A Metro-focused housing developer weathers the downturn

December 16, 2011

The current trend of smart growth, or developing housing and other amenities near transit-friendly areas, has been the mantra for local planning agencies and developers in the last several years. One of the pioneers in the Washington area of this concept is the Bethesda firm EYA, which since 1992 has been developing townhouses and other higher density housing in neighborhoods within a short walk of Metro stations.

You might be familiar with EYA’s colorful townhouses near U Street NW, near the popular Busboys & Poets restaurant, or the rowhomes near the Wheaton Metro in Maryland. The company’s newest projects include the Mosaic District townhouses near the Dunn Loring Metro in Virginia and the Chancellor’s Row homes near the Brookland/CUA Metro in the District.

According to a report out last month from George Mason University’s Center for Regional Analysis, our area can’t afford to not build near Metrorail stops and mass transit because our roads won’t be able to handle the expected additional influx of workers and commuters.

I recently talked with EYA’s co-founder and president Bob D. Youngentob about his company’s strategy, his outlook for 2012 and lessons learned from the housing downturn. Here’s an edited transcript.

George Mason’s recent forecast looking at the region’s housing needs through 2030 concludes we need to be building a lot more high-density housing near Metros. Do you feel validated by that?

Historically, in the earlier recession in the early ’80s and early ’90s, close-in properties always maintained their values so you weren’t suffering these dramatic price reductions that you saw elsewhere. People were taking notice of changes that baby boomers were aging and looking for a change of lifestyle. They didn’t want maintenance of large suburban spreads and urbanization was coming into vogue. And then, not only do you have the baby boomers, but the young professional segment has focused on this lifestyle, no longer feeling that having a family in the suburbs is the dream. Those two demographics have fueled our business.

So, yeah, we do feel validated if that is the right word. We were doing it for different reasons early on but the demographics are moving in our favor.

How was 2011 for your business? Are we out of the rut yet?

We exceeded our sales projects, which obviously have been moderated by what had happened between 2007 and 2009. We did take our lumps like everyone else during the tough parts of the recession. Our strategy of focusing on these closer-in sites has proven out some moderate price increases. The places we are selling are all Metro-oriented they are the most attractive given the people who are currently buying.

And what’s your outlook for 2012?

There’s tremendous uncertainty ahead as it relates to what’s happening in Congress and the worldwide economy. Every time the market takes a substantial dip, people put off the decision to buy. I don’t think they have made the decision not to buy or move closer in, they’re just delaying [taking action]. Every time the market is at an uptick, we see a renewed confidence.

I don’t think we’re ever going to be 100 percent through it. Everyone who has survived 2007 through 2009 will operate more conservatively going forward. At the same point, we’re optimistic about the types of sites we have and the buyers that are out there.

We’ll probably do better in 2012 than this year, provided that the external factors don’t change from where they are. We’ll be selling three of same projects we are now, which are some of the hottest-selling communities in the D.C. area and we’ll be adding two new communities to our offerings.

Are there some lessons you’ve learned from the recession?

I’ve always believed that trying to be all things to all people doesn’t make sense. Find one thing you do better than everyone else.

You can do more with less. We’ve become much more efficient as an organization and performing at a higher level in terms of sales and deliveries than we were in 2005. We have fewer but better people and it allows you to do things at a higher quality. As we reduced staff through that period we kept all those people who were top performers. Having a team of 100 percent top performers allows you to do more. They have much more confidence in each other and they tend to rise above because they don’t want to let each other down.

The hardest thing coming out of the recession that they never taught you at business school is how to do a reduction in staff [of people] who were really part of a family. Even though [this company is] not owned by a family, it’s challenging for people who worked here a long time. That’s something I never want to have go through again. As a business leader, you have to do for the good of the organization for those who remain as opposed to waiting too long and letting the entire organization go under as a result of carrying too many people. Our goal was to do [staff reductions] the fewest possible times as opposed to having people worrying every day. At one point we had 110 people at our peak. We shrunk to 55 people and now we’re back to 70.

Does your business provide an insight into local real estate? We’d love to hear from you, whether you are a contractor, homeowner, house hunter or a real estate professional. Tell us your story. E-mail realestate@washpost.com and write “Market Insight” in the subject line.

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