News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
John Caulfield / BUILDER / June 18, 2013
Are builders too aggressive in acquiring real estate?
Jonathan S. Grebow
is president and CEO of Ridgewood Real Estate Parners in Florham Park, N.J.
Yes. Builders are forgetting past excesses.
Since 2009, Ridgewood has been a residential real estate developer and investor specializing in land banking. The company acquires, develops, and sells residential and mixed-use communities across the United States.
While Grebow says his company has enjoyed “close relationships” with public and private builders, many of those same builders “have become our biggest competition for land” over the past year or so. Although the housing market is recovering, “we are very surprised that the nation’s largest builders are jumping back into land so quickly and aggressively,” he says.
Have they so quickly erased from their minds the recent recessionary period, asks Grebow, when Wall Street penalized the publics for stacking more land onto their balance sheets?
He also wonders why more builders, large and small, don’t avail themselves of land banks, which were set up to allow builders to remain asset light while increasing their returns on investment.
Ridgewood still seeks to provide builders the ability to purchase finished lots on a smaller, more manageable scale of either price or lot number. “We like to say ‘we buy wholesale and sell retail,’” Grebow says.
By purchasing larger, more expensive tracts, Ridgewood solves problems related to entitlement modifications or other development issues. “We utilize our skills,” which lets builders “concentrate on what they do best: building homes and providing customer service,” Grebow explains. “We believe that home builders prefer to pay a premium to purchase ready-to-build lots, which in this improving market benefits the developer’s bottom line.”