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On the rebound.

Winrock Development Co. Gears Up For What It Believes Will Be A Resurgent New Home Market

Home builders and residential developers have watched the new home market in Pulaski County plummet to half of what it was five years ago.

That steady decline will end if the forecast of the largest residential developer in central Arkansas turns out to be accurate.

Officials at Little Rock's Winrock Development Co. expect the new home market to rebound in 1992.

"We're poised and positioned for a good market in 1992," says Ron Tyne, Winrock's president. "We're gearing up for a very busy year."

Tyne won't give specifics, but the company plans to make more land acquisitions, enter new markets and open several development phases to replace a dwindling inventory of lots.

Two years ago, Winrock traded 2.53 acres of commercial property on Bowman Road in west Little Rock to the Bailey Corp. for 72 acres of residential land in the St. Charles subdivision.

One real estate opportunity could revolve around the plight of The Maumelle Co., which is in the throes of foreclosure proceedings that could put hundreds of undeveloped acres up for grabs.

Is Maumelle one of the markets Winrock is examining?

Tyne will only say that Maumelle is "something we've looked at from time to time when it has come on the market."

That interest dates back as far as 1966 when Winrock considered buying a 5,200-acre Army ordnance works at Maumelle. It later chose not to purchase the property.

Winrock has 18 subdivisions still active in Pulaski County, but eight of those are only a few lots away from selling out.

Winrock's largest and best-known residential subdivision is Indian Hills in North Little Rock. The development began in 1964 with 600 acres. Today, 27 years and 28 phases later, only one residential lot and eight acres of commercially zoned land remain unsold.

Of the new home sales in Pulaski County, about 30.2 percent are made in Winrock subdivisions.

The company is continually crunching numbers and checking market conditions.

"We probably spend more time extracting and extrapolating it than anyone else," Tyne says. "I like to think we're on top of the market and know what we're doing. We do a lot of homework, soul-searching and gut-wrenching analysis, and it's more than just studying numbers and data."

The number of single-family building permits issued in Pulaski County has dropped by almost 50 percent since 1986.

A five-year snapshot of single-family building permits issued in the county reads:

* 1986 -- 1,333 * 1987 -- 1,210 * 1988 -- 945 * 1989 -- 819 * 1990 -- 673

The downward spiral hasn't stopped, either. The nine-month total for 1991 is 484, compared with 539 during the first nine months of 1990.

"That bothers me, but I don't think it's a trend that will continue," Tyne says. "We've bottomed out ... I really feel good about next year. I don't see anything that will hamper the real estate market. The resale market has done well, and I notice more homes coming onto the market now."

Favorable interest rates, declining inventory and pent-up demand are three factors that could result in a residential market recovery.

Tyne admits the drop in new home sales is a disturbing trend.

"We're following the national trend on that," he says.

There were 351 new home sales in Pulaski County during the first nine months of 1991, compared with 454 during the same period a year ago.

The situation prompted one of the top home builders and residential developers in Pulaski County to pull out of the market recently. ERC Properties Inc. of Fort Smith sold the remaining 37 lots in its Point West subdivision for $475,000 ($12,838 per lot). Tim Martin and Bob Sanders, co-owners of Cornerstone Development Co., bought the land, which is located off Bowman Road, through Mar-San Services Inc.

ERC Properties sold 19 new homes during the first three quarters of 1991, the most of any builder in Pulaski County. John Wright Construction Co. and Cornerstone Development followed with 14 home sales each. Steve Deere (13), Bill Bosley (12) and Vernon Brown (10) also made it into double-digit sales.

"The whole market has changed since the recession of the early 1980s," Tyne says. "It has even gone back to the levels it was at then. Everything slowed down last year."

No More Home Building

Winrock made its name as a residential developer and home builder.

The tradition ended in 1983 when Winrock Homes became Winrock Development after officials decided to quit building homes.

Tyne says that because the country was moving into a recession, it was difficult to build homes on the scale "we needed to support our staff. That was rather difficult to do on the scale we were geared up for."

Winrock had built an average of 200 to 300 homes per year since the 1960s. But U.S. housing starts in 1981 fell to the lowest level in 35 years. Back-to-back losses in 1981-82 forced Winrock to exit the building business.

"The decision was not lightly made, particularly since Winrock had been building homes since the 1950s," Russ McDonough Jr., chairman and president of parent firm Winrock Enterprises Inc., said at the time.

Winrock since has focused on development. The new home market is dominated these days by small contractors who buy lots, build houses and sell the package.

Winrock Development, a division of Winrock Enterprises (1990 revenues of $35 million), has opened dozens of residential subdivisions in Pulaski County.

The Glenview addition in North Little Rock began with 50 homes in 1957. It was Winrock's first.

The company even ventured into cities such as Trumann and Blytheville.

Providing affordable housing for middle- and lower-income buyers is a Winrock hallmark. But it's a tough trend to maintain in west Little Rock.

