Master plan development isn't what it used to be. It's tougher now. By David Frame
The notion of what constitutes a master planned community has evolved tremendously in recent years. What used to be a swim-and-tennis subdivision is now a huge, highly diversified project that can have 5,000 units -- or more. Coordinating the various pieces that go into the community's creation -- which is the function of the development business -- has become crucial to the project's success. And the trend toward creating many separate villages with elements like trails and parks makes the process that much more detail intensive.
It starts with what we call "the big idea" for the community, that is, the concept that embodies who the target customers are and what they want. Our market research tells us what percentage will be empty nesters, what percentage will be families, and so on. That, in turn, leads us to the builders who can provide the right product and the level of customer service we seek.
You can't go into master plan projects today with the idea that you're simply a developer of lots. You're a developer of a huge community for people to live in, and in some cases, to work in.
In recent years, builders and developers have reached a greater understanding that our interests are aligned. When builders sell a home, we sell a lot. You can't have a situation where people love the homes and are not satisfied with the community elements. Everything has to work, from the entrance to the builders' sales offices.
That's why our due-diligence process includes not only looking at a builder's financials and its record on customer satisfaction, but also its model merchandising and selling methods. That sales process needs to mesh with ours so that together we deliver a clear message about the homeowners' association, technology, club membership structures, and other elements.
Selling the buyer on the community should be the first step in this process. It's a decision that most people make fairly quickly, so the initial contact and impression can make or break a deal before the buyer ever gets inside a model. We start by taking prospective buyers through our information centers where, in a 15-minute presentation, our staff presents the community, the schools, and the lifestyle. Then buyers move on to the builders' models. Sometimes, it's difficult to get builders to understand that the process has to work that way, but it's the approach we've found most successful.
Creating a seamless experience for the customer is a big part of the evolution in master plan development, and it's our daily challenge. Companies like Del Webb and Arvida do a great job of this because they control every component, right down to how a piece of litter is handled on the job site. As the developer and builder, they are able to provide this seamless experience as a matter of policy and culture. But we don't home build, as a rule, so for us the team approach is essential to staying true to the big idea throughout the life of the project.
Another recent change is in developers' use of sales information to create trend lines. This helps the builders adjust their pricing effectively. Sometimes builders confuse pent-up demand with sustainable demand, and they'll raise prices too high, too fast. We see it over and over again -- as you get rapid price increases, you can see absorption go down dramatically. Using databases to watch trends help prevent that.
Sometimes we can all lose sight of those for whom we're creating the community. Acting as a team can help us make sure that we're building what we the customer wants and not what we want.
--David L. Frame is executive vice president and COO of Terrabrook, a Dallas-based developer of master planned communities with operations in 26 markets. Previously, he spent six years with Arvida and was a partner with Trammell Crow Residential in Florida.
BIG BUILDER Magazine, March 2002