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Business Observer Friday, Aug. 30, 2019 7 months ago

Firm builds big business off teardowns

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The teardown trend continues unabated at Perrone Construction.

The luxury homebuilding teardown trend — sending a wrecking ball into a million-dollar home, then building a new house on the same lot  — goes back at least 40 years.

That’s when Richard Perrone started Perrone Construction, in 1980. Back then, maybe one in four homes the firm built, Perrone says, were teardown projects. Today, nearly every home the Sarasota-based custom homebuilder constructs starts from a teardown. The company has demolished at least five houses in recent months, including one, built in 1990, that the client bought pre-teardown for $9.85 million.

“People are paying for a house they don’t even want,” Perrone tells Coffee Talk. “But it’s a mindset that they are willing to do this. We say they’re buying a property, not (just) a house to tear down.”

Perrone’s son Ricky, vice president of business development, adds that the trend stems from simple economics. “It’s a supply and demand thing,” Ricky Perrone says. “There’s such scarcity of vacant waterfront land available, and even fewer of those properties are actually for sale at any given time.”

A majority of the firm’s clients are second-home buyers, in which they have some flexibility in their budgets to pay a premium for the site, then build the home. And they aren’t necessarily building a bigger home, says Ricky Perrone, but something with a newer design and aesthetic. Some of the teardowns are homes that date back to the 1950s or 60s, say the Perrones, while others are as new as the 1990s.

The trend has led to a growth spurt at the company, which recently hired four employees, including a new project manager and a director of operations. It now has nine total employees.

The company’s approach on the demolition side to a teardown is similar to how it builds a home: detail-oriented and above-and-beyond thoroughness. At every teardown site, for example, says Richard Perrone, crews go underground several feet to remove any debris or fix any piping issues. A teardown can cost anywhere from $20,000 to $40,000, the Perrones say. That’s a rounding error for some clients — like the one who recently sold a home for $27 million in Bel-Air, Los Angeles, and is looking for a spot in Sarasota.

Working with and overcoming project-based challenges for high-expectation clients — which many teardown buyers tend to be — remains invigorating for Richard Perrone, even going on 40 years. “One of my favorite days is when we put a shovel in the ground for the first time,” he says. “It’s the start of building a new house and to this day I still get excited about it.”


 

 


 

 

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