Could some of the most in-demand housing markets be cooling off?
There are many routes to success in the home building industry.
There are many routes to success in the home building industry. Many builders try to spread their risk by being all things to all people. They develop housing and communities to meet every buyer profile.
|Sunrise Colony Co. founder and chairman William Bone (seated) and senior vice president/project manager Doug Shipman believe they must have raving fans for customers to succeed in the company’s target market.|
This approach works for many but runs absolutely contrary to the thinking at work at Sunrise Colony Co. For the past 30 years this developer/builder has concentrated on a single market: golf course-oriented, master-planned residential communities for the empty nester, pre-retiree market. This single-minded focus combined with thorough customer research and strict adherence to construction quality standards has made this year’s National Housing Quality Silver Award winner a preferred choice among targeted home buyers.
Sunrise Colony founder and chairman William "Bill" Bone defined the company’s mission in the beginning: To be the builder of America’s finest country club communities. That is still the case, and added to it is a commitment to increase knowledge, change for the better and "learn from our mistakes," he says.
Not forgotten in the overall mission is the customer. "Our customer goal is to create ‘raving fans.’ We believe that mere satisfaction is not good enough for any builder. In our case, given that our customers are spending on average over $500,000 to live in one of our communities, having raving fans is a requirement."
|Sunrise Colony Co. associates at Indian Ridge Country Club in Palm Desert, Calif., package lifestyle and luxury homes for buyers.|
Knowing the Business
During the past 30 years, Sunrise Colony Co.’s Coachella Valley Division has developed seven golf course-oriented, master-planned residential communities in the Palm Springs, Calif. area. The newest of these is Indian Ridge Country Club, located on 640 acres in Palm Desert. Upon completion the project will contain 1,100 homes ranging in price from $250,000 to $900,000, two Arnold Palmer-designed 18-hole golf courses, a 42,000-square-foot clubhouse, a 22,000-square foot sports club containing a health club, 14 tennis courts, three swimming pools and other amenities.
Like all Sunrise Colony developments, Indian Ridge Country Club was created by adhering to the company’s "Eleven Steps to Success in the Community Development Business." Adherence to these development rules has helped the company dominate one of the most competitive resort community markets.
The most basic of these principles is this: High market share is a result of giving consumers the best product (both housing and community amenities), the best location and the best value for their money. Several of the other specific steps for success include:
- Identify unfulfilled demand for a specific housing product. It is not sufficient to say there is a housing shortage in the United States; rather, identify a need for a specific housing product in a specific location. It must be described in sufficient detail for an architect to design the product. This detail includes the size of the lot, size of the home, number of bedrooms and bathrooms, whether it is a one-story or two-story house, has a two- or three-car garage, the quality level of the specifications, the sales prices, etc.
- Create a superior land plan including the appropriate recreational and other amenities. The objective is to maximize the residential lot values in the process by creating the maximum lot premium potential.
- Establish sales prices so that the consumer receives the best value in relation to the competition. The buyer has a perfect mental computer and is able to weigh the trade-off between quality and price. The maximum market penetration is typically not achieved by delivering the highest quality or the lowest price, but results from a delicate balance somewhere in between.
Beyond these 11 steps to success, the other document that drives Sunrise Colony is its "Prerequisites to a Long-Term Employment Relationship."
"Good people are our most valuable asset," explains senior vice president/project manager Doug Shipman. "We have cultivated an outstanding and loyal team of employees that trust and work well together."
At Sunrise, as in all companies, a minimum level of performance is required of all employees. At Sunrise, however, a superstar performer, no matter how talented or productive, who does not live up to the "prerequisites" cannot stay on the team.
Some of the written prerequisites are:
- Honesty: It is obvious that employees should not steal from the Company, but honesty in communication is equally important. When information is conveyed it must be the whole truth. Our definition of a lie includes intentionally leading someone to the wrong conclusion, even if all the information communicated is true. The prerequisite greatly reduces guessing and game playing. It allows a tremendous level of faith and confidence in what everyone says; everything is above board and can be taken at face value.
