Careful financial planning and industry savvy carried Jody “Joe” Dunning through the recession. The Byhalia native and former director of the small business startup center at Northwest Mississippi Community College heads Classic Homes, LLC, a contracting firm based out of Olive Branch. “It’s a lot easier to give up in this business when you’re weighted down with debt,” he says.
Since 1992, Dunning has built a variety of houses from the ground up across North Mississippi. “We originally tried to stay around DeSoto County. However, when the downturn hit, we would basically do whatever it took and go where we needed to go,” Dunning says. “We were able to turn to other arenas outside of residential building including a few restaurants and other commercial projects.” Dunning earned his general construction license in 2006, which opened up a slew of new opportunities outside the realm of residential construction. “We didn’t really focus on brick-and-mortar groundwork on commercial jobs,” he says. “There was a little bit of a learning curve compared to working residentially, but many of the differences boil down to the materials we use — metalwork for commercial versus traditional lumber for residential.”
Commercial work allowed Dunning to hone his craft during the downtime of the 2008-2011 housing dip. The seasoned contractor momentarily turned his focus away from residential homes and toward smaller-scale renovations and interior design. This focus on smaller jobs and slow growth wasn’t in the purview of many other area contractors, many of whom planned big and ended up being forced to give up the ghost when times got tough. “A lot of guys were building 20 or so market homes with 200 lots in inventory,” he says. “That’s one of the things we didn’t do. You always want to grow your business but we thought that mindset could catch us off guard if a downturn did occur.”
A former banker, Dunning was well versed in the area of supply and demand. He saw the symptoms of a dwindling market and planned accordingly to keep his business afloat. He speaks of the days before the housing bubble burst with a degree of hindsight gained from 20 years of immersion in the industry. “Times were good. We were doing $100-$125 a square foot and 2006 was our best year. We probably built about 20 homes that year,” he says. “But suddenly, we were building much less. The banks wouldn’t let most contractors build more than two or three at a time.”
In addition to commercial work, Dunning found himself taking on smaller and lower-cost residential projects during the recession. “It’s a whole lot easier to move a $100,000 home than a $400,000 home,” Dunning says. “We gave up our profit a few years but we never actually had to take money out of the company.”
While the signs were everywhere in the form of the high cost of roofing materials, drywall and carpeting, Dunning saw that evidence of the recession was not always found in unsold homes, but rather a heavy and stubborn lot inventory hastily purchased by other prospective contractors. “A lot of the time, you’ll see nothing but a concrete foundation with pipes sticking and overgrown weeds for months on end,” he says.
While Dunning acknowledges the importance of saving money, he isn’t beyond passing some of the savings down to his clientele. Many of his recent projects boast Energy Star certification in light of recent “green” trends. To homeowners, this means a reduction of hundreds of dollars a year in utility payments and a minimal carbon footprint. In 2012, the 11 Energy Star-certified homes built by Classic Homes cut down on carbon emissions in the state, saving up to 19,833 pounds of burnt coal.And despite a few grim years as of late, Dunning looks toward the future. He emphasizes a need for revaluation of appraisal procedures to match the current market, championing a cost-approach method instead of traditional comparable appraisal.“That way, builders receive credit for what they’re putting into a house in terms of material and cost,” he says. “If you built a house six months ago, it’s likely that your framing materials would cost $5,000 more than they do today. Right now, we’re seeing an increase in the cost in building materials and lots and we’re still stuck in the old appraisal process of comparing the price to established homes.”
Now that his company has weathered the worst, Dunning hopes to resume business as usual in the coming years. “Last year was profitable for us and it’s looking like 2013 will be even better,” Dunning says. “I definitely feel like it’s on the upturn. Things are looking good—the DOW is up and trucks are on the road.”
The onset of the Great Recession in late 2008 shook the global economy to its foundation, causing the largest domestic decline in goods and services since World War II.
