Joe Farrell in his office in Bridgehampton. DANA SHAW
Two recent million-dollar price cuts illustrate the business strategy of speculative builder Joe Farrellâ€”to keep inventory moving â€śso you can move on.â€ťâ€śI love to get the money and put it to work again,â€ť said Mr. Farrell, whoâ€™s diversified his portfolio to include a broad range of price points as well as geographyâ€”not only on both sides of Montauk Highway on the East End but also in Florida and upstate New York.
â€śWe build in volume,â€ť he said. â€śI donâ€™t have to sit there and wait to make a fortune in one house.â€ť
The price for a completed spec house at 423 Parsonage Lane south of the highway in Sagaponack was recently dropped by $1 million, to just less than $12.5 million. At 280 Highland Terrace in Bridgehampton, another Farrell house south of the highway, the asking price was chopped by $1.5 million to a hair short of $17 million.
Not waiting to get the highest price possible enables the developer to start a new projectâ€”often at a different price range or neighborhood that might be hotter at the moment. If the high end gets soft, for example, it helps to have inventory at a lower price point.
The Bridgehampton-based Farrell Building Company has its own architects, engineers, paralegals and excavators, among others. The company took a hit in the 2008 recession and had to lay people off, and Mr. Farrell said he doesnâ€™t want to go through that again, even though the business eventually doubled in the years that followed.
â€śI went to a different business model,â€ť Mr. Farrell said of a time following the recession when he transitioned from building $15 million to $18 million homes to $3 million to $5 million ones. â€śWhen next recession comes, I need work,â€ť he said, and to that end he has any number of irons in the fire.
In addition to residential projects both north and south of Montuk Highway, they include two $30 million oceanfront homes just south of Miami, a self-storage building in Port Jefferson, a 92-bed assisted living facility in Fishkill, and convenience stores and a 163-unit apartment building in Newburgh, New York.
In the Hamptons, Mr. Farrell said heâ€™s finding that land prices arenâ€™t going down, but that there is less competition to buy the land. â€śEvery builder and their brother, theyâ€™re all here,â€ť he said, but â€śa lot of builders are tied upâ€”their capital is tied up.
â€śI donâ€™t waitâ€”I like to be ahead of the curve,â€ť the developer said.
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