"I like to achieve what is very difficult to achieve," Tyne says. "I believe there is a market for low-priced houses. That's difficult to do in west Little Rock."

Land prices in much of west Little Rock make it impossible for some buyers to qualify for loans because of income limitations and down-payment requirements.

"We need more lower-priced houses," Tyne says.

More flexible development requirements would help alleviate the problem, according to Tyne.

He notes that Spring Tree Village in southwest Little Rock was developed with the same criteria as Pleasant Valley. Such uniformity is nice, but the requirements squeeze the profit margins.

In terms of profits, it often takes three low-priced homes to add up to one mid- to high-priced home.

"It's difficult, if not impossible, to build a house for less than $60,000 in west Little Rock," Tyne says.

Lot prices there typically are more than $20,000. A rule of thumb is that the price of a residential lot is equivalent to 20 percent of the price of a new home.

Winrock History

Winthrop Rockefeller founded Winrock Enterprises in 1955, two years after arriving in Arkansas.

He was joined by five investors:

* Frank Newell, a Little Rock insurance executive.

* George Reynolds, a Morrilton broker.

* Jack Pickens, a Little Rock construction executive.

* Louis Hurley, an El Dorado banker.

* W.E. Barber, a Shawnee, Okla., financier.

Rockefeller, who later became chairman of the Arkansas Industrial Development Commission and served as governor from 1967-70, also had a hand in developing Pleasant Valley and Riverdale in Little Rock.

In its heyday, the Winrock board was led by high-powered directors such as Holiday Inn founder Kemmons Wilson of Memphis, Tenn., and developer Trammell Crow of Dallas.

McDonough, who became president of Winrock Enterprises in 1969, is now chairman and majority owner.

The Rockefeller estate left the ownership picture in 1978 after swapping its shares in Winrock Enterprises for the Winrock Center development in Albuquerque, N.M., and related assets. The project, built around the 900,000-SF Winrock Shopping Center and White-Winrock Hotel, includes office space and apartments.

Winrock Enterprises also owns Jet Stream Plastic Pipe Co., which has operations in Siloam Springs.

In 1972, Winrock bought Planters Lumber Co. of North Little Rock and a related facility in Tupelo, Miss. It later sold the company. Planters was used to support Winrock's building operations, which at one time accounted for 15 percent of all "spec" homes in central Arkansas.
Subdivision No. Sold Percent of Total
 1. Summit Ridge(*) 25 7.1%
 2. Point West 22 6.3%
 3. Sandpiper West(*) 17 4.8%
 4. St. Charles(*) 16 4.6%
 5. Stonehedge 14 4.0%
 6. Longlea Manor 13 3.7%
 7. Windsor Valley(*) 12 3.4%
 8. Oakbrooke 11 3.1%
 9. Maryland Place 11 3.1%
10. Edgewater 10 2.8%
11. Longlea 9 2.6%
12. Westchester 8 2.3%
13. Overbrook 8 2.3%
14. Shaker Heights 7 2.0%
15. Aspen Highlands 7 2.0%
16. Cedar Ridge(*) 7 2.0%
17. St. Michael(*) 7 2.0%
Total 351 100%
Figures reflect first nine months of 1991.
* Winrock subdivisions.

In 1975, Winrock bought Dicken Manufacturing Co. of Arcadia, Ohio, which produces parts for the water-well industry. It later was combined with another acquisition, Midwest Water Well Supply of Huntley, Ill. Both companies were sold in 1990.

In 1981, Winrock Enterprises bought Peerless Plastics of Garden City, Kan., which manufactures irrigation pipes. It later sold that company also.

Tyne joined Winrock Development in 1975 as a land development coordinator. A native of Columbus, Ohio, Tyne had planned to pursue a career in forestry when he came to the state to attend what is now the University of Arkansas at Monticello.

After graduating with a bachelor's degree in forest management, Tyne went to graduate school at Louisiana State University at Baton Rouge. He earned a master's degree in landscape architecture with an emphasis on land planning. His master's thesis was on urban forestry.

Tyne's formal education is evident during a drive through the first two phases of St. Michael's. He stops, puts his Chevrolet Blazer into park and pauses near the wooden barricade that marks the end of St. Michael Drive.

Beyond it lies a dry creek bed and rolling hills covered with trees that are taking on the colors of autumn.

"I get excited about looking at land like that," Tyne says. "I don't look at |development~ as knocking down trees. I look at the land, and I imagine what it would be like to live here, and what I would do if I were building my house here."

Tyne's enthusiasm could be contagious.

That's because other developers and building contractors in central Arkansas stand to gain if Winrock's outlook for 1992 comes true.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:resurgence of new home market in Arkansas evidenced by projects of Winrock Development Co.
Author:Waldon, George
Publication:Arkansas Business
Article Type:Company Profile
Date:Oct 28, 1991
Previous Article:Arkansas business rankings: executive compensation.
Next Article:Coming down the stretch.

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