However, few industries felt the sting of the recession like the country’s battered housing market. During the five-year long real estate crash ushered in alongside the recession, home values in the United States dropped by a combined $9 trillion, an amount equal to the annual GDP of the entire country of China. This striking loss cast the industry to the forefront of national news and led to a massive loss of jobs and foreclosure of businesses and homes across the country. The downturn of the residential housing market in particular affected thousands of designers, architects, contractors and builders and changed the business models of many for years to come, ushering in a new era of wearing many hats, mobilizing and doing more with less.
Now, the market is finally showing signs of life following the massive dip in 2008. While many are still hesitant to acknowledge that the worst is over, the numbers speak for themselves. Construction rates have risen more than 38 percent in the past year and housing starts are now 85 percent higher than the dire lows hit at during the peak of the recession in 2009.
While many operations perished during these tumultuous times, a willingness to break conventional stereotypes and think outside the box contributed to many local businesses not thriving, but surviving the tough times through grit and determination.
Five that survived the crash
Dan Camp cites a unique, rental-based business model and ripe, workable neighborhood as the two primary reasons that the recession never visited his stomping grounds of Starkville, Mississippi. “We don’t play with the same set of drums as everybody else in the business,” Camp says.
Camp, the visionary behind the sprawling student entertainment district known as the Cotton District, created what has become known to locals as a walkable sensation in the small college town. “For students, it means you won’t get put in the pokey after you’ve had a few,” he says, in acknowledgement of the area’s thriving nightlife.
Camp says he doesn’t understand the “gotta sell” mentality that most developers operate within. According to Camp, houses are often poor investments and difficult to obtain an efficient return on investment for months of work.
“I figured out 40-something years ago that there are much better ways to do it,” Camp says. “And the major difference with us being that this operation has always had positive cash flow — cash is always the answer.”
The Cotton District employs an own-to-rent strategy in lieu of traditional methods to maintain a steady cash flow. This method of passive income has carried Camp throughout the years and has served as a safeguard of sorts against the swelling housing bubble in the time leading up to the recession. To Camp, the advantages of owning the properties he works on far outweigh the extra hours he puts in maintaining the buildings. In fact, he revels in it. “This is the only venue of its kind,” he says. “And I couldn’t imagine any other place I’d rather live than right in the middle of it all.”
As former mayor of Starkville and owner of 90 percent of buildings in the Cotton District, the 71-year-old developer has seen the best and worst of the industry in his years in the business. A self-made man in every sense of the word, Camp’s success in the field of urban renewal comes as the result of 50 years of trial and perseverance. “The area I originally worked with was so terrible, you would be shocked that it wasn’t included in any city government plan,” he says. “I guess, in some ways, I did the community a little favor.”
Deep in the heart of Bulldog territory, MSU students clamor for a spot in the Cotton District, with nearly a 99 percent occupancy rate year round. Camp’s successful model can partially be attributed to the fact that the Southern U.S. tends to have more renters than other regions, especially in college locales. Each of Camp’s 90 buildings in the Cotton District packs anywhere from one to 18 units each. His signature style includes mixed-used housing units that pack student dwellings above local boutiques and restaurants for a true taste of downtown living in rural Mississippi. “Anything that looks good over here, we did it,” Camp says.
Camp’s easily recognizable work is a far cry from the ranch-style architecture that once dominated the surrounding area. His architecture consists of classical, French-style housing that blends the best of design from New Orleans, Vicksburg and whatever else has caught his eye in foreign locales over his years of traveling. Many of his buildings, he says, are geared toward implementing his own slice of Belgium’s renowned capital of Bruges in the heart of the Magnolia State.
And Camp does it all with no formal training. While he doesn’t pack the professional architectural expertise of his contemporaries, his skills are sought after from as far as Harvard University and Belgium, where he has delivered lectures on his unique, NOLA-meets-Vicksburg style of architecture. Casual, candid and cavalier, Camp’s attitude is highly atypical of the consummate salesman and he shows no signs of stopping.
