Pay Dirt

Pay Dirt

REAL ESTATE by Sean Roth | Real Estate Editor

It's hard to expect a start-up company to perform exceptionally during the first few years, but every so often there's an anomaly like Tampa's Metro Development Group. Founded in early 2003, it has already far surpassed the $100 million gross-revenue mark, a threshold for any start-up.

Last year, company revenues grew by 250%, from $80 million to $200 million. And that's a whopping 1,566% increase off its 2003 revenues of $12 million. It's pretty clear Metro Development has hit upon an exploding niche.

Metro Development is not the typical development company: For one thing, it doesn't do vertical construction. They buy the land, do all the land planning and permitting, develop the infrastructure, landscaping and amenities and then sell the lots off to individual residential developers, principally the larger public companies. Lennar Homes is currently its largest customer. To distinguish itself even further from the big master-planned developers, Metro normally sticks to average sized, entry-level home lots.

"I was lucky when I started the company," company president John Ryan says. "I assembled it from some of the five star players in the industry. These people already had successful careers in Tampa Bay. These are all people with life-long experience. I'm not aware of another company that does what we do."

Starting with three projects, Metro Development is now working in about 60 communities, from offices in Tampa, Orlando and Jacksonville.

"My goal," Ryan says, "has been to build to 10,000 lots a year in five years. We're getting close. Last year we built about 7,500. Once we hit that, I think we'll level off for bit. That's really all we can handle with our three offices.

The company employs 50 people. Its separate infrastructure-construction firm, Southeastern Construction LLC, employs another 70.

Creative layouts

Given the tight market in developable land across most of the Gulf Coast, Metro Development has seen a dramatic jump in demand.

"It's a fantastic market," Ryan says. "The demand for what we do has increased dramatically the last three years. There are typically more than two potential buyers for every lot we sell."

Metro Development does what the public companies can't, Ryan says, because it figures out how it can afford to make the economics of the site work, typically by paying more for land than others would.

"People think we overpay," Ryan, 45, says. "Land in general is not tight. There is an awful lot of land for sale, but for a lot of it, the price exceeds the economic viability. I'm not aware of a development company that has as many site planning and engineers as we do. This lets us look at things a certain way."

Most of this creativity comes down to the basics of lot layout, Ryan says, such as the number of homes per acre.

But while creativity in lot design may work with the business plan, those extra dollars could make typical financiers cautious. On that front, Ryan has an advantage, as he's a member of The Ryan Group, a large family development company and trust. Ryan declined to comment on the exact size of The Ryan Group, but in January, the group developed and opened the Ritz-Carlton, Grand Cayman, a Caribbean resort worth about $500 million.

Ryan grew up in Canada and earned a Bachelor's in civil engineering from Queens University in Ontario in 1984. He started in the industry working as a project engineer for Des Moines, Iowa-based Green Construction Co. His main focus during his two years with Green was overseeing interstate road construction projects in Allen, Pa.

In 1986, he left to join The Ryan Group, where he developed high-rise condominiums, office buildings, commercial properties and residential subdivisions. In 1990, Ryan put together the firm's first project in Florida, which led him to do a number of joint venture projects with Clearwater developer The Byrd Corp. The most prominent of those partnership deals was The GrandView high-rise condominium tower in Tampa. Ryan and the joint venture developed 10 projects together until Ryan left to start his own firm.

Nationwide expansion

As its revenue growth shows, Metro Development is ratcheting up its development plans considerably. To date, the company has completed a total of 11 communities, but has 45 others in the works in Hillsborough, Pasco, Polk, Manatee, Hernando, Osceola and Lake counties.

The company is also in the midst of its largest purchase so far, a $200 million acquisition of about 180 acres in Osceola that is being parsed in three phases. The firm is also making waves in a lot of other areas throughout the state. Potential projects include:

•Bronson, one of the largest residential subdivisions planned recently for Hernando County. Initial plans call for 3,700 units and a shopping center near U.S. 19 and Woodland Waters;

•Cypress Creek, a 600-acre development for 2,200 single-family homes and town homes, north of Sun City Center;

• Fox Branch Ranch, a 1,817 unit complex on 909 acres off of Kathleen Road, north of Duff Road, in Polk County;

• A 2,000 home development on 900 acres on Morris Bridge Road, east of Wiregrass Ranch in Wesley Chapel in Pasco County.

In general, Metro Development is looking for property in many parts of central and east Florida, from Jacksonville down south, to Martin County. Ryan says once the company achieves its 10,000 lots a year goal, he will likely start looking nationwide for expansion.

Some would say having 9,000 new lots under construction during a market scale back is a risk. Not Ryan.

"I think there are going to be some areas of the country that are really negatively affected," Ryan says. "The press has been looking for a story on the bubble for some time, but I don't see this affecting the Florida market beyond the first couple quarters. We are continuing to see extremely strong demand in Florida. In a view of at least one economist, hopefully this will curtail some of the cost increases."

The Metro model

John Ryan, president of Metro Development Group, attributes the company's rapid success to a few key traits.

• Hire experienced employees.

• Set hard and fast rules that control which projects you do.

• Play to your strengths and be creative.

• Don't be afraid to spend money to make money.