This follow-up article featuring our company, appeared in the Gulf Coast Business Review this week. We are always very honored to be a part of great news stories. Thank you Alex Walsh.
Plan and Attack
In the long run, selling out the Towers of Channelside will likely end up as a secondary achievement on the resumes of Cheryl McCormick Brown and Steve McAuliffe.
More importantly, their success as a sales team taught the two how best to execute their idea for a new business. The new firm, called McAuliffe & McCormick, is now actively searching for clients with properties that need selling.
In February, the pair was tasked with finding buyers for 137 luxury condos at Towers of Channelside in Tampa — an inventory representing more than half of the building’s total number of units. At the time, McCormick Brown was the Towers’ sales director; McAuliffe was a broker with St. Petersburg-based JMC Realty.
Four months later, all 137 remaining units had been sold, and the duo’s first “clients” — four banks (Wells Fargo, Fifth Third, M&I and PNC) and a hedge fund known as The Madison Group — were pleased.
McAuliffe and McCormick Brown were pleased, too. The two had begun talking about working together more than a year prior to their success with the Towers; and when Ryland Homes, McCormick Brown’s most recent employer, decided to cut back on its marketing operations, the time to act had arrived.
To sell the remaining inventory at Towers of Channelside quickly, McAuliffe and McCormick Brown cut prices by an average of 40% for all empty units. The strategy may sound simple — lower prices spur sales. But as McAuliffe explains, the team’s approach to pricing was anything but guesswork.
McAuliffe looked at 20 years of real estate price data to try to isolate the impact on values caused by the overheated market of the last half-decade. By his count, prices at the Towers were 40% higher than they should be; thus, the aforementioned cuts.
The team also says it was important to cut prices just once, rather than allow them to slowly creep downward over time. Holding new prices steady convinced lurking buyers to stop waiting for further decreases.
The scale of that sale was impressive: If a 40% discount brought in $45 million, that’s $30 million gone from the original price point. But McCormick Brown is confident the banks would have gotten “about half” of the revenues she and McAuliffe generated had they settled on a bulk sale of the properties.
Going forward, that’ll be the key to the sales pitch for McAuliffe & McCormick: the promise of better revenue recovery from working with them, as opposed to a bulk sale.
They’ll also need properties to sell. Like so many Floridians, the two are forced to wait for the owners of distressed properties to decide what to do with those troubled assets.
“It’s definitely wait-and-see,” McCormick Brown says. “It takes a while for a lot of these properties to come to fruition.”
In the meantime, the new company will provide consulting, marketing, and even Web design services to slowly recovering homebuilders looking to grow a little without making a dozen full-time hires. McAuliffe & McCormick will likely remain a two-person company for the foreseeable future, but working with former partners from past projects on individual cases makes the firm flexible in the long run.
In fact, of all the details behind their new business, it’s that diverse line up of supporting cast members that the pair is most reserved about — questions about their partners were met with silence, and then, “Next question, please.”
The new company won’t limit itself to work in the Tampa Bay area; in fact, McAuliffe thinks his firm’s home turf is lagging furthest behind in terms of recovery. “We haven’t seen a lot of progress,” he says.
But despite that slow movement, and with signs of life in other nearby markets, McAuliffe and McCormick Brown remain confident that there’s a need for their business in this market.
“There are definitely buyers out there,” McAuliffe says.
Please note: The sellout of the Tower’s 147 inventory homes took 12 months.