- Reliability: When someone agrees to complete a task by 5 p.m. Friday, the supervisor of the person needs to have complete confidence at 5:01 p.m. that the task has been completed. If for any reason the task cannot be completed by the agreed-upon time, the burden is on the employee to contact the supervisor.
- Positive Yet Realistic Thinker: Nothing slows down the functioning of and demoralizes an organization as much as a negative thinker. It requires great negotiation and persuasion to convince a negative thinker to do what needs to and can be done. It is also time-consuming and terribly inefficient. A positive thinker, on the other hand, approaches tasks from the viewpoint of "how can it be done" instead of "why it cannot be done."
Sunrise has 13 employment prerequisites. Others include integrity, loyalty, team player, pursuit of excellence and passion. Salary increases, bonuses and continued employment are based on employees fulfilling all the prerequisites.
"This is our foundation document," explains Shipman. "It reflects our values and the way we want everyone to be treated when dealing with our company."
The clientele at Sunrise Colony’s Indian Ridge Country Club are predominantly high-income professionals. A majority of the homes purchased are second or winter homes and represent a pinnacle of achievement for the owner.
"Buyer expectations are extremely high," explains Shipman. "Satisfying our customer requires a great location, a well-designed home, a solid relationship between the buyer and all staff members, exceptional construction performance and flawless service."
Sunrise leaves little to chance in satisfying customers. Particular care is taken to ensure that Sunrise developments provide a product "of superior beauty, amenities and value." Making this happen means managing every aspect of development from beginning to end, and often well beyond.
"We perform virtually every aspect of the land development, golf course construction, home construction, marketing and management within the company," says Bone. "We also offer a comprehensive range of services that includes sales, resales and interior design beyond the norm."
The company’s design center, opened in the early 1980s, allows buyers to select options in lighting, plumbing, flooring surfaces, cabinet reconfigurations, countertops, etc. It also offers full design capabilities including furniture, wall coverings, window treatments, accessories, artwork, built-ins and more.
The same attention to detail is given to outside areas. Sunrise landscapes the front yard, rear yard and courtyard of each home. Each plan is designed individually; no standard templates are used.
"Everything we do is directed toward giving this discriminating buyer an outstanding product and lifestyle," explains Shipman.
To ensure that its product and services meet buyer expectations and exceed the offering of other builders, Sunrise management regularly benchmarks its efforts against others inside and outside its Palm Springs community. "We commission focused reports from the Lesser real estate group to understand what competitors are doing, what their best practices might be and what is occurring in the market. This is critical for us as the opportunities to benchmark with similar builders of high-end, golf course communities are naturally limited."
Fixing errors and correcting mistakes is part of the building business -- an expensive part that Sunrise works hard to eliminate. Instead of spending money after-the-fact, the company has worked with its trades to create a comprehensive prevention-oriented management system. This system involves every department in the company along with key external resources. The system includes:
- Engineering Certification: For calibration and technical guidance Sunrise employs an outside firm for engineering certification. The structural engineer walks each home to confirm that it is built according to plans and specification. A framing walk is always conducted before drywall, and discrepancies, if any, are typically remedied the same day. The engineer then rewalks the job, inspects all items and provides written certification that all beams, connections, straps, bolts, hardware, shear panel nailing and roof nailing are all done perfectly.
- Roofing Certification: A roofing and waterproofing consultant inspects each roof during construction to verify that prescribed methods are followed, including best practices in waterproofing. A final roof inspection is made at the completion of the home.
"This program is a key factor in training our trade contractors to do the job right the first time,” explains Shipman. "It educates them in proper engineering requirements and provides them daily and weekly feedback on job performance and the accuracy."
It also serves another very important purpose. "When this process is conveyed to buyers, we are able to provide them great peace of mind and exceed their expectations."
Mercedes' Training Pays Off