our story |
|||
HISTORY OF HIGHLAND HOMES While Shallenberger was remodeling a house in University City, Cavanagh was building a new home across the street. One thing led to another and the two decided to join forces and joint-ventured a couple of houses and a condominium building with a third partner who was later removed from the equation. A few months later Highland Homes was born. That same year Shallenberger and Cavanagh decided to invest their resources in to transforming the company in to a leading developer of AFFORDABLE housing with an emphasis on GREEN construction practices. They decided to find land and build Missouri’s first affordable GREEN multi-family development. They wanted to offer energy-efficient workforce and single-by-choice housing with little-to-zero money down for their buyers. In 2006 the partners ventured in to land development for the first time with the acquisition of a 20 acre parcel in St. Peters on Highway 94 and developed Highland Park to accommodate approximately 250 condos. Phase I (80 condos) was 50% sold-out before the first buildings were under roof. Highland Park was the first such development to offer stylish During the planning stages of Highland Park, Cavanagh discovered a dilapidated and troubled mobile home park in O’Fallon, Missouri just off Interstate 70. After nearly a year of demolition and remediation, Missouri’s second affordable GREEN multi-family development named Highland Terrace was born with another 240 condos this time with 75,000 square feet of office/retail space. PRESENT AND FUTURE OF HIGHLAND HOMES There are numerous keys to the success of Highland Homes in the affordable housing market. First, both developments are in established areas in need of work-force housing. Each development is adjacent to homes ranging in price from $300,000 to $600,000. Highland Park was the first affordable GREEN development in Missouri; Highland Terrace was the second such development. The list of Standard Features offered by Highland Homes is more extensive than many found in homes substantially more expensive with special upgrade packages not seen anywhere. Historically it has been very difficult for developers to convince local municipalities, their government and constituents to allow high-density multi-family developments–especially those catering to first-time, lower income and work-force buyers. For years any time a developer made an attempt to gain approval or support for a development like Highland Park or Highland Terrace, the opposition’s motto has been “Not in my backyard!”. Cavanagh and Shallenberger felt they had a distinct advantage their predecessors and competitors had not yet discovered: building GREEN. And they were right! Highland Homes defines GREEN building as the practice of increasing the efficiency with which buildings and their sites use and harvest energy, water and materials and reduces how the construction impacts human health and the environment. Through better site and building design, construction, operation, maintenance and removal–the complete building life cycle–GREEN building can lead to worthy benefits including reduced operating costs by increasing productivity and using less energy and water, improved public and occupant health due to improved indoor air quality and reduced environmental impacts by, for example, lessening storm water runoff and the heat island effect. The overwhelming support of Highland Park by the residents and government of St. Peters translated in to tremendous public interest and skyrocketing sales. The inter-company goal of 26 sales in the first year was nearly doubled! And the news quickly spread that although the housing market nearly everywhere else was dying, the Highland guys were doing something right! Cavanagh saw King Arthur’s as an opportunity to add to Highland Homes’ growing success in the affordable GREEN marketplace. When he contracted to buy the land, he made it a condition of the sale that the land be annexed in to O’Fallon with additional favorable conditions agreed to by the city’s Administration. By January 2007, King Arthur’s was annexed in to O’Fallon and Highland Terrace was under way. Some thought having the only two affordable GREEN developments in Missouri much less St. Charles County was very risky especially during a time of such turmoil in the real estate market. Cavanagh and Shallenberger learned at Highland Park that there existed much more demand for workforce housing than any other segment of the housing sector. Further, they foresaw an opportunity to build an even more affordable product at Highland Terrace. Having both developments would allow them to cross-market the properties and generate more interest and sales without increasing marketing costs. There were lessons learned at Highland Park that could immediately impact Highland Terrace. Highland Homes was founded with the belief that buyers expect certain higher-end features. By providing high-end features as standard features, Highland Homes gained a competitive advantage over its competitors. Although the nicer features were more expensive, Highland Homes’ low overhead allowed the company to absorb the additional cost while building a reputation for high quality standard features without the generally expected high prices. With escalating costs and overhead, Highland Homes managed to preserve the higher level of standards that lead to its success. With close to 500 condominiums coming on-line for Highland Homes in a relatively short period of time, Shallenberger took the opportunity to design the units to contain many same-as amenities and architectural characteristics. This forward thinking would lead to reduced costs and exposure for Highland Homes. For instance, every one of the kitchens in both Highland Park and Highland Terrace was designed to be exactly the same despite having more than eighteen (18) unique floorplans– some of which were designed to be 2-story. By making each kitchen identical, Highland Homes had the opportunity to reduce the investment in material costs by buying in bulk. Shallenberger would design kitchens, countertops, bathrooms, closets, doors, staircases, light fixture layouts, flooring styles and even rooftop decks so that items were interchangeable from unit-to-unit, building-to-building and development-to-development. This provided Highland Homes the opportunity to buy with volume discounts without having to carry unnecessarily high amounts of inventory. Shallenberger set out to track down as many products as close to the manufacturing source as possible. At last Shallenberger had the opportunity to utilize his experience overseas for the first time since leaving the rug business four years earlier. Knowing that much of the world’s prefinished hardwood flooring and granite countertops were manufactured or fabricated in China, Shallenberger was able