New Horizons
Simonini Builders,
Charlotte, N.C.
Founded in 1994, Simonini Builders forged a reputation throughout Charlotte and the Carolinas as the premier luxury and custom home builder in the market, known as much for executing brilliant design as delivering top-notch quality and performance. The company’s portfolio boasts more than 700 homes in those 16 years, an enviable pace for a shop that provided a true custom home experience to its buyers, even when it built from a portfolio of plans devised by some of the country’s leading housing architects. That Simonini Builders racked up numerous design awards for its work—including Builder’s Choice Grand awards in 2002 and 2007—is secondary to the comfort and style it has delivered to its buyers and the timelessness of its neighborhoods.
Q: How have you adjusted your business in response to the current housing economy?
Ray Killian Jr., co-founder and CEO: We announced in early September that we would be winding down our business by the end of this year. We’ve experienced unprecedented changes in the economic environment and financial values in the housing industry that simply will not allow us to sustain this business. We decided to do it now because we’re not seeing it get any better in the short term.
Alan Simonini, co-founder and COO: The market for the million-dollar homes we used to build is now so slow and so small that we have to look at other opportunities [that don’t suit our current business model].
Q: Where do you see those opportunities?
AS: In this town, the merchant builders have gone south of $350,000, leaving what we think is a large market in the $400s to $600s that is not being addressed.
Q: How have you addressed that opportunity?
AS: We engaged [architecture firm] Bassenian-Lagoni to help us make functional, comfortable luxury homes work at that price point. The result is our Island Collection, a series of seven architecturally designed homes [each with three elevation choices] that we’re building and selling in the $500 to $600s.
RK: Even with a higher per-foot cost than the merchant builders, we’ve presold nine units in that collection [since early 2009] to a segment of buyers that are still willing to pay for a higher level of finish and a design and building process that feels like it’s custom even though it’s from a portfolio of designs.
Q: Given the economy, what do home buyers value now?
RK: We spent a lot of time surveying and asking buyers to help us come up with the program for the Island Collection. We found that they still value large master suites, outdoor living areas, and combined kitchen-family-eating areas.
AS: They’ll live with smaller secondary rooms if they get those things that Ray mentioned, and they’re also accepting flexible-use spaces instead of separate rooms for exclusive uses.
RK: Really, it comes down to figuring out what the banks value and will appraise properly to fund a [mortgage] loan. We lost the ability to get those values on our higher-priced luxury homes. We offered so much more than our competitors and the merchant builders, but stopped getting credit for it on appraisals.
Q: Do you think those values will shift when the economy recovers?
AS: I think there’s been a fundamental value shift [among consumers] that excess is not cool and that efficiency is. That could change, but it won’t happen soon.
RK: If you look at the demographics, Boomers have been slapped in the face and are realizing that at 60 years old they probably won’t get another bite at the apple [of excess], so they’re looking at what we call “right-sized” living. And those in their 20s and 30s are into efficiency. As long as they have their technology, they’re happy. Besides, new banking standards won’t allow that kind of excess in the future.
Footnote: In announcing that it would cease operations by the end of this year, Killian and Simonini indicated that third-party equity investors in the communities in which the company builds had expressed interest in forming a new home-building company to fill the void and continue to produce and sell homes (perhaps with former Simonini staff members) consistent with those currently being built. That includes The Preserve at Robbins Park, site of the local HBA chapter’s annual HomeArama, in which The Island Collection will be exclusively featured. Stay tuned.
Pursuit of Happiness
Torti Gallas and Partners,
Silver Spring, Md.
If you compared a snapshot of Torti Gallas and Partners in the late 1980s and today, you’d be hard-pressed to see any similarities. Nearly killed off in the last big housing recession, the former CHK Architects and Planners emerged from that “correction” with a new name and a new urbanist approach to design that broke free of its single-family production design roots and forged a diversity of work that has served the firm well through the current economic downturn. Along the way, Torti Gallas and Partners collected its share of accolades, including 13 Builder’s Choice awards dating back to 1999, for projects based close to its Washington, D.C.–area home to those in markets as far-flung as Florida, Ohio, Nebraska, and California—not to mention the firm’s work overseas.
Q: How have you weathered the current economic climate?
John Torti, FAIA, partner: We made major changes since the last recession [in the early ’90s] that have carried through to this one. About two-thirds of our work now is public-private partnerships instead of private-sector clients, and we have projects in more than 40 cities and six countries, so we’re not at the [economic] whim of a particular region. Still, we weren’t 100 percent prepared [for this recession], probably about 87.5 percent.
Tom Gallas, partner and CFO: We also engaged in collaborative, community-based relationships instead of just producing the construction documents for a developer or builder. We became much more involved from start to finish.
Q: How has the firm evolved to meet environmental concerns and demands?
TG: Some of our junior associates pulled us in that direction about 10 years ago, and now we have a solid commitment to the environment and have built those capabilities. We’re now able to respond to what we see as a shift in the marketplace to a higher level of consciousness of more sustainable and environmentally efficient design decisions. We also seek out opportunities to do the planning and the architecture [for a project] to have a greater impact on sustainability [versus just one house].
Q: You implemented and refer to something called “the chase.” What is that?
