One could understandably think that the Great Recession wasn’t the best time to start up a homebuilding company. But founder and President Greg Lingo of Cornell Homes says his company has proven over the last five years that opportunity can be found even in difficult times.
“This was actually a great time for us; we never would have been able to grow at this rate in a better economy,” Lingo says. “First, the Philadelphia/Tri-State market did not have the same problems that other parts of the country did. The market is stable and has a lot of competition, including many regional builders that were saddled with legacy debt.”
Since Cornell Homes started up in 2007, many of those regional competitors are gone or heavily leveraged. Cornell Homes, on the other hand, came into the market fresh and wasn’t stuck with land it bought at the height of the market. It came into the market at a time when good prices and locations were there for the taking.
“Many national companies here retreated, which has helped grow our marketshare,” Lingo says. “Our approach is to get out into the communities where we can position ourselves in better locations at a better value and against limited competition.”
The Right Markets
Headquartered in the Philadelphia metro area, Cornell Homes serves parts of Delaware, New Jersey and Pennsylvania. The company has seen consistent growth almost each year since opening its doors. In 2008, it sold around 30 homes, a number that grew to 116 in 2009 and 182 in 2010. It took a small dip in total sales to 166 in 2011, but Lingo says the company is on pace to sell 240 homes in 2012.
Cornell Homes got its start with a strategy based on providing strong value in highly desirable markets. Through research and understanding of the markets it serves, Cornell Homes focuses on building in locations with dense populations, commuter access and employment centers.
“We haven’t focused on outlying areas because those areas are still dry,” says Lingo, who was recently named a 2012 regional finalist in the Ernst & Young Entrepreneur Of The Year Greater Philadelphia Awards Program. “We are building where people want to be.”
After focusing first on location, the company then takes into account what kind of product will best fit the buyer profile in terms of price and amenities. From there, Cornell Homes customizes its products to fit the dominant buying characteristics of the highest percentage of buyers within each given market.
“We are building to what the customers’ wants and needs are, tailoring the product to meet those needs,” Lingo says. “In general, no matter what the price point, the correction in the economy has changed buyers’ mindsets, perhaps permanently. People are really focused on what they need, not so much what they want, across all price points.”
To ensure success on each project, Cornell Homes aims to hire the most qualified project and general managers. Lingo says experienced managers know how to focus on cost, time, quality and customer service and satisfaction. When the company selects trade partners for its communities, those decisions are also based on satisfying cost, time and quality concerns.
“People won’t pay more than they need to for our homes,” Lingo says. “They want value, and that is about more than just price. Depending on their priorities, they may want to know if the house is functional for their needs, or if the house is green. We bring in subcontractors who can get the job done the right way, and then we manage the projects with our own people.”
Cornell Homes has a number of new home and renovation projects underway. One of these projects is The Overlook at Carriage Hill in Doylestown, Pa. Doylestown is the county seat of Bucks County, located just 27 miles north of Philadelphia. The project is a bike ride from downtown Doylestown and includes 263 townhomes that start in the $220,000 price range.
“Before we opened our model, we had 38 homes presold,” Lingo explains. “Since opening the model in March, we are on a pace for The Overlook at Carriage Hill to be the best-selling community in the state.”
Another project the company is excited about is much different from The Overlook at Carriage Hill. Located in Moorestown, N.J., Willowbrook will consist of 27 estate homes on one to three acres starting at $1.15 million. Moorestown is an exclusive, upscale community about 15 miles away from Philadelphia. Money magazine named it one of the best places to live in America.
“These projects illustrate the different types of projects we can work on,” according to Lingo. “We excel on meeting the buyers’ needs, whether that is providing value for a new buyer looking for a starter or move-down home, or providing high-end luxury.”
Going forward, Cornell Homes appears to have its priorities in order. Lingo says the company wants to be the No. 1 builder in each submarket where it does business. Once it reaches a certain critical volume, the company plans to expand into adjacent markets, including resort communities in Delaware and Maryland, as well as the Washington, D.C., and Baltimore metropolitan areas.
The challenge for all players in the industry right now is in obtaining financing, but Lingo isn’t worried yet. “We have a very strong track record and 13 different banks that finance our various projects,” he says. “Accessing financing hasn’t been a hurdle yet because we have a low-risk business model where we don’t own land. That has been beneficial in this market, and we won’t go out on a limb. Instead, we’ll rely on strong private equity and banking relationships to weather, and take advantage of, the storm.”