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British Builder Finds Success in Southland : Company's First Year Shows Strong Sales in Home Developments

August 17, 1986|DAVID W. MYERS | David W. Myers specializes in business aspects of real estate. and

It's a long way from the fog-shrouded, cobblestone streets of London to the warm, freeway-laced suburbs of Southern California. But one British home builder hopes that it is the road to success in America.

"We took a while to get here, but things are going quite nicely," says Martin Laing, chairman of London-based John Laing PLC and a sixth-generation builder. "Sales are running ahead of our original projections."

Indeed, the British building and manufacturing conglomerate, with more than $1 billion in 1985 revenue, so far has had nothing but good fortune in the Southland.

Laing opened its first U. S. community--Mariposa in Colton--last October, and sales quickly took off. The homes, which range in size from 808 to 1,440 square feet, start at $64,990 and sell for as much as $91,990.

Won Prestigious Award

Timothy L. Unger, a California native whom the British firm selected to start up the new U. S. subsidiary, proudly notes that one of Mariposa's floor plans won a prestigious merit award in the California Building Industry Assn.'s Gold Nugget competition for best design of a single-family home under 1,200 square feet.

Similar success has been achieved at Laing's second development, Altamar, in Laguna Niguel. Opened last March, Altamar is Laing's priciest community, with homes costing between $128,990 and $156,990.

But nowhere has the new U. S. entity been more successful than in Orange County's Rancho Santa Margarita, a new master-planned community. The company has filled a niche in the sprawling, 5,000-acre community by offering what it claims are the lowest-priced homes in the county: 450-to-950-square-foot condominiums, ranging in price from $55,990 to $78,000.

Laing offered the first 78 homes in the project for sale in May, and all 78 were sold within the first week.

Expects Good Year

David Holliday, chairman of Laing's primary home-building unit, said the company will likely close sales on as many as 250 homes in the United States this year, and another 400 in 1987. Although that would be a hefty sales increase, it is still far below the output of most Southland builders.

"We're taking a very cautious, conservative approach toward building here," Laing said. "That's one reason why we've only built in master-planned communities instead of doing our own raw-land development. Raw land is just too risky, at least in this stage of the game."

Laing Homes expects to begin construction on its next two residential developments, one in Corona and the other in Fontana, toward the end of this year or in early 1987. Also on tap for next year is the start-up of another residential project in Colton.

It'll be at least two years, however, before Laing will consider introducing a U. S. version of its wildly popular pre-manufactured homes.

Houses in Kits

The houses, marketed in England under the name of "Super Homes," are shipped to builders in a container about the size of two apartment dumpsters. The kits have most of the components needed to build a house--including insulation, plumbing and pre-assembled window units.

A typical "Super Home" costs the builder about $15,000 and retails for about $50,000. A sophisticated computer system allows the builder to customize the home with more than 1,400 different options.

Such a low-cost house would likely hold great appeal for American consumers, especially for those saving to buy their first home. Laing management, however, feels it's too early to start selling U.S. versions of the homes here.

"The guts of the whole Super Homes system is the computer," Holliday said. "It would be very expensive to duplicate it here."

Other roadblocks to introduction of the kits in America are the everchanging tastes of the American consumer and the ample availability of land in the suburbs.

"One reason why Super Homes are so popular in the United Kingdom is that we don't have much room to build over there," Holliday said. "There's more room here than there."

There is also more opportunity in the United States than there is in England. A mere 160,000 new homes are built in the United Kingdom each year, Laing said, "which is about the same number of homes that are built in Southern California alone."

Laing credits much of the firm's early U. S. success to the extensive market research the company did before coming to America.

California First Choice

"We considered building in several states, but finally settled on California," Laing said. Florida was in the running, he added, but was later ruled out because it "is too reliant on inmigration.

"Also, its population is much older, so people there aren't really the first-time and first-time trade-up buyers that are our target audience."

Texas was nixed primarily because its economy is too dependent on the volatile oil industry. "The stability of California's economy will cushion us when the real estate cycle turns soft," Laing added.

Unger, who previously worked for Barratt American--another Southland builder with a U. K. parent--said British builders "tend to be a lot more conservative" than their American counterparts.

Most Emplyees Americans

"The British don't move as fast, and they usually don't take on as much debt as U. S. companies," Unger said.

Despite the company's ties with England, most of Laing Homes U.S.A.'s employees are American.

"We use American salespeople, American architects, American engineers and American subcontractors," Laing said. "I suppose the only thing British (about the U.S. subsidiary) is the money."

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