of lakes for fishing and kayaking.
TARGET MARKET With more than 20,000 residents, this large community has move- up, lateral, and move-down buyers in all stages of life. In 2013, 33 percent of new home buyers came from Missouri City, where Sienna is located, and most of those buyers were already Sienna Plantation residents. Thirty percent of buyers were ages 26 to 35; 48 percent were ages 36 to 55.
KEY STATS Since its grand opening in 1997, more than 7,000 homes have been built on the 10,800-acre parcel, and Johnson Development expects the number of homes—priced from the high-$200,000s to several million dollars—to nearly double over the next 10-plus years. It sold 445 homes in 2013, a 15 percent increase over the previous year.
HOW IT HITS THE SWEET SPOT In the early years, Johnson Development constructed the largest private water park in the South, which set Sienna apart from any other community at the time. Sienna continues to stay ahead of the competition by adding a broad array of amenities that appeal to the targeted demographics.
FAVORITE THING Many people are on their second and third homes in the community and have brought their friends and relatives to live near them. It’s very gratifying.
WHAT THEY'D DO NEXT TIME Include a large-scale active adult community. With so many empty-nesters moving to Sienna to be near their children and grandchildren, it was a missed opportunity.
Located in Houston’s booming South Montgomery County, Woodforest opened in 2010, and now ranks sixth among Houston’s top-selling communities and 15th in the nation. It’s slated for more than 5,000 patio, single-family, and custom homes, and soon will introduce townhomes and a village for adults ages 55 and older. Here, too, amenities are the magnet. Golfers come for the 27-hole championship Woodforest Golf Club, one of the top-ranked daily-fee golf courses in Texas. Johnson Development also invested in a recreation complex with a resort-style swimming pool, spray park, tennis courts, and a full-size basketball court. More than 5 miles of walking trails connect the neighborhoods to sports fields, playgrounds, and parks. Soon residents will be able to conduct much of their daily business within the community, as 90 acres of mixed-use development is planned, and the first on-site school will open this August.
TARGET MARKET First-time buyers, second and third move-up buyers, families, and empty-nesters are on Woodforest’s radar. Local and in-state buyers make up almost 90 percent of the population, and 10 percent are from out of state—Louisiana, Colorado, and California . Sixty-two percent are ages 20 to 49, and many are young families: 74 percent of the children are under 12 years old.
KEY STATS 3,000 acres, currently populated with more than 1,000 homes ranging in price from $200,000 to $2 million.
HOW IT HITS THE SWEET SPOT Preserving trees, streams, and other natural land features has created an environment that resonates with prospective buyers.
FAVORITE THING We’ve created a place for families to make memories. The forest creates a beautiful backdrop for the homes and gives character to the amenities, which are like hidden pockets of fun in the natural setting. Instead of clearing the forest, developing, and having to reforest, our slogan is “preserve the trees,” and the protected natural environment is what buyers like most about living in Woodforest.
WHAT THEY'D DO NEXT TIME Launch at a time other than the worst recessionary period in history.
CROSS CREEK RANCH
Opening in Houston’s Fort Bend County in 2008, this community’s big draw is its backdrop: a restored, naturalized landscape and creek that threads past almost half of the homes. Formerly a degraded drainage channel, Flewellen Creek is now a healthy, stormwater-managed ecosystem. Goff says the large-scale sustainable environment, crisscrossed with hiking and bike trails and parks, gives residents a unique experience not found in other master-planned communities, which has translated to a significant increase in market share over the past few years. Other attractions include an Adventure Island aquatics playground, disc golf course, sports complex and competition pool, and Canine Commons dog park.
TARGET MARKET Cross Creek attracts the spectrum from young families to retirees. In 2013, 26 percent of buyers were ages 26 to 35, and 40 percent were 36 to 45 years of age.
KEY STATS Roughly 6,500 residential units are planned on 3,200 acres. Approximately 1,400 homes have been built ranging in price from the $200,000s to more than $1 million.
HOW IT HITS THE SWEET SPOT Convenient access to major employment centers and great school districts.
FAVORITE THING Native grasses and indigenous trees within generous open spaces is unique to a competitive sub-market. Throughout the year, there are seasonal colors, migratory birds, and wildlife.
WHAT THEY'D DO NEXT TIME Not build a 10,000-square-foot welcome center again. With unlimited access to information about our communities through the Internet, today’s buyers are much more informed than before. We are relying on technology to reach our target markets and are moving toward a modest, but very high-quality, on-site presence.
Learn more about markets featured in this article: Houston, TX.