Could some of the most in-demand housing markets be cooling off?
Movers and Shakers: Orleans Homebuilders Inc.
Since 1918, the Orleans name has been synonymous with residential real estate in the Philadelphia market. Last year, Orleans Homebuilders Inc. took a proactive approach to the shrinking local land supply by moving into Virginia and North Carolina with ...
|“Ground is at a critical point. We have a backlog for the next five years...but it’s getting harder and harder. “
—Jeffrey Orleans of Orleans Homebuilders
Adding Real Estate
Since 1918, the Orleans name has been synonymous with residential real estate in the Philadelphia market. Last year, Orleans Homebuilders Inc. took a proactive approach to the shrinking local land supply by moving into Virginia and North Carolina with the purchase of Parker Lancaster Corp.
The Orleans legacy begins with Alfred P. Orleans, who emigrated to the United States from Russia in the early 20th century. By 1918, Alfred was buying small pieces of land and building houses in Philadelphia. Guided by the philosophy that housing should be both affordable and livable, over the next six decades he expanded into the suburbs. Orleans communities began springing up in Delaware, Chester, Montgomery and Bucks Counties, across the Delaware River in New Jersey, and in Florida in the ’60s and ’70s. To date, the company has built over 65,000 homes, ranging from entry-level condominiums to large single-family homes.
Today, Orleans Homebuilders is based in Bensalem, Pa., and run by CEO Jeffrey P. Orleans, Alfred’s grandson. The Florida operation, headed by Jeffrey’s late father, Marvin, has been defunct since the 1980s.
While the company motto, “Orleans builds value,” hasn’t changed, the housing mix is different. Orleans closed 680 detached homes and 480 low-rise attached homes last year for revenues of $272 million. That puts them in the 61st position in the Giant 400, compared to 87th last year. Part of the reason for the jump is a higher price point, says Jeffrey Orleans: “Years ago we did predominately first-time and first move-up, but now we’re into second- and third-time move-up houses also.” In the Philadelphia/New Jersey market, less than 40% of the homes built today are condos and townhouses, compared to two-thirds in prior years. In 2000, Orleans reported an average price of $600,000 for a 4000-square-foot, second move-up home.
Despite being one of the most profitable home builders in the Philadelphia area, Orleans has to face the reality that land is disappearing. “There’s not a lot of building opportunity in the Delaware Valley,” he says. “Ground is at a critical point. We have a backlog for at least the next five years and we hope to maintain that, but it’s getting harder and harder. We’re doing infill; we’re going farther out. We’re spreading into central New Jersey. The market is very competitive, but still within a reasonable drive of our office.”
Last fall, Orleans acquired Parker Lancaster, a Richmond, Va.-based home builder that generated approximately $87 million in housing revenues in 1999. Parker Lancaster of Orleans, as the new subsidiary is known, will build mainly single-family homes for first move-up buyers, in addition to some entry-level and second move-up product. “We’re mostly in the large markets in North Carolina—Charlotte and Raleigh.” Other than the name change, Orleans expects the Parker Lancaster organization to remain intact. “Part of what we purchased was the manpower,” he says. The company will continue to be managed by Parker Lancaster executives, with input from Orleans.
While he’s always concerned about a downturn in the market, Orleans admits he doesn’t see one on the horizon. The company’s sales in January and February 2001 were strong in all four markets: Pennsylvania, New Jersey, Virginia and North Carolina. “I don’t expect a boom, but I’m very cautiously optimistic.”
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