In Charlotte, N.C., 30 months ago, if you weren't in the home building business, more than likely you had never heard of C.P. Morgan Communities. Before 2005, the Indianapolis-based builder wasn't even a minor blip on the radar. But now, with 1,300 home closings in 2006, C.P. Morgan owns the No. 1 position among Charlotte's home builders.
Starting from zilch, C.P. Morgan captured about 5.2 percent of a 25,180 permit new-home market in America's seventh fastest growing metro area–a market that created almost 30,000 new jobs in 2006 and added 61,000 new residents to its environs, according to Big Builder sister company, Hanley Wood Market Intelligence (HWMI).
"I've spent 40 years in this business," says former longtime Centex Homes sales manager Ed Dunnavant, who now is director of the North Carolina region for real estate market research advisors MetroStudy. The C.P. Morgan phenomenon "is one of the most fantastic growth stories I have ever seen," Dunnavant says. "They brought a single-family detached product in here that competed in price with what other big builders were doing townhomes and condominiums for, but was 2,200 or 2,300 square feet. And they did a fantastic job marketing and driving people to the sites."
Desperation–namely, chronic, virtually life-threatening, fundamental new-home sales doldrums in its Rust Belt bread-and-butter regions of Indiana and Ohio, when so many other new-home geographies were on steroids in the early part of the decade–fueled C.P. Morgan's incursion southward. It planned to recreate its business model of providing virtually impossible-to-beat square footage for the money in farther flung markets, but ones not so far away from its home turf that it couldn't draw from management oversight, and a subcontractor base already prepped and streamlined for fiercely competitive markets.
Forty-something other big builders with already extant operations in the Charlotte area and scores of others who are now jealously eyeing ways to parachute in and join the party in a market where houses of all varieties and price-points are still selling at a healthy clip (four or five homes per 100 units per month absorption rates) might only wish they were so desperate three or so years ago.
In uncanny chicken-and-egg logic, Charlotte is a new economy "have" in a United States of metropolitan of "haves" and "have-nots." For starters, a climate temperate enough for outdoor recreation 12 months a year, but with seasonal diversity enough to satisfy fall foliage buffs. Attracting growth these days, however, are attributes such as an internationally famed state university branch, an unusually well-thought-out interstate highway infrastructure, and an international airport that U.S. Airways considers as its headquarters hub.
Put natural beauty and amenity together with infrastructure and education, and you've got a young people magnet. Young people magnets attract corporate relocation. Seven Fortune 500 companies call Charlotte their headquarters town, and hundreds of others have located major East Coast bases there. Jobs, in turn, attract more young people, expanding the talent pool and the process self-perpetuates–talent, jobs, more talent, more companies, more jobs.
"While banking and investment banking almost always seem to be the starting point for any discussion on Charlotte's economy, there is much more going on in the Queen City," observes Wachovia Bank senior economist Mark Vitner, who is based in Charlotte. "There has been a notable pick up in large corporate expansions during the past six months. The Charlotte Chamber of Commerce's most recent tally of relocations, expansions, and new-business startups found a total of 809 announcements during 2006, and 2007 has gotten off to a strong start. ?The region is still a big draw for corporate and regional headquarters, but is now also attracting a number of engineering and research operations. Manufacturing and distribution also posted solid gains."
The good news for home builders amid all this business and economic growth has been the availability of that most precious of commodities–land. Although Mecklenburg County, which has the North Carolina capital city of Charlotte as its county seat, has begun to max out in single-family options, at least seven other surrounding counties–each well-served with multi-lane interstates, I-40, I-77, I-85, and the newly completed beltway I-485, and an incipient light-rail system–offer convenient commuting options to Charlotte business centers.
"The barriers to entry for the big boys have been minimal," says MetroStudy's Dunnavant. "They've had steady business, but profit margins here are hard to grow, given the competitiveness, the diversity of product, and the availability of good land positions in every direction out of the center of the city."
Learn more about markets featured in this article: Charlotte, NC.