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Business Observer Friday, Feb. 1, 2019 6 months ago

Close to home: Builder attributes fast growth to focus on local market

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Homes By WestBay entered the single-family new homes market at the worst time imaginable. Yet a decade later, it's selling 500 homes a year.
by: Brian Hartz Tampa Bay Editor

Willy Nunn probably should have known better than to hitch his wagon to a new homebuilding company in October 2009.

“It’s what we like to refer to as the darkest part of the night,” says the 53-year-old president of Homes by WestBay, recalling the economic downturn that brought the residential real estate market to a halt nationwide.

A decade later, though, Nunn’s decision looks decidedly less questionable. By carving out a niche and sticking to it, Riverview-based, privately held Homes By WestBay is one of the fastest-growing builders in the Tampa Bay region, with revenue rising 52.2% since 2015, from $127.78 million to $194.55 million in 2017. More growth? Nunn projects the company will be just under $250 million in sales for 2018.

Homes By WestBay closed on 553 homes last year. That means the average sale price of a Homes By WestBay residence exceeded $452,000. "We find that we do very well from $400,000 to $650,000 — there are a lot of buyers there," Nunn says. "And in the $300,000-$400,000 range, we build a little nicer home than what you might elsewhere in the market, though we have to be selective about where we offer those.”

“We do very well in … master-planned communities where buyers are looking for a luxury brand to match the luxury brands they’ve purchased for other things.” Willy Nunn, president of Homes By WestBay

What's Homes By WestBay's secret sauce to growing so fast out of the downturn? 

“We do what the big public builders struggle with,” Nunn says. “We provide a high level of service and personalization, a level of complexity that is difficult for a large, multimarket builder to manage. It requires a special management team and overall team that is very hands-on.”

Another key differentiator is the company’s laser-like focus on the Tampa Bay region. Nunn says he has no intentions of looking for development opportunities farther away than, say, Sarasota.

“We won’t go to Orlando,” he says. “What we do is just too hands-on. It requires a subtle understanding of what customers want to pay for and what should be optional.”

Nunn says the high-level baseline specifications of the company’s homes have led it to seek out lots in communities such as Bexley, Lakeshore Ranch and Connerton in Land O’Lakes; Waterset in Apollo Beach; FishHawk Ranch in Lithia; and Starkey Ranch in Odessa. It also builds in Pinellas County at Palm Harbor’s tony Innisbrook community.

“We took the larger-lot positions in FishHawk and Seven Oaks, in Wesley Chapel, to start the company,” Nunn says. “At the time, a lot of people were looking to acquire distressed assets, but there was no builder in the marketplace to monetize, at a fair market price, high-quality lots owned by well-funded developers in Class A communities. We do very well in Waterset and Starkey Ranch, master-planned communities where buyers are looking for a luxury brand to match the luxury brands they’ve purchased for other things.”

Homes By WestBay was the brainchild of area builder Roger Gatewood back in 2009. Nunn, who spent the bulk of his career as an executive with Bank of America and Centex Homes, was brought on as president of the fledgling company. But Nunn soon became majority owner, with Gatewood staying on as a consultant, a role he maintains today.

Prior to Homes By WestBay, Gatewood founded Westfield Homes, which he sold to Standard Pacific in 2002. (Standard Pacific merged with Ryland Group in a $5.2 billion deal in 2015.) Nunn says that track record of entrepreneurship remains with Homes By WestBay, which seeks opportunities to develop communities of its own, such as Forest Glen in Riverview, a development that has since sold out.

Nunn says Homes By WestBay’s highly focused yet open-minded, opportunistic approach to the market set it up well to thrive in a market that could soon flatten after years of hot growth.

“Last spring was hot and we pulled forward demand,” he says. “Many buyers concluded rates were going to go up and needed to buy now. Then in the second half of the year, demand fell off significantly. As a result, there’s more inventory out there than there has been, but it’s not unbalanced, so we’re in a very normal environment, just running our business.”

A potential slowdown has Nunn looking at infill projects, and he says Homes By WestBay will likely break from its tradition of being a single-family home builder and add townhomes to the mix, most likely in northern Manatee County. Says Nunn: “We see a big part of the development for the Tampa Bay area moving there."

READ OUR COMPLETE COVERAGE

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