RGC’s Soft Sell Is Succeeding : Pricey Newport Coast Homes Find Buyers Despite Recession
The recession may be destroying what’s left of Orange County consumers’ confidence, but don’t try to convince officials at RGC that the sky is falling.
The Newport Beach residential builder, best known for its stylish, mid- and low-priced attached housing, has begun construction on the second tract of semi-custom homes in the Irvine Co.’s Newport Coast development.
Despite prices that range from $645,000 to $990,000, RGC sales agents have taken $10,000 cash deposits for 18 of the large Italianate residences--almost 20% of the total project. And that’s before any of the models have been built at the hillside development overlooking Corona del Mar and Newport Harbor.
Although there is Japanese investment capital backing construction of the 111 homes that RGC plans for the site, the early deposits and prospective buyer lists don’t represent overseas wealth. The buyers are almost all current residents of Newport Beach and Irvine, said Susan Shook, RGC’s vice president of marketing.
And the secret to the project’s selling success? Location, price, RGC’s reputation and--equally important, real estate industry specialists say--the company’s all-out marketing effort.
RGC--the acronym stands for RecreActions Group of Cos.--was awarded Irvine Co.’s seal of approval to develop the 43-acre site three years ago. Company officials early this year sent project announcements to more than 3,000 people who had signed the interest list for general information about Newport Coast. From that mailing and inquiries from about 300 people who heard about the project from other sources, RGC wound up with more than 1,000 letters of interest.
From early June through mid-July, RGC officials held meetings twice a week, inviting six to eight prospective buyers to each session. Weekly meetings resumed earlier this month as a new wave of interest developed. The early deposits--an agreement with prospect No. 18 was just signed Tuesday--have come out of those sessions, said E. James Murar, RGC’s chairman.
“We have just had phenomenal success with the small-group presentations,” said Murar, adding that he, Shook and company President Harold Lynch Jr. anticipate spending quite a few more evenings away from their own families.
“We have been getting 50 new inquiries a week” since a sign was put up at the site and Irvine Co. advertising for Newport Coast began including the RGC development, he said.
Tim Hamilton, a Laguna Niguel development consultant, said that RGC, with its weekly soft-sell presentations, “is doing an exceptional job of hands on, face-to-face selling. They are involving the senior management of the company, and that is pretty unusual. And it surely makes the buyer feel special.
“Add to that the fact that RGC is probably one of the most innovative product design and merchandising firms in the housing business, and you’ve got sales.”
RGC calls its newest development Santa Lucia after the 4th-Century Sicilian martyr who is considered the patroness of sight. While that could be an oblique reference to the views from the hillside tract, RGC’s corporate marketing strategy has pushed things a bit further, upgrading St. Lucy’s standing to that of patroness of visionary perception.
“The parallel derived from . . . Santa Lucia comes from RGC’s stand for something great, yet unseen,” the corporate marketing plan says.
Marketing hyperbole aside, however, housing industry specialists who have largely been tracking the decline of the market in Orange County during the past three years say that RGC has shown itself to be pretty visionary with the project.
Just down the hill, on much bigger lots with ocean views, is a development of semi-custom homes built by Bramalea of California and priced from $1.2 million to more than $2 million.
Though Bramalea will not release sales figures, industry insiders say that the pace has been slow--much more so than at RGC.
“RGC is selling potential, but they’re selling it at under $1 million, and that is a very different buyer than what Bramalea is looking for,” said Bonnie Benton, a Laguna Niguel residential marketing consultant.
There is a good market in Orange County for well-built homes in great locations and priced from $500,000 to $1.5 million, she said, “and RGC is doing a fabulous job of romancing the concept” to buyers.
“They also did extensive focus-group work,” Benton said. “I don’t know that anyone else in the market has managed to milk an interest list that well, from including local people in their design process to taking potential buyers to the site at twilight” to derive maximum marketing benefit from the twinkling lights of Corona del Mar spread out below.
Shook said typical Santa Lucia buyers are business owners or professionals.
The homes reserved to date run the gamut from Santa Lucia’s smallest plan, a 2,877-square-foot, single-story house with 3 1/2 bathrooms and either two bedrooms and a den or three bedrooms; to the largest, with 4 1/2 bathrooms and either three bedrooms and a den or four bedrooms.
All four of the plans also feature separate living, dining and family rooms, three fireplaces, three-car garages and master suites that, with the bathrooms and walk-in closets included, total nearly 800 square feet of living space.
The lots are turned sideways from the typical Southern California layout so that they have narrow street frontage but are quite deep. That enabled RGC to nearly triple the number of “view” lots in the development. The homes’ main entrances are on what typically would be the side of the structure.
A key element of the RGC marketing plan, Shook said, was derived from focus-group sessions that “told us that a very important thing for shoppers (in this price range) was an opportunity for personal expression: They don’t want to build a custom home, but they want to be able to customize a production home.”
To meet that demand, RGC includes a large customizing allowance in the price of each home--the figures vary, but Murar used $45,000 as an example. And the builder encourages the buyer to use that money for anything from moving walls to special appliances, art and furnishings.
When the sales office opens it will include a retail interior showroom, Shook said, and a full-time “design concierge” to work with buyers who don’t have their own interior designers.
Also, she said, RGC has retained four leading West Coast interior designers “and asked each one to take one of the models and create their own unique signature home. We asked them to treat the model as if it would be their own house when they were done with it.”
Those models will not be open for quite a while yet, though--workers are just now digging trenches for the foundations. They will probably open in May or June, Murar said, with the first homes completed and ready for occupancy in August--11 months from now.