“We’re working on some things around here that’ll blow your mind, including a hotel going up that my sons have recently designed. In fact, I’ve requested that we import some hot Latin females from Puerto Rico to work as maids,” he says with a wry grin.
Among his most recognizable works is the Rue Du Grand Fromage, the District’s “Big Cheese” — a towering classical-style structure that welcomes visitors to the many shops and restaurants of the area. From the overall appearance of the buildings to the foundation below, Camp’s work is highly recognizable and uniquely his own. He uses wood foundations instead of traditional concrete and has established a way to work faster and more efficiently on the less-stable soil of the land. “Of course, they thought I was nuts at first. Eventually, they quit saying I was crazy and began to copy my work,” he says. “If it’s good enough for the beach, it’s good enough for us.”
However, Camp acknowledges that his model may not be suited for fast-growing metropolitan communities like Olive Branch. His work fills a niche for a very specialized market, something that developers have tried to emulate in burgeoning college towns across the country. While much of Camp’s success can be attributed to his architectural style and business model, he maintains that every dime he’s earned has come through following the sage advice of his mother: “Never sell anything, never have a partner and always include a washer and dryer,” he says. “Mother was right.”
Stephen Skinner of UrbanArch Associates says a willingness to adapt to the changing climate while staying true to the core principles established by himself and co-owner Brian Bullard were the deciding factors that kept his company afloat during the recession.
“People appreciate those in the industry that haven’t compromised their principles,” he says. “We have a broad range of experience along with a very diverse client base and have still been able to maintain a smaller, more boutique-style design environment.” According to Skinner, those who survived were the ones who knew how to adapt and didn’t wait for jobs to fall into their laps. He also credits the surge of “weekend warrior” homebuilders, developers and commercial contractors as a contributing factor to the oversaturation of the market that led to the 2008 downturn. “Before the recession, everyone jumped in trying to make their fortune,” he says. "People were out here making money hand over fist without trying very hard or even being good at what they did. The demand was that great. When things slowed down, they didn’t know how to react or adjust because most had never seen a downturn before.”
Skinner’s by-any-means style of business management has also helped the company grow from a modest start out of his house in Olive Branch in 2002 to his stylish new office on South Main Street in Memphis. “With Memphis in particular, the residential and commercial markets had completely dried up,” he says. “But we found that the best way to find new work during slow times was to not wait for it to come to you. Sometimes you have to be proactive and go out and make a project happen.”
The new office, with its graffiti-coated interior and Spartan design style, fits right in alongside the small niche of artists’ studios in downtown Memphis. In addition to commercial work, UrbanArch has designed many estate homes throughout DeSoto County geared toward the more affluent citizens of the fastest growing county in the state. This diversity in operations brought a steady stream of work that would carry the firm through tough times and beyond. “I have found that most small firms focus on a specific specialty in either residential or commercial design – we don’t. We currently have thriving commercial and residential departments,” he says. “When the economy tanks in one area, the other is there to pick up the slack.”
While UrbanArch held out longer than most during the crash, the lingering effects were definitely felt.
“Prior to the recession, the industry was going like gangbusters — we had quite a backlog and it took us a while to get to the end of that because our projects can take up to a year or more,” he says. “Unfortunately, some in the industry didn’t have a backload and felt the effects much sooner than that. We found that we had to be willing to do what the competition wasn’t. “
In addition to maintaining a healthy backlog of work, UrbanArch adopted a policy early on to take on projects that many other local firms avoided. “From the very beginning, we have made it a point to treat all of our clients with the same level respect and care regardless of the project size or type,” he says. “It also turns out that many of these same clients have businesses that seem to thrive during recessions and this has produced a significant amount of work for us.”
Skinner credits this commitment to seeking out underdog projects and an ability to work on a tight budget as the deciding factors that kept the company going. “Our business model is very frugal. We try to stay lean and mean. As owners, we still answer our own phones and work alongside our staff in the design and development of construction drawings every day,” he says. “Most businesses also open up a large line of credit when they get started and we didn’t do that. This business model has allowed us to be very flexible and secure regardless of the financial climate.”
