Grand Haven's Austin Developments
Canadian-based builder and developer Brookfield Residential Properties is expanding its presence in Texas’s capital city with the purchase of Austin-based Grand Haven Homes, which operates about 15 active communities with homes ranging from the mid-$200s to the mid-$600s. The deal closed last week, and is expected to be announced later today by executives from Brookfield. 

Brookfield has been a suitor in some of the more high-profile land and asset deals in the past couple of years, including the five Weyerhaeuser companies TRI Pointe won, and the Shapell Industries tracts in California that Toll Brothers landed. One might expect the company aggressively to define its operational footprint to leverage its land and development holdings along with its home building operations, which include Austin (and San Antonio), Denver, Los Angeles, Northern California, Phoenix, San Diego, and Washington, D.C. in the U.S., and Calgary, Edmonton, and greater Toronto in Canada.

A Grand Haven Homes model
A Grand Haven Homes model

While Grand Haven didn’t rank in the Top Ten in closings in the Austin market in 2013, which is dominated by nine publics, the builder seems to have carved out a niche, playing to the upper end of the market and also offering a high level of personalization. Grand Haven says it has more than “83 years of collective home building experience,” according to its website.

Austin is more fragmented than other housing markets around the country with its Top Ten only controlling about 60% of the market. In most places the Top Ten control about 66% of the market, according to UBS. 

Brookfield made its foray into the Austin area, which ranked sixth nationally in closings in 2013, in 2007 with the Blanco Vista master-planned community in San Marcos, according to its website. Since then, it has introduced Addison, a-195 acre master planned community, and Easton Park in Austin. 

Like much of Texas, Austin has surged during the recovery. “Job gains in Austin and San Antonio have outpaced the national average over the past few years, contributing to strong demand in both of these markets,” UBS said in a recent report about the two Texas markets. “In 2013, closings in the former rose 26%, compared to 14% in the latter, with faster wage growth in Austin likely leading to its relative outperformance.” 

UBS went on to say supply constraints helped stall demand in 2014. But affordability also played a role. Though Austin finished 2014 on a high note and ended up with a 13.7% increase in single family starts compared to 2014, closings dropped to 5.2%, according to Metrostudy. 

“This leads to the question: ‘Are the fundamentals of housing demand in Austin strong enough to overcome rising prices and stagnant income growth?” Metrostudy said in a recent report on the market. “The answer has to do with pricing and the ability, or inability, to produce lots and housing at significant levels that can cater to the under-$200,000 market.”

This is one place Grand Haven wouldn’t appear to help Brookfield. Grand Haven doesn’t offer houses under $200,000 and mainly seems to generally stick between $300,000 to $600,000 level, when surveying the open communities on its website. 

Grand Haven offers buyers a smaller-square-footage Cottage Series that offers one- and two-story detached homes ranging from 1,300 to more than 1,760 square feet in a gated enclave in attractive locations. The builder also offers a luxury line, called GH Reserve that features “grand design, top-of-the-line interior features and an even higher level of personalization,” according to the builder’s website. It also premiered a program called Grand Haven LIFEZONES designed to “offer homeowners a true sense of personalization in their new home.”