JT: It’s basically how we pursue and prepare proposals for the projects we want. The key for us is making strategic partnerships with professional colleagues and clients to chase projects together. We have a War Room in our office where we gather big teams to strategize our approach and come up with a plan that we then simulate. Those plans occasionally bomb, but better a month before the proposal is due than as the project is being built.
Q: Where does technology come into play?
TG: We made an investment in our future in late 2006 with Revit [a 3D building information modeling tool from Autodesk] that enabled us to be better partners with our clients and colleagues and make better decisions about the aesthetics and economies of our designs. It’s also enabled us to be more competitive [for design talent] and retain our people because they respect that investment in their futures. It’s allowed us to keep the muscle and the brains of the firm through this recession, and we’ve actually added 12 people in the last year.
Q: Any other keys to your survival?
JT: Our game plan is to work harder, smarter, better, faster, and cheaper and still keep our ideological foundation [of new urbanism]. We look for ways not to redo things. There’s more time and cost in the redoing than in the doing. When we improve our process, we’re able to get to the point or solution more quickly and correctly.
Q: What’s next?
TG: We’re looking at more affordable housing projects [because] we see them getting financed. But the key to success [in that segment] is creating mixed-use and mixed-income developments that enable viable economic and sustainable communities.
JT: The writing is on the wall with the changes in demographics during the next 10 to 20 years. Baby Boomers are going to appreciate a place with a variety of living experiences, whether it’s the urban core or a close-in suburban town square, especially if it’s walkable and has public transportation. The suburban cul-de-sac model is going to be a much smaller piece of the development landscape.
First Responder
William Hezmalhalch Architects,
Santa Ana, Calif.
With more than 30 years of experience specializing in community and neighborhood design (among a diverse range of skills, including graphic design and building certification consulting), William Hezmalhalch and his firm of hand-picked associates and operations staff have directed and designed a broad range of residential building types, from custom to high-density attached and just about everything in between. That channel of expertise has broadened the firm’s influence to town centers, commercial and retail projects, and even the infrastructure that serves and complements its homes and neighborhoods. Its work has earned the firm 14 Builder’s Choice Awards, a list that exemplifies its diverse portfolio and commitment to the now; the latest one, for instance, for a green/sustainable mixed-use project in Orange, Calif.
Q: How have you adjusted your business in response to the current economy?
Bill Hezmalhalch, NCARB, FARA, AIA, president and founder: We have strategically downsized, in phases, and with an approach that maintains our core senior-level design and technical staff. Fortunately, we emphasize diversity [which includes] staff members being capable of performing multiple functions. And, we have expanded our services to provide a one-stop opportunity for our clients. Diversity is the key to our health as a firm.
Q: Have you changed your approach to housing design in this economy?
BH: Our approach, as always, responds to market trends, constraints, and opportunities. We focus on demographic trends and desires, the political environment as it impacts process requirements, and efficient design practices that address cost constraints and downsizing. We’re committed to housing types that stand out from the competition and that provide a pleasing experience for the homeowners. We also seek to integrate all phases of the design—planning, architecture, landscape, and interiors—to create responsible designs that are sustainable both environmentally and economically.
Q: You operate what you call a “studio” structure. How does that work?
BH: Our business structure is broken into five studios, specifically architectural graphics, branding, colors and materials, rendering, and green s.p.a.c.e., the latter into which all of our sustainable work flows, including green building certification services. That studio model provides the highest level of expertise and service for the diversity of project types we encounter, and it’s a method that provides many options for our clients to match personalities, work styles, expertise, etc., to customize and personalize each opportunity.
Q: In what types of housing or community planning do you see demand?
BH: I believe housing design and planning models have become formulaic and predictable and in the future must meet the new needs and desires of the buyers. Homes and communities need to create experiences that will connect with buyers emotionally and intellectually, provide a healthy living environment, and be responsible financially and environmentally.
Q: Where are clients and buyers placing value these days?
BH: Clients are placing value on costs, price points, and efficiency in design and architecture. They want projects that are well thought-out and integrated with all of the disciplines to provide a seamless [development and sales] process with no surprises. Buyers want well-designed spaces that reflect their living patterns, specifically indoor-outdoor experiences, high-quality finishes for items and areas they can see and touch, energy efficiency, integrated technology, and a pleasing and efficient sales process.
Q: What areas and features no longer hold as much value or interest for buyers/clients as they did before the recession?
BH: Excess is out. They no longer want or value too much square footage, volume ceilings, compartmentalizing and over-definition of spaces, high-maintenance exteriors, living rooms, second dining rooms, and three- and four-car garages.
Q: What’s next?
BH: We need to refine and streamline the design process and evolve with technology. We need to explore construction technologies like modular and components and manufactured. We need to design for technology and energy use and for multigenerational and ageless households. Housing will become smaller and in higher density, more efficient to design and build, and flexible to new and changing living patterns and occupant relationships. The sense of community will be key with the integration of master planning and architecture providing a sense of place and welcomed living environments.
Read about past inductees to the Wm. S. Marvin Hall of Fame for Design Excellence at: www.builderonline.com/design/hall-of-fame.
Learn more about markets featured in this article: Los Angeles, CA, Charlotte, NC.
