When we featured Terry Wardell as our 2004 Custom Builder of the Year, his top-end San Diego-area custom home market was booming. His projects ranged from $600,000 to $10 million, with an average cost per square foot of $350, and most were contracted on a cost-plus basis. Aside from the technical demands of executing adventurous structures on difficult sites, Wardell saw his primary challenges as managerial. Since the mid-1990s, his company had been doubling its annual volume roughly every three years, spurring almost continuous evolution in its systems, procedures, and job descriptions. But Wardell has never been one to stand still, and he thrived on the excitement. Now, well into the worst recession of his career, Wardell is still animated by the challenge of piloting his business, but the nature of the challenge has changed dramatically. “The handwriting was on the wall in October 2008,” he explains. “The sales were just not occurring.” Jobs already under way kept his crews busy for a time, but only by scrambling did the company fend off disaster. “By really pushing on the jobs we had going, we were able to start a big job in February 2009,” he says. “We went from 62 employees to 30, but had we not started that project, I don’t know where we would be.”
The task now, he says, is to orient his company to a new environment whose contours are only gradually coming into focus. “It’s a far more price-driven market than it was,” he observes. Jobs are smaller and less profitable. High-end clients used to seek out the best builder, he says. “Now I think they determine who is good enough. I’m beginning to believe that all of the added value that we were taught to bring to the table—if it adds cost—isn’t valued.” To recapture some volume, Wardell has already started a remodeling division and brought a concrete subcontractor in-house. “It’s another profit center, and it keeps my guys busy,” he says. And more such initiatives may be on the way. “There’s a lot less work out there; I need a bigger percentage of those jobs than I used to.” At 55 Wardell still doesn’t like to stand still, but he doesn’t consider that an option, in any case. “The pace of change is going to accelerate,” he says. “I think it’s going to be fascinating. I just don’t know how fast I can dance.”
Wardell Builders, Solana Beach, Calif.
wardellbuilders.com
Type of business: Custom builder
Years in business: 23
Employees: 34
2009 volume: More than $10 million
2009 starts: 2