Skinner has had a hand in many architectural endeavors in DeSoto County. The prolific commercial and residential designer has undertaken projects such as the Olive Branch City Hall and Police Station, Fillin Station Grille, Snowden Grove Amphitheatre and the upcoming Southaven Senior Citizens’ Center. In addition to a healthy portfolio of commercial work, Skinner cites his role as a designer for many residential projects in DeSoto County as an important part of the company’s diverse portfolio. He looks at each project on a case-by-case basis and employs his own standards and guidelines to maximize customer satisfaction and project success. He says that “politician-style” designers don’t ordinarily go over well in DeSoto County’s five major cities, which gives smaller, more focused local firms like UrbanArch the edge over fierce competition.
“There’s no guidebook to buy that tells you specifically how to addresses the growth dynamics of one of the fastest growing counties in the country,” he says. “I have found that even during a financial downturn, there are those clients who will continue to insist on something better and refuse to settle. If you do good work and guard your integrity, clients will seek you out.”
With 20 years of homebuilding experience under his belt, Bob Higginbotham’s highly recognizable style of expansive custom homes have made his work stand out from the crowd in DeSoto County. However, even one of the region’s most reputable builders wasn’t immune to the struggles brought on by the economic downturn. “When things were good, they were really good,” he says. “And we’ve had slow times before but when this crunch hit, it was different — it hit everybody.”
In addition to numerous accolades from the Home Builders Association of Mississippi, one of Higginbotham’s crowning achievements as a local builder are his homes in Spring Place Estates, a picturesque, high-dollar neighborhood located just off Pleasant Hill and Church Road in Olive Branch. There, each house is built site-specific to maximize the location and provide a unique aesthetic flair. Known countywide for his “can-do” reputation, Higginbotham frequently takes on challenging projects that include expansive estates featuring curved floors, high ceilings and other trying tasks for homebuilders. “I’m not the only builder who can build stuff like this,” he says of his work. “But I may be one of the few in the area who is crazy enough to take something like that on. I enjoy my work.”
While he’s spent much of his time in the business engaged in the local environment becoming aware of the highly specialized needs of his clientele, the looming effects of the economic downturn became glaringly apparent to Higginbotham shortly after wrapping up work on a major project in 2009. “I had just finished a good-sized house from ’08 that carried us into the next year. Usually, I’ve got something else coming out of the ground but this time I didn’t,” he says. “I finished on Friday and by Monday, I didn’t have anywhere to go for the first time in 30 years.”
To avoid fading into obscurity like so many of his peers, Higginbotham began researching new ways to find work, cut costs and minimize the impact of the nation’s greatest economic struggle in recent history. “At the time, I was thinking about how it wasn’t just me — there are a lot of people who were dependant on me to make a living,” he says.
Eventually, he decided that concessions would have to be made. He closed his workshop in Hernando off of McCracken Road, where he produced many of the components for his Spring Place homes. His office in Olive Branch also closed its doors soon after and Higginbotham was forced to conduct operations from his own home. “The office was mainly just a place to meet people and shake hands, but we made a lot of good stuff in the shop that we applied to the houses,” Higginbotham reminisces.
While primarily a homebuilder by trade, the recession led Higginbotham to seek out work that included insurance repairs and other minor services. He cut down on building speculative housing, relegating the construction of lavish trappings like Spring Place to “only an occasional thing.” “I was just homebuilding before the crash,” he says. “It soon became clear that we needed to diversify.”
Projects that he wouldn’t have had time for five years ago soon became the bread and butter of Higginbotham’s day-to-day operations. From repairing flood damage to remodeling and adding expansions to existing homes, Higginbotham’s team conceded a bit of the glamour in order to stay afloat during the recession. “We eventually started to take anything that anyone would call about,” he says. “It took a while — I was sort of typecast as the guy who would only work on big houses.”
