Shea Homes’ Spaces Has Got the Home Building Industry’s Attention
Among 2010 New Year’s resolutions, perhaps consider this. Note to self if you’re a leading home building company senior-management executive spying floor plans, elevations, marketing, and sales efforts at what could be an inflection point new product strategy for American new home building in the 21st Century.
Don’t get caught by the CEO of the company whose homes you’re snooping around in.
But if you do get nabbed–as one top 100 home builder’s VP of sales and marketing did one pristine early December afternoon in the heart of California’s Inland Empire home building war zone–you might hope that it’s Shea Homes CEO Bert Selva who busts you, and that it’s in one of Shea’s just unveiled Spaces communities.
Said perpetrator’s name shall go unreported. It’s actually not that important. Espionage of this nature is part and parcel of the high volume home building game, and Bert Selva knows that. He took it all in stride and let his prisoner off gently when the fellow said, “Bert, you’re doing an amazing thing here. I’ve been here four times now. I should probably buy one of these houses.”
“In what other manufacturing business do you have the ability to walk into your competition and pick up their trade secrets (i.e. floor plans and elevations) in their marketing materials? If it’s innovative, it doesn’t stay secret for long,” says Selva.
In fact, Selva’s pleased with the stir Shea’s introduction of Spaces homes has created. He’s had dozens of calls about Spaces, including a number from the CEOs of several public home building companies, and there’s a reason. Sleek, simple, functional, flexible, sustainable design. And, to boot, you can use those same descriptives for the operational process, which makes it low in variability, high in scaleability, and therefore affordable.
Affordable, cool, energy-efficient. That’s the thinking behind the Spaces homes. Take the process engineering revolution Jeff Mezger and his team at KB Home pulled off to make KB’s Open Series the talk of 2009 and give that whole initiative a demographic and psychographic pitch toward that generation of 77 million we’ve long referred to as “tomorrow’s home buyer.”
Think iPod or iPhone. Think W hotel. Think different.
“What did Apple do with the iPod that made it a great product?” says architect Mike Woodley, who entered the top-secret creative development of the Spaces project in late 2008. “They made it work really well at several functions; they streamlined the design, and they got rid of all the knobs. That’s what we’ve done with the Spaces homes. It’s flexible, clean, and it’s all about how people live in and use a house. We got rid of all the knobs.”
Woodley notes an important phenomenon that’s held from the time he was running charrettes on the project late last fall through the present, when he presents Spaces to everyone from Shea division presidents to local planning commissions. Not everybody likes it, and not everybody gets it.
“We actually know we’re onto something when we have the older school guys talking about how this or that doesn’t line up, or this is too thin, or that’s not enough,” says Woodley. “This really is new, and it’s got to appeal to buyers who don’t want what we’ve been doing for so long now.”
In doing so, Shea captured efficiencies enough to build profitably with a price tag to customers up to 15% below equivalent homes in the 2,000 sq. ft. range and below, whose prices are already 15% to 20% less than they were at their 2006 peak.
So Shea, which up to now could only compete by out-wowing its rivals with location, architectural panache, amenity, and quality, now can compete on price. Amid estimates that foreclosures and distressed sales will remain part of the fabric of real estate like an unwelcome visitor with no plans to leave, competing on price is not an option. This is especially true for private home builders whose capital structure won’t allow them to simply impair lot values and dump them on the cash-for-acres net operating loss tax carry back market.
So private home builders in particular face a 2010 that like the past 24 months or more means surviving on their wits. And that means gaining a desirability advantage over both foreclosures and competitors. The simplest equation here is winning on both price and design/engineering.
To do that, home building strategy must change both product and process. Spaces does that for Shea.
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KB Home will never have the creativity and responsibility to compare it to Apple. I would think your offending Steve and crew with such nonsense. Apple try’s hard to help its customers KB Home ignores them. The next generation homebuyer does not exist anymore. Only us the people who bought the current generation of homes – what’s left of us. My KB home was sold to me as a energy efficient home only to find out several main areas were never tested or actually connected to the system by KB Home, Jeff Mezger and his team are the joke and the joke is on you – Buyer Beware with a KB Home.
See Starwood Hotel’s “Aloft” concept…not sure “Spaces” is as original as represented.