This article was originally published in the Business Observer by Mark Gordon and can be viewed here.
Prolific area homebuilder Pat Neal was about to check out and pay for his groceries at an Albertsons in west Bradenton in 1991 when he spotted a Neal Communities customer in line. The customer had bought a home recently and was experiencing air conditioning issues. Neal initially backed away. He worried he might get an earful. His first thought: hide behind the Corn Flakes. But Neal, then 42 and running a company nearly exclusively building homes in Manatee County, quickly came to his senses. He walked up and introduced himself to the customer. Turns out, Neal says, the customer was “as happy as mud” because the company fixed the problem. “I realized I don’t want to live this way,” Neal adds about that day. It’s also how Neal, now 75, created a motto for the company that holds today: never do anything in regard to customers, employees, vendors and anything or anyone else with the company where someday you will seek to avoid the person by hiding behind the Corn Flakes in the grocery store. That motto — combined with an astute land-acquisition model, a willingness to alter strategies in the face of complicated market forces and an aversion to taking on debt — has put Neal Communities on the cusp of two major accomplishments. One, turning 55 years old, will happen in 2025.A second milestone, surpassing $1 billion in annual revenue, could happen next year as well, if not then by 2026 or 2027. Neal Communities, with 311 employees, posted $905 million in revenue in 2023, up 47.6% from $613 million in 2022. And that’s up from $276.6 million in 2014 — a 10-year growth rate of 227.18%. The company has built 23,000 homes since Neal and his father founded it in 1970.
Hitting $1 billion in annual revenue puts the Lakewood Ranch-based business in rare space: there are few companies in the Sarasota-Bradenton region both that large in revenue and homegrown. Even less are privately-owned. And none are homebuilders.
In addition, 2023 was a record year for the business: it closed 1,355 new homes, at an average price of around $670,000. It has 18 communities where it sells homes, with four under construction and eight in entitlements. It builds homes in Manatee, Sarasota, Charlotte, Lee, and Collier counties.
Bradenton area homebuilder Marshall Gobuty, who has worked with Neal on some projects and considers him a friend and mentor, says the most impressive thing about Neal is his relentless energy on anything relating to the company and building homes. “Everything that goes on at Neal Communities at some point goes back to Pat,” says Gobuty, founder and president of Pearl Homes. “He looks at everything thinking how he could do it better. He’s never satisfied with the status quo.”
In a recent interview as Neal drove a visitor around for a tour of Grand Park, a 1,700 home-community built on a former sod farm in south Sarasota off Clark Road, east of Interstate 75, he talked about the state of the company, the homebuilding market and more. Edited excerpts: Details Matter Neal says the company spends more per home than the large publicly-traded homebuilders it competes with. “Our brand promise is to float above the public builders and build a home with greater attention to detail, a more beautiful front elevation, set in a more natural environment,” he says. “Our homes are prettier and more focused on visual beauty and are more environmentally sensitive than our competitors.” That strategy, Neal adds, includes being more focused on the front elevation of the homes; putting in substantially more landscaping; and having lower density and more space between homes. Almost on cue, Neal, on the tour, points out bushes that had grown too high and other seemingly minute landscaping issues he says would involve a forthcoming memo to some landscape personnel. “When you come into one of our communities, you should know within 30 seconds you’re in a Neal community,” he says. After COVID Even four years on, the impact of the pandemic is felt within the company and its strategy and model. For the first few years, it was constantly playing catch-up on the surge in demand, Neal says, recalling how it couldn’t get refrigerators and it even bought a truss company to eliminate, or curtail, a supply chain hiccup. Another big change: the amount of people it takes to build a house today has nearly doubled, from 40 or so to around 75. On the move The flip side to those challenges is Neal Communities’ buyer pool has expanded significantly, Neal says. “There is much greater pressure to move away from Illinois, New York, Pennsylvania or California, to name a few, to relocate here,” he says. The past year is a textbook example. Neal says “we never used to sell homes to people from California.” Then, last year, it sold 36 homes to people with a Golden State address at the time of the purchase. Family matters About 30% of the company’s home sales are to families, which is higher than its ever been, Neal says. The other two demographics it sells to are what Neal calls OPALs (older person with active lifestyles) or empty nesters. The average age of a Neal Communities homebuyer is in the low 60s. About 57% of the company’s customers have an out of state address at the time of first purchase. Family matters II Another family that drives the business is Neal’s own family. Other Neals who work in the company include Pat’s wife of 46 years, Charlene; the couple’s two sons, John and Michael; and one niece and one nephew. Charlene has been with the company for 43 years, while Neal proudly says he’s worked with John since 2004 and Michael since 2013. Charlene is senior vice president of design and the company’s PureStyle arm, with a team of nine people. John, meanwhile, oversees Neal Land & Neighborhoods, a master-planned community developer that partners with Neal Communities on some projects. And Michael’s company works on land development in Grand Park, in addition to working with other builders in Parrish, Bradenton and Punta Gorda, Pat Neal says. John Neal will build about 800 homes sites on his own this year, while Michael will handle about 600 home sites. The family lives close to one another in west Bradenton. “My greatest personal pleasure is coming to the office every day to see my family, ” says Neal. Places everyone Neal projects the Sarasota-Bradenton market, including Lakewood Ranch, will remain a hotspot for home sales for several years. The communities and towns in Florida’s east coast, from Daytona Beach to Broward, he says, are filling or already filled up and are “just not as nice.” “The weather is not as nice, the beaches are not as nice, it is not as warm in the winter, and the Atlantic is certainly not as beautiful as the Gulf,” he adds in a memo after the interview. Dwell on it Neal Communities sells homes in other price points besides what Neal calls the “marvelous middle.” One one end, the company’s Signature unit sold 63 homes last year at an average of $1.5 million each. On the other end its SimplyDwell unit, launched at the end of 2022, sells homes in Sarasota and Manatee counties priced from $295,000 to about $370,000. That market, he says, isn’t low-income but “middle income people starting their progression to home ownership.” The internal challenge, Neal says, is to build homes for SimpyDwell at half the price of its base homes but maintain an acceptable profit margin. One way to ease that challenge is in volume, as Neal says “we have a commitment to build 500 homes per year by our fourth year” with SimplyDwell. Future plans In this interview, like in previous interviews, Neal stresses he’s not a hobbies person. And retirement is as foreign a concept to him as a one-car garage. His jam is blueprints and pouring over land packages. And going to tour sites. “I don’t play golf, I don’t play pickleball,” he says. “I love coming to work everyday to help figure out how to move our strategic plan forward.”