In addition to scarcer opportunities for work, combating the high prices of building supplies and raw material became a secondary battle for Higginbotham and his associates. “Right now, lumber is at an all-time high. Everything has gone up in terms of prices for materials but not labor — the people are still there; everybody wants to work,” he says. “The bottom line is that everybody is working for less now.”
Now, with the market on the upswing, Higginbotham hopes to restore his operations to their former pre-crash glory. He’s currently back in Spring Place working on new properties and back to the basics of the profession he loves: building homes from the ground up. “I know a lot of people who were good builders and businessmen who didn’t do anything wrong but got caught in the crunch,” he says. “Subcontractors were scarce for a while but now things are coming back together. Since January, I’ve done more work than I have in the past four years.
Oscar Andrade credits a strong reputation and willingness to take operations on the road as the deciding factors that reduced the impact of the economic crunch on his business. As owner of At Home Builders, LLC, Andrade and his crew employ a hands-on approach to building and become familiar faces to prospective homeowners in the process.
“The relationships that we’ve built with our clients carry us from one project to the next,” he says.“Everything is hands-on. We’re not site managers, we’re designers and builders. We are at the site the entire time throughout the building process.”
This emphasis on contractor-client relations means that Andrade doesn’t operate within the realm of speculative housing, ensuring that every project he takes on will go somewhere and he won’t waste time resting on his laurels waiting for properties to sell.
“You can do well with spec homes, but you’re also risking going under if they don’t sell,” he says. “We make sure 100 percent of the business we do is presold.”
A small and manageable in-house team has allowed Andrade to commute quickly and take on multiple projects at a time across the country, many of which carried At Home Builders through the tough times of the recession and beyond. His crew is more than willing to travel the U.S. for established clientele, even if it means commuting from the MidSouth to the east coast several times a week. Andrade says his team has a willingness to tackle large projects anywhere in the South, from the outlying cities of Arlington and Eads to the far-flung reaches of the Florida panhandle. “Luckily, when the recession hit we had a number of projects lined up to carry us through that time. We were willing to go pretty much anywhere. Wherever the client takes us, we go.” he says. “And for those few years during the downturn, we were actually busier than we were before.”
Like other successful MidSouth homebuilders, Andrade believes that a thorough set of building guidelines are key to successful operations. These guidelines, which include various design criteria and directions for energy- and resource-efficient design, benefit customers in the long run by increasing property value and ensuring sustainable homes. “To a lot of clients, it can be a little annoying but if you don’t inform your customers about guidelines you can be out of budget really easily,” he says. “But by following the rules, it ensures you get top-dollar resell value for your home. It’s something most people may not understand right away, but when someone signs the check, you will.”
This emphasis on adhering to guidelines and covenants led to Andrade’s company producing more new homes in DeSoto County throughout the recession than any other in the area. Among Andrade’s most notable projects are his homes in Olive Branch’s Robinson Crossing, an area that Andrade’s strict compliance with guidelines ensured that smaller, modest properties could peacefully coexist alongside luxurious half-million dollar homes. “We were one of the only ones building there and it’s all been by referral,” he says.
With 12 years of experience in the field, 36-year-old Andrade has spent most of the past decade immersed in the business of architecture. As the son of a construction worker who came to the U.S. from Mexico and worked his way up the ranks to supervisor, Andrade knows the value of hard work and takes pleasure in a little friendly collaboration with his contemporaries.
“We really have no rivals. As far as I know, we’re the only ones in DeSoto County who can design and build with a hands-on approach,” he says. “If there’s another architect working in the area, I can give them pointers.” Andrade says he spends much of his time “coaching” customers through the process by explaining and instructing on what needs to be done, a method that has built his reputation as the most conversational contractor in DeSoto County. “We do not do advertising, we have no signs – everything we do is word of mouth,” he says. “A lot of the time, contractors only see how to get the most profit. They don’t care about the client because they are only one – but if you think about it, that one can turn into several. Many times, satisfied clients do the marketing for us.”