to utilize his years of experience importing products from Asia in order to save Highland Homes thousands of dollars. What started as an opportunity to save the company money, soon became an obsession to find the highest quality products at the lowest possible cost. Soon Highland Homes would have even more competitive advantages over their competitors. Highland Homes began importing flooring when Shallenberger was still in the flooring business. Shallenberger realized then that he was able to provide a much superior product at a competitive price. Shallenberger learned that in China, the difference in cost between builder-grade flooring or cabinets and a much nicer item was negligible compared to the difference in price in the United States. Highland Homes would be able to provide the highest quality maple and oak flooring as well as 42” solid maple full-overlay kitchen cabinets to their buyers while managing to actually pay less than their competition was paying for 30” particle-board/MDF cabinets with white arched builder-grade melamine cabinets. None of this would have been possible with 18 different kitchen or bathroom layouts. Buyers were surprised and excited. Highland Homes would import cabinets and vanities, granite vanity- and countertops, hardwood flooring, light fixtures, rooftop decking and spiral staircases for Highland Park and Highland Terrace. Opportunities for future direct-source purchases include toilets, bathtubs, shower bases, doorknobs, prehung doors, appliances and possibly exterior brick and stone. By purchasing significantly higher quality products than their competitors, Highland set out to change how buyers purchase upgrades and options. Traditionally, builders offer lackluster lower quality standard features to force buyers to spend a great deal on upgrades in order to achieve the look and design of the home of their proverbial dreams. Buyers were forced to pour through catalogs and spend hours viewing showroom samples and style and colour choices intended to entice expensive changeorders and increase builder profitability. Very few upgrades were unique; most buyers would buy the 3-4 most popular upgrades in cabinets, flooring, bath fixtures and lighting. The colour selection process was a drain on manpower and company resources but a necessary evil for profitability. Highland Homes changes have revolutionized the process and made the selection process simple and a very lucrative profit center.
Highland Homes does, however, offer three additional option packages that are very unique to the homebuilding industry: the Super Bowl Shuffle package, the Luxurious Leather package and the Contemporary Bedroom package. Realizing that the majority of workforce housing buyers are either first-time or single-by-choice buyers, Cavanagh and Shallenberger recognized that many buyers did not have large savings accounts or lines of credit to buy new furniture or electronics for their new Highland Homes condominium. Highland Homes partnered with Home Source Design Center, locally owned by a fellow fraternity brother, to provide such packages. The Super Bowl Shuffle package includes a AWARDS AND ACCOLADES OF HIGHLAND HOMES |
|||
|
|||
. Together, Shallenberger and Cavanagh rehabbed the 800 square foot storefront in exchange for the first couple months rent and set up shop. Highland would go on to build nineteen (19) condominiums and several single-family homes within a short radius of its new home that year. With growth of more than 500% in the first two years to follow making Highland Homes one of the Fastest Growing Companies of any kind in Missouri, the need for a larger home became evident. In 2005 Highland broke ground on a new 8,000 square foot building complete with offices, high-bay warehouse, storage and one-half acre of outdoor parking and equipment storage. With single-family homes in Dog Town, Webster Groves, Brentwood, Rock Hill, Frontenac, Olivette and Kirkwood and multi-family flats and elevator condo buildings in the U-City loop, Highland Homes became the Fastest Growing Company in Missouri and the 20th Largest Home builder in St. Louis in 2006 according to the St. Louis Business Journal.
condominiums for people who enjoy city residences but wanted or needed to live in St. Charles County. The development consists One- and Two-Bedroom condos equipped with features such as custom cabinetry and 9-12' tall ceilings. The development gained notoriety for its rooftop decks and underground parking with other amenities such as a clubhouse, swimming pool, volleyball courts and significant green space. The unique contemporary exterior design has earned a great deal of acclaim from buyers and realtors alike.
Each buyer chooses from two standard kitchen cabinet styles and four laminate countertops. Both cabinets are of the highest quality available–noticeably nicer than anything offered by the competition. The buyers have the option of buying the Ultra Chic Kitchen package which includes their choice of four different colors of granite countertops, a matching granite breakfast bar, 6” granite backsplashes, their choice of four different upgraded cabinets, a stainless steel undermount sink and contemporary door and drawer pulls. Purchased separately this would cost any consumer as much as $10,000. The Ultra Chic Kitchen sells for $3,950 with a better than 50% profit margin for Highland Homes. Highland Homes does not offer its buyers at Highland Park or Highland Terrace the opportunity to add or change the location of light fixtures and there is just one standard colour of carpet and paint. Anything else costs $750 per room to change. Most buyers do not opt to change the carpet; some plan to paint their rooms after they move in which is encouraged by Highland Homes. 
50” Plasma TV complete with a Surround Sound system and a subwoofer, a DVD/CD Player, Playstation 3 or a Wii and Madden NFL 2008 (or which ever is the most current year). The Luxurious Leather package comes with a contemporary leather Sofa, Chair and Ottoman complemented by a matching Coffee Table. The buyer can choose from four different design packages and the most popular ten leather and ultrasuede colors. The Contemporary Bedroom package consists of the buyer’s choice of four design packages which include Queen Size Bed, Mattress And Box Spring, Chest, Dresser And Night Stand. Each of the packages costs under $4,000 and can be built-in to the purchase price and included in the buyer’s mortgage. Purchased elsewhere, these packages would cost the buyers in excess of $6,000; even with such a discount to its buyers, Highland Homes still manages a 30% profit margin on each of the option packages. Shallenberger intends to visit factories in China and Vietnam in the summer of 2008 to explore the possibility of sourcing the furniture directly providing drastically higher margins for the company.
