WARSAW, Ind. - Menards, the third-largest home improvement dealer in North America, plans to develop and construct a 60-home subdivision next to its new store in this town, located between Fort Wayne and South Bend, Ind.

The Eau Claire, Wis.-based retailer's attorney, Garrett Caffee, told the Associated Press that new-home construction would benefit Menards in several ways: It encourages growth in the community, sales of building materials, and its relationship with local builders and contractors.

AP reports that Menards has already built a 160-unit community near its store in Yorkville, Ill., and is planning to develop a 300-acre parcel in Urbana, Ill., for residential construction. The retailer did not disclose which builders or contractors it would use for its development in Warsaw or Urbana, but AP quoted Jeremy Skinner, who works in Warsaw's building and planning department, who said he expects the homes would be priced in the $150,000-to-$250,000 range.

Many industry observers have long felt that it was only a matter of time before one of the industry's giant home improvement retailers stuck its toe into home building. The Home Depot, which generated nearly $4 billion in installed sales last year, has until recently been the topic of such rumors. At the very least, the line separating dealers and builders is smudged, especially among pro dealers that offer installation services. For example, a year ago Rome, Ga.-based Wheeler's reorganized its installation department - which contributes 20 percent of the company's $270 million in revenue - "so we'd be set up more like a builder," says Rick Ariail, director of installed sales. In a podcast on installed sales aired earlier this month, Mike Butts, president of DeWitt, Mich.-based construction services consultant LBM Solutions, stated that "In many parts of the country, LBM dealers are offering almost turnkey solutions, taking the house from foundation to 'dried-in,' and then turning the keys over to the builder."

Learn more about markets featured in this article: Fort Wayne, IN, South Bend, IN.