Quadrant Homes Featured in Puget Sound Business Journal
November 2010
Quadrant cuts home size, adds features to lure buyers
by Kelly Gilblom
Call it “Extreme Makeover: Pacific Northwest Edition.”
Quadrant Corp., the state’s largest home builder, has adjusted its management and rolled out a new line of smaller, fancier houses, in a bid to stay at the top.
Like most home builders, Quadrant has struggled during the prolonged slump in housing demand. Last year it sold just 579 homes, about half as many as the year before. And it has cut its work force by 19 percent to 132 people.
But its new, smaller home design marks a departure from the maxed-out floor plans most other builders are putting up. The Bellevue-based unit of forest-products giant Weyerhaeuser Co. says the move follows substantial research on what buyers are seeking in the current market. As a builder closely watched by the industry, Quadrant’s move could mark a new trend in the region.
Quadrant’s moves also follow the retirement of a top executive at a Weyerhaeuser unit in August, which opened the way for cost savings with a flatter management structure.
“We streamlined,” said Peter Orser, who was named president of Weyerhaeuser Real Estate Co. (WRECO), the unit of Weyerhaeuser that owns Quadrant.
Ken Krivanec, who has been at Quadrant since 1999, succeeded Orser as president of Quadrant Homes. Two other executives moved into top roles at Weyerhaeuser’s Timberlands business and Wood Products division. All the subsidiary heads now report directly to Weyerhaeuser CEO Dan Fulton, saving intermediate layers of management.
“The leadership changes will result in a leaner, more efficient organization,” Orser said. Beyond saving money, the new management is energized to attract new customers, he said.
As head of Quadrant, Krivanec faces the challenge of selling homes when demand is low and credit is still very tight.
The lack of buyers is evident in the sales figures of other big home builders. SoundBuilt Homes sold 154 homes in 2009, down from 339 in 2008. Sales at CamWest Development dropped to 204 from 219 in the same period.
“Mortgage underwriting continues to be a difficult process. We can’t change that,” said Krivanec, adding: “Sheer sales numbers are down dramatically.”
The difference is the response. Krivanec said Quadrant decided to drastically alter the homes it builds and personalizes for customers. First-time buyers used to want space above all else, he said. In recent years, the average Quadrant customer spent $330,000 and home sizes rose, with more open space. Last year’s average size was 2,221 square feet. The company’s slogan reflected the trend: More house, less money.
But now the market has changed, Krivanec said. He said his research shows buyers want more style than space. They are focused on thousands of options when they personalize their homes and are willing to accept slightly less space, an average of 2,161 square feet, to enjoy better details.
“Our research we embarked on this year led us to significant changes,” said Krivanec. “Buyers are more discerning.”
As a result, Quadrant’s “Revolution” homes are big on such features as fireplaces, granite countertops and stainless-steel appliances. The emphasis on aesthetics is visible even from the outside. Instead of a plain, neutral-colored exterior, which drew the eye straight to the home’s garage, Quadrant’s new projects are more colorful and are outfitted with shutters and trim. Its three newest communities are located in Gig Harbor, Poulsbo and Maple Valley.
All these changes in the houses reflect changes among the customers. The average Quadrant buyer is spending about $270,000, an 18 percent drop from before the recession.
Joey Ferrick, who deals regularly with major home builders as a building manager for TeamBuilder, a unit of Issaquah-based John L. Scott Real Estate, said most of the other big builders are still focusing on giving customers more space and doing it cheaply.
“A lot of demographics still want more square footage, more bang for their buck, and they’re able to get it,” he said. “To reach buyers’ criteria, people are having to be cheaper about finishing” — the exact trend Quadrant is bucking with its new line of homes. However, Quadrant’s move is very much in line with the industry when it comes to buyers’ difficulty in procuring financing, he said.
Like other builders, Quadrant also is helping buyers build credit — and says its customers are using that program at an increasing rate. Quadrant staff meet with would-be home buyers and suggest ways to raise their credit ratings. The better their rating, the lower the interest rate on their mortgage, and the lower their payments, the more house they can afford. This process also helps keep Quadrant’s buyers from going into default.
“Everyone’s focused on buyers getting papers,” said Ferrick, referring to mortgage approval. “There’s a lot of people who want to buy but can’t qualify like they could before. Builders are doing anything they can for the buyer’s financing.”
Quadrant says its credit program often suggests people wait until their credit improves to buy a house, so it keeps some people from purchasing prematurely.
The market is expected to remain depressed. Real estate experts predict sales won’t heat up in 2011.
“I think the market is still sluggish and waiting,” said Ferrick. “The recession’s over, but we’re in the lag time. There will be an uptick
in sales when the confidence kicks in.”
Krivanec said Quadrant will focus on marketing the choices it gives with its Revolution houses. Starting in January, it will highlight the fact that the “Built Your Way” program, which gives buyers thousands of feature choices, from siding to appliances to paint color, has had a makeover.
About Quadrant Homes
More Washingtonians live in a Quadrant home than in one constructed by any other builder. Quadrant Homes, a subsidiary of Weyerhaeuser Real Estate Company, is now in its 40th year of award-winning home building in the Puget Sound region. Quadrant’s “Built Your Way” approach encourages homebuyers to select the features that matter most to them. The company is currently building or developing new-home communities in King, Snohomish, Pierce, Thurston, Kitsap, and Skagit counties. Quadrant was recognized with the 2010 Guildmaster Award for exceptional customer satisfaction, has been named a Builder of the Year by the Master Builders Association of King and Snohomish Counties, and one of Washington’s Best Work Places by The Puget Sound Business Journal. Quadrant has also been designated by the Environmental Protection Agency as a qualified Energy Star® builder. For more information, visit the Quadrant Homes website, Quadrant Homes Twitter and Quadrant Homes Facebook
