The McKee Group, a Springfield, Pa.–based builder, expects to close 69 homes. That would be a healthy 60% increase over its closings in 2011, but a far cry from the 235 homes it closed in 2007.
However, unlike many other builders that saw their closings plummet during the recession, McKee was able to fall back on several other cash flow–generating business units within its operations. These include six self-storage facilities, a portfolio of more than 500 rental apartments, a division that sells manufactured homes, a commercial division that develops raw land for construction of offices and purchases existing properties, and a business that manages a marina in Wildwood, N.J., that McKee Group built in the 1990s and includes a service department in New Jersey and new and brokerage yacht sales facilities in New Jersey and Maryland .
“We’ve always been an opportunity-driven company, and made a conscious decision to run a balanced business,” says Frank McKee, the company’s president, who began building garden apartment complexes with his father in the 1970s. On Monday, McKee, his daughter Jennifer (who runs the company’s manufactured housing division), and Mick Kenney (a 13-year company veteran to took the reins of its new-home division last October), spoke with Builder about McKee Group’s unique set up. (McKee’s other daughter, Kate, runs its self-storage and office buildings businesses.)
McKee Group builds primarily for active-adult buyers; all but one of its nine clubhouse communities in Delaware, Pennsylvania, New Jersey, and Maryland are age-qualified. These communities offer condos that range from 1,100 to 1,400 square feet and are priced from $199,900 to $254,000. Single-family ranches and carriage houses range from 1,220 to 2,402 square feet and are priced from $219,900 to $441,990.
McKee sees new-home sales, which are budgeted to contribute 41% of his company’s total annual revenue in 2012, as “coming back.” McKee Group is currently working on its first walkable community in Concord, Pa., near Wilmington, Del., which Kenney says will feature smaller, 40- to 45-foot-wide homes. However, McKee doesn’t expect closings to reach 2007 levels (when new-home sales equaled 67.7% of total revenue) for quite some time, or even to equal the company’s sales in 2001 for a few more years.
The company also manages three “village” communities that sell manufactured homes produced by Skyline Homes, which McKee has partnered with for years. New homes in the villages are available for as little as $78,900 for a 903-square-foot unit with two bedrooms and two bathrooms; larger and more elaborate models cost up to $173,900. Jennifer McKee says the company is focusing on expanding its existing village communities, and expects to sell between 20 and 24 units this year. Her father adds that adding modular homes on permanent foundations to the villages’ offering is a future possibility.
While McKee Group hasn’t built any new rental apartments for awhile, it continues to look for new properties to buy as well as land for new construction. However, McKee differs from other builders when he suggests that the run-up in monthly rents might be cresting sooner than later.
On the other hand, McKee sees “a lot of opportunities” in land development for new-home construction going forward.
John Caulfield is senior editor for Builder magazine.
Learn more about markets featured in this article: Eugene, OR.