David Weekley Homes has been operating in Denver since 1993, and it has acquired a deep knowledge of the market’s benefits and challenges. Just a couple of hours away in Colorado Springs, however, those benefits and challenges are different.
For more than two years, executives at Houston-based David Weekley Homes, the nation’s largest private builder, spent time researching the Colorado Springs market to see if its benefits outweighed its challenges.
Last year, the benefits side won out and Colorado Springs was targeted as the company’s newest division.
“We thought it would make a lot of sense for us, leveraging our existing infrastructure with our understanding of Colorado building in general,” says Walter Watson, area president for David Weekley Homes. “We certainly know that it’s a different market from Denver, but we felt like that the time was right now.”
The area’s employment growth, business-friendly local government, and strong home builders association each weighed heavily in the decision, Watson adds. The division officially launched on Jan. 1.
“Our decision was based on our overall growth goals as a company,” Watson explains. “We are always looking to grow and given our history in the Denver market and because of its proximity to the Denver market, we’ve been looking at the Colorado Springs market for years.”
Dustin Nelson, who joined David Weekley Homes in 1998 and runs the new division, says part of the company’s growth over the past four or five years “has been in exploring some midsized markets and smaller markets, and Colorado Springs is one that we saw that provided a lot of value.”
Previously based in Texas, Nelson wasn’t familiar with the Colorado Springs market, but he sought out the challenge. “I was interested both professionally and personally to try to start something up, and we were growing so I let [Chairman] David Weekley and [CEO] John Johnson know that I was very interested in a startup,” he says.
Product Offering
Nelson says he was struck by Colorado Springs’ demographics, which skew toward a mix of retirees and millennials. With that dynamic in place, Nelson anticipates offering some varied product in the market.
“We’ll do traditional, larger single-family, but I also think we’ll try to bring in some higher density, 35-foot-wide lot product soon, and maybe even higher density product in the near future,” he says. “I think there are some areas where that type of product we do very well with would work here.”
As Watson looks at the area, he says there are parts of the market “we can hit that aren’t being addressed as much as they could be.” He agrees with Nelson that a higher density product is very much on the table as it would help get the company’s homes into a more affordable price point to expand its buyer pool. “It would help us get more first-time and first-time move-up buyers to address that need in the market,” Watson says.
A higher density product would be attractive to both millennials and empty nesters, says Nelson. “I think that will allow us also to be in some areas of town that probably have been passed over because of the density,” he adds.
Building Time
David Weekley Homes first purchased two lots in the Flying Horse master planned community to “learn our cost and figure out the market,” Nelson says. Construction started on the two traditional single-family homes in February. “We just kind of dipped our toe in the water with those first two homesites,” he adds. “We’re very excited about trying to get a larger builder position in the community, and we’re optimistic that’s going to work out as well.”
Twenty-four sites were purchased in the Wolf Ranch community and work on a model home started in March. Floor plans, ranging in size from 1,700 square feet to 2,300 square feet, will offer main-level living and full yard maintenance. “I think we’ll get some families, but I think we’ll get the retirees with this low-maintenance product,” Nelson says.
At Wolf Ranch, construction began on the first four homes in June. Although it’s early in the operation, Nelson says it “appears that part of the reason home prices are a little lower here are builder costs are going to be a little lower as well.”
Looking Ahead
The Colorado Springs division will deliver five to 10 homes this year and looks to finish 40 or 50 homes in 2018, Nelson says. The company is expected to close on contracts at two other area communities and plans to start building in those this summer, he adds.
“This is going to be a good market for us and we think we can get 2% or 3% of the market share pretty quickly,” Nelson says, “but it’s never going to be the units that we do in some of the larger markets or where some of the bigger builders would be very interested in.”
Of the market’s top 10 builders only one—Century Communities—is public. “I don’t think they’ve ever gotten the velocity that they really need in this market,” Nelson says of the public builders. “So it’s given us an opportunity, and I think the local developers and even other builders have been very helpful in getting us started here.”
Watson says David Weekley Homes can operate like a regional home builder when it needs to. “We have a very decentralized structure at David Weekley Homes so that we can make the right local market choices for the individual markets,” he explains. “We feel like we can do what’s right and adjust our product and our processes for what works in Colorado Springs.”
With the division up and running, Nelson is looking at land positions and establishing relationships with trade partners. He says he relies heavily on the company’s reputation when securing labor, but it will be interesting to see how it plays out in the coming months.
“So far it’s been fine, but we’re not building at the velocity that we will be over the next 12 months,” he says of finding labor. “The proof will be in pudding, but so far it’s been good. I think people have been excited to hear that David Weekley is in town and doing business.”
