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When Mike Bednarski began Icon Residential in 2014 with a pair of partners, nobody bothered to tell him that townhomes wouldn’t be accepted in Florida in a market dominated by single-family homes.
No one mentioned that homebuilders’ revenue doesn’t grow that wildly from year to year, either.
Just 31 at the time, Bednarski didn’t know better.
Had Bednarski been armed with that information, things might have turned out differently.
But ignorance, it turned out for the Tampa-based company, was bliss.
In its four years of operation, Icon Residential’s townhome developments in Tampa, Orlando, Sarasota and Atlanta have crushed every sales projection the company considered.
Its revenue has roughly doubled, too, every other year, to $75 million in 2017. Bednarski believes the company, an affiliate of investment firm Broome Capital that he co-founded in 2012, could top $150 million in total sales in 2019.
“A lot of it stemmed, I guess, from all of us being relatively young and naïve,” Bednarski says. “We didn’t realize that homebuilders aren’t supposed to grow this way this fast.”
Employment has ramped up just as quickly. From a few employees in 2015, today Icon Residential has 67 full-time staff. Bednarski estimates the company will employ 100 by the end of 2019.
And it may just be getting started, if Bednarski has his way and sales continue apace. By 2025, Bednarski’s goal is to catapult Icon Residential into one of the Top 50 largest homebuilders in the U.S.
It’s well on its way. This year, thanks to projects like The District on 9th in St. Petersburg, Westshore Village in Tampa and Artisan on Main in Sarasota, Bednarski expects Icon to notch 300 housing starts.
“There are not too many builders or developers out there who are doing what they are. They’ve had some pretty phenomenal growth for a company that just began building like five years ago." — Scott Carter, FBC Mortgage LLC.
Much of its success is the result of a philosophy that, product type aside, has its genesis in desiring to be different.
“We view ourselves as very progressive,” Bednarski says. “We don’t want to just plop down a widget every time. Some of our original frustration with the business was that we didn’t like the commoditized way homes were being built in America. We said to ourselves ‘Let’s be cutting edge.’ We felt like we could do better.”
Bednarski and fellow Icon Residential principals Ryan Studzinski and Peggy Tseung decided to focus on townhomes — a relative rarity in Florida — in an effort to capture a pair of demographics: Aging Millennials interested in moving up from an apartment and aging baby boomers interested in downsizing from single-family homesteads.
Tseung and Bednarski met when she worked at J.M. Morgan and he was scouring the market for distressed housing to buy coming out of the last decade’s recession. Bednarksi met Studzinski, an apartment developer at the time, at an Urban Land Institute event and the pair realized they shared a vision for building.
The trios timing was solid, too, coming just as the U.S. economy was starting to surge and Florida began experiencing significant in-migration exceeding even that of a decade ago.
But it wasn’t until Icon Residential began work on its maiden project, Arlington St. Pete, on 8th Street and Arlington Avenue North in St. Petersburg, that the company’s principals realized they had tapped into a burgeoning cultural trend.
“Some people thought we were crazy, coming out with a fringy product and in that section of St. Petersburg,” Bednarski says. “But then we fully sold out two of our three phases before we even began construction on the first phase.”
Today, the 40-unit Arlington St. Pete is fully sold out.
Just as importantly to Icon Residential’s business model, urban areas nationwide were gaining in renewed popularity but often lacked new housing stock.
“We started building just as cities became more receptive to higher-density developments to accommodate an influx of people,” Bednarski says.
Such was the case in Sarasota, where Bednarski credits the city-enacted Residential Overlay District in the city’s Rosemary District, which granted developers triple the typical residential density for a period of time to spur activity, for its presence there.
Icon Residential is currently constructing two townhome projects, Artisan on Main and Valencia at Rosemary Place. Together, the pair of projects will contain 65 residences when fully completed in 2019.
Valencia will wrap within the next few months. To date, 28 of its 30 townhomes have been sold.
From an operations standpoint, townhomes made sense, too. Icon Residential is able to sell multiple units on a single site where infill land costs can be less expensive.
“There are not too many builders or developers out there who are doing what they are,” says Scott Carter, a sales manager at FBC Mortgage LLC, in Orlando.
“They’ve had some pretty phenomenal growth for a company that just began building like five years ago,” Carter adds.
Bednarski says the key to Icon Residential’s growth also is the result of its conscious decision not to sell just homes, but uniquely designed residences that fit individually into each community it locates.
“We’re not just selling boxes,” he says. “We’re selling lifestyle. Where we’ve chosen the build, the neighborhood surrounding our townhomes becomes the buyer’s living room.
“And on top of that, we think we sell a pretty sexy box, too, something that has unique design elements and modern finishes, something that’s as luxury as possible and that’s also financially approachable. What we’re not interested in is being a homebuilder where all the housing in the community looks the same.”
Going forward, Bednarski says Icon Residential has plans to expand geographically, into urban infill markets like Charlotte and Raleigh, N.C., and into Nashville and Dallas, too.
“We’re not just selling boxes. We’re selling lifestyle. Where we’ve chosen the build, the neighborhood surrounding our townhomes becomes the buyer’s living room." — Mike Bednarski, Icon Residential
“Because we’re vertically integrated, we need a certain scale,” Bednarski says. “And all of those cities seem conducive to townhome development.”
Not that Icon Residential plans to uproot from Tampa or Atlanta.
“We’ll stay focused in the markets we’re currently in, and shift somewhat to larger markets where we think it’ll be a little easier to do what we do.”
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