Ann Arbor's Norfolk Homes expands into second out-of-state market
Norfolk Homes spent years as a leading Ann Arbor area home builder and land developer.
Now the company - while committed to keeping its headquarters here and retaining its existing communities and land holdings in the area - is moving into new markets.
In 2008, the company started operations in Nashville, Tenn. This fall, it’s opening an office in Huntsville, Ala.
“After that we’ll choose our next market,” co-owner Kevin Belew said.
The move to the southern cities came as Belew and co-owner Jim Franke considered options for their company when the local home building market turned a couple of years ago.
“I don’t want to make it sound like we’re not committed to Washtenaw County, Jackson and Livingston County,” Belew said. “We own property here. “
And when job growth returns to the region, Belew said, this will be the first area to benefit.
“When things get back to normal, Ann Arbor will turn into the best market in Michigan,” Belew said.
Until then, Norfolk is turning to geographic diversity as a strategy to keep building and growing.
The strategy worked last year when the company moved into Nashville, where Norfolk is working on five projects and has a couple of more lined up.
“We sold about 40 houses there this year,” Belew said.
And, he says, even though it’s a down market there, too, the depths are nowhere close to the situation here.
There, the market went from about 12,000 units per year to about half of that.
In Southeast Michigan, builders got permits for 15,387 single-family homes in 2004. By 2008, that total fell to 1,999 - and 861 so far this year.
That’s not a viable market for a crowded field of established home building companies.
Belew said he and Franke survived the housing downturn in the early 1990s, and diversified their business over the years because of it. One example is their investment in other businesses, like long-term health care facilities.
Another example was pursuing land in the Ann Arbor area, while also building in suburban communities like Dexter and Grass Lake.
“We thought being in the Ann Arbor market would protect us from the downturn,” Belew said. “But this one was so much worse than (the 1990s).”
In addition to diversification, the company’s liquidity is helping the owners have the choice to move among markets.
After the success in Nashville, Norfolk turned its focus to Huntsville. Belew said its low unemployment rate and nearby military job growth through the federal Brace Realignment and Closure plan - or BRAC - make it attractive.
This fall, they’re analyzing the market, acquiring options to purchase land - keeping the capital outlay low - and creating both production plans and teams for sales and marketing.
“By the end of the year we’ll be under construction with our first set of models,” Belew said.
Land prices are down in Huntsville, but Belew expects a fast rebound - so his options should be worth more as prices rise.
And it doesn’t hurt that there aren’t any national builders in the market yet, either.
“It’s a good time to enter the market,” Belew said. “Next year, I won’t expect it to be easy to get land.”