Aggressive Atlanta-based builder Keith McSwain knows how to coax Southerners into buying houses. With more than 2,200 sales in six cities last year, his McCar Homes is showing the world how to grow a private home builder fast — organically. This 3,172-square-foot colonial model, the Hanley, is a key element of his market entry strategy in Raleigh, N.C. And it has tongues wagging in the Research Triangle.
McCar Homes' Hanley model, a brick colonial two-story, sits on a corner lot and has a side-entry garage. The homes' location in Wake Forest, N.C.'s Stonegate community has stunning curb appeal for Southern move-ups.
It's the sales center for McCar's 670-unit, 215-acre master planned community, Stonegate, located just beyond Raleigh's new I-540 outerbelt freeway on the southern edge of Wake Forest, N.C. "The location is outstanding," says Bob Kosnik, McCar's Raleigh division vice president. "It's surrounded by commercial and retail development, just minutes away from Triangle Town Center mall. Our success comes from a combination of factors, including location, architecture and a strong value proposition."
Stonegate is McCar's fourth community in the Raleigh area since his 2003 entry into the market, but it's the first in the northeastern growth corridor pushing toward Wake Forest. The large scale of the project took locals by surprise. "We're the new kids in town," says Steve Check, McCar's president of land acquisition and development, who found the deal. "We wanted to make a statement that would establish our brand in the Raleigh market."Think Big
Although the move is aggressive, it's also part of a disciplined market entry initiative. "We were looking for land in that quadrant of the market," Check says. "Our first projects were west, in Cary and Apex. We wanted to get into that northeastern growth corridor, which has great access and schools. We drew a circle on the map and started looking, but not for something this big. Our goal was to find a position of 100 to 200 lots, not 500."
McCar looked long and hard at the deal, then brought in an investment and development partner, Jacksonville, Fla.-based Stokes Land Group before pulling the trigger. "We knew we'd have to do multiple product lines to segment pricing," Check says, "in order to get the absorption to make such a big project feasible. That's why we have four series of homes, each on different lot sizes, and we'll also have a townhouse phase, which we haven't started yet."
McCar closed on the deal in early 2005. Stokes Land Group brought some financing to the table, along with development expertise. "We signed the land over to them, then contracted to buy the lots they develop," Check reveals. "Only the public builders were doing projects of this size in Raleigh," he says. "Stonegate shows we have some financial muscle, and it opened a lot of doors for us on future opportunities."Emotional Appeal
McCar Homes' in-house merchandiser Tonya Romine dresses the Hanley in lavish traditional furnishings that convey class and upward mobility to Carolinians.
The Hanley model is one of five plans in Stonegate's Masters Series, which runs from 2,600 to 3,300 square feet, base-priced from $335,000 to $380,000, on 75- by- 130-foot lots. There are two series at Stonegate priced below the Masters and one above it. At a base price of $365,000, the Hanley is the upper middle price point for the Masters, although McCar made a calculated decision to appeal to the emotions of shoppers by loading the Hanley with options and upgrades that bring the model's final price tag to $450,000.
It's not an innovative house plan, but it packs bang for the buck along with the solid traditional architecture the South still favors. "It has a lot of square footage for the money, especially at the base price," says Kosnik. "Buyers also like the flexibility of the Hanley. The sunroom on the back corner of the house can be a study, or we can turn the adjacent powder room into a full bathroom and incorporate it into a guest bedroom suite. Upstairs, the vault above the family room can be turned into a bonus room for buyers driven to get the most floor space possible for their money."
The model is also on a corner lot, which allows it to have a side-entry garage — and an uncluttered front elevation that creates extra curb appeal. Those not-so-subtle emotional appeals are working to pry open the wallets of Raleigh move-ups and relocating transferees. Stonegate has already sold 104 houses, including 66 in the Masters Series and 19 Hanleys. The Park Series, at an entry price point of $250,000, has 26 sales. And the highest-priced product line, the Registry Series that starts at $400,000, has 12 sales.What Slowdown?
The Old South is one of the bright spots on an otherwise staggering national housing scene. "Where we're building, it hasn't been as bad as elsewhere," McSwain admits. That's obvious from the pace of his company's growth. McCar is now in six cities — Atlanta; Greenville, S.C.; Charlotte; Greensborough; Raleigh, N.C.; and Tampa, Fla. — and the firm has just entered Columbia, S.C.
A fledgling operation in Jacksonville, Fla., has been put on hold until that market recovers. The company ranked No. 56 on Professional Builder's Giant 400 list last year, with 4,400 closings for $538.1 million in revenue.
McCar President Keith McSwain has a keen understanding of the style and status yearnings of Southern move-ups. It shows in the rich detailing of teh Hanley kitchen and breakfast nook.
McSwain, 44, says when the books are closed on 2006, he expects revenues in excess of $600 million. That's likely to propel McCar to a higher rank when the Giant 400 is unveiled this spring. Not bad for a company started 50 years ago by Dan and Elaine McSwain in Vidalia, Ga., where the family firm built 10 to 15 houses a year. It was the entry of former University of Georgia football player Keith into his father's business that put McCar on the fast track in 1985, the same year the firm moved from Vidalia to Atlanta. "My father and I came to Atlanta because he wanted the opportunity to do more, to provide more jobs for more families," McSwain says today. (The McCar name is a combination of McSwain and former partner Clyde Carter, who was part of the initial push into Atlanta.)
In Raleigh, McCar has moved from 128 closings in 2005 to 280 in 2006. "I'm excited about what we can do there in 2007," McSwain says. He's also got his eye on Charleston, S.C., and Birmingham, Ala. "Those are Southern cities where we'd be very comfortable," he says, "but right now, we'll concentrate on getting Columbia up and running."