Craig Gallagher explains how flexibility and attention to customer desires helped this builder find a bright spot in a gloomy housing market.

In what has been a decidedly un-sunny time for Florida’s beleaguered real estate market, Craig Gallagher and partner Craig Fiebe have found a way to keep $88 million Lexington Homes sailing through some rough waters.

On the heels of several years of white-hot appreciation, Florida’s real estate bubble inevitably burst, and disastrous hurricane seasons have raised insurance rates to stratospheric levels. Soaring property taxes have only added to the gloom, depressing prices and creating wary buyers.

Fortunately, Lexington Homes had a plan. “We shifted our product mix, bringing price points in line with what is really selling in the market,” Gallagher explained. “We typically sell in the range of $180,000 to $450,000, with the $250,00 to $300,000 range being our bread and butter. Overall, prices are about $100,000 below where they were this time two years ago.”

Craig Gallagher

A hard-made decision to make a “fairly substantial” reduction in staff also helped. “We had to right-size the company to stay healthy through the downturn,” Gallagher said. “But the good news is that I feel like we’ve seen the bottom. We’re hoping to see a nice bounce in early 2008.”

As homebuyers struggled to adapt to a new reality, Lexington quickly rolled out a line of more-moderately priced inventory. “That involved modifying floor plans, pulling in the square footage, and using less-involved construction,” Gallagher said. “We also addressed our specs, maybe taking out an item that historically had been standard and offering it as an option.”

The company also scaled back its strategy of aggressive land acquisition. “We’re going with the best of the best right now,” Gallagher explained. “If it’s not an out-of-the-park home run, we’re not bringing it online.”

It helps that the company has firmly planted its brand in a market that stretches from Citrus County in the north through the densely populated Tampa/St. Petersburg/Clearwater area and down to Fort Meyers to the south. “We have better name recognition than virtually any of the nationals,” said Gallagher.

Part of that comes from the company working so hard to separate itself from other builders by paying attention to every detail of the construction process and offering buyers the ability to personalize their homes.

The other part of Lexington’s brand awareness comes from an unselfish devotion to the community. For example, 20 million people around the nation recently watched a special two-hour broadcast on ABC-TV as Lexington Homes and “Extreme Makeover: Home Edition” helped provide a new home for the Jamie Dolan family and a guide dog named Lexie.

Universal appeal
The company motto, “Bring us your dreams, we’ll give them a home,” is perhaps best manifested in Lexington’s Design Studio concept. Here, homebuyers can work with design consultants to personalize every detail of their new home.

Make no mistake, the company is definitely a production builder, albeit one that allows for some choice and modification. “Our existing inventory of floor plans far exceeds our competition,” Gallagher said. “But we really differentiate ourselves through choice, allowing the customer to have some flexibility and impact on the design.”

Leading the pack of Lexington models is the Serenade, a 2,800-square-foot 4/3 with an award-winning bathroom design that creates a distinctive bay along the front of the house. “It offers a combination of good curb appeal and a floor plan that has been tweaked and improved through six generations of design,” explained Gallagher. “There is no wasted space in the house, and it flows very nicely. It has universal appeal to everyone from empty nesters to folks with two to three kids.”

The company also places great emphasis on creating a positive home buying experience. “Building a home is an emotional experience under the best of conditions, so we try to lay out all the trials and tribulations of the construction process so that there are no surprises for our customers,” said Gallagher. To that end, there are no nasty surprises on the pricing end. “We pride ourselves on turnkey pricing. Our specs are substantially above and beyond anything the competion offers,” he said. “What most builders would offer as options, we offer as standard.”

Too many potato chips
Like many businesses, Lexington Homes owes some of its success to paying attention to changes in the market. “Lexington Homes opened its doors in 1995 with the simple goal of building beautiful new homes for families in the Tampa Bay area,” Gallagher recalled. “We realized that the demographics of the southwest Florida market were changing.”

What used to be a blue-collar retiree market was changing to people looking for larger homes, thanks in large part to solid job creation from the healthy Tampa Bay employment market. Reviewing the local MLS data, Gallagher saw that less than 5% of area houses were four-bedroom homes. “It was all 2/2 for retirees.”

The company was also quick to capitalize on the growth that followed the completion of the Suncoast Parkway, which seemingly overnight turned a huge swath of rural land into a hot suburban commodity. From Lexington’s new Villages of Avalon, residents can get on the parkway and be in downtown Tampa or at the airport in 30 minutes.

Musing on a career that has seen success in many areas (a younger Gallagher was one of the first to find a consumer application for pepper spray with his company Phaser International), Gallagher is fond of sharing an anecdote he first heard from a college mentor. “He told me that if you’re having a party and everyone brings potato chips, you’re not going to have much of a party. But if someone brings the soda, someone brings the potato chips, and someone else brings the dip, it’s going to be great.”

That adage is something Gallagher has certainly looked to over the years. “I realized early on that I needed to surround myself with people who were bringing things to the party. It helps to be in the right place at the right time and to commit to a lot of hard work. But I have always been able to surround myself with very talented people. I’ve been smart enough to realize that, many times, there’s someone else out there that can do it better than me.”

Steffen Smith is an Atlanta-based writer and can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .