Eric Campbell never had any doubt that the land perched atop Cougar Mountain had million-dollar views. On a clear day you can see Seattle, the Puget Sound, and the colossal snow-topped peaks of the Olympic Peninsula. It’s the kind of scenery that drops jaws and opens wallets.
But in 2010, Campbell’s Seattle home building company, CamWest, didn’t have enough cash to buy the appropriately named Belvedere Project, much less develop it into a neighborhood that would entice buyers with fat wallets.
When Campbell first looked at acquiring the 36 acres zoned for 81 lots in 2010, the land was distressed and the price tag to buy it out of debt would have been roughly $70 million.
“Even in in the most frothy markets, ’06, ’07, you would have looked at that [price] cross-eyed,” said Campbell. That cost brought each lot to nearly $900,000, not including a home.
But by 2011, the price had fallen to $22 million and CamWest, which had weathered the recession and was buying distressed land for future growth, took another look at the property in Bellevue, Wash.
Campbell was sure it was a good buy, but CamWest’s banks were still asking the builder to put as much as half of the purchase price into the deal. Plus, because no million-dollar home communities opened in the area for years, there were no comparative house sales to prove the land’s potential.
“We believe in it, but that’s too much risk,” Campbell recalled bankers telling him.
So the builder, who had amassed a long list of other distressed Seattle land he wanted to buy, started looking for ways to get capital. He considered making CamWest a public company to gain access to low-cost investment money, but he was told he would have to expand beyond the Seattle market to make that work—an idea he wasn’t crazy about.
A Perfect MatchThen home builder matchmaker Ivy Zelman, CEO of Zelman and Associates, introduced Campbell to Toll Brothers, which was eager to move into the Seattle market. Toll’s CEO Doug Yearley came to visit and Campbell took him to the top of Cougar Mountain.
"I told him, 'If you end up buying us, this is the stuff we can do,'" Campbell said. "You bring the checkbook and we will do the execution."
"'These are some of the best views I have seen in my life,'" Campbell remembered Yearley, a mountain climber, saying. And the deal was done—CamWest was bought by Toll Brothers, and Campbell stayed on to be its Seattle division president.
“It was a leap of faith,” said Campbell. “Doug was truly my advocate. We pro-formaed the deal and it was too tough to forecast” what the demand would be.
Quick RewardsThat leap of faith was rewarded quickly. Toll bought the land in February and March of 2012 and started selling from a sales trailer. By the end of July, it sold 31 homes with an average price tag of $1.35 million, despite the fact that there was no model home.
The view and CamWest's and Toll’s reputations were enough to get consumers to take their own leap of faith. And it didn’t hurt that the community’s location is just a 15-minute drive to downtown Bellevue, yet has a remote feeling, perched on the mountain and tucked into a curve of Cougar Mountain Regional Wildland Park.
“That’s where the demand is; people want to live closer in,” said Campbell.
Likewise, the Seattle market was somewhat starved for these kind of high-end properties, he added. “This is truly the first luxury home community to open with views in over six years. We really hit untapped demand.“
Teresa Burney is a senior editor for BUILDER.
