Barber Group Propels Projects in NWA

On Sundays, Brandon Barber likes to drive through The Barber Group’s different residential and commercial projects. Most of the time, he’s got his children riding in the back of the Land Rover and the area’s top real estate agent, Keri Barber, next to him.

If he’s lucky, Barber said, both 3-year-old Sloan and 7-month-old Olivia are asleep.

If a tree has fallen or died, Barber will call someone about it. Maintaining a relationship with investors and clients is important, he said, even if the subdivision is 2 years old.

In the two years since its incorporation, the group has tallied more than $93 million in revenue and now has 56 employees. Barber said the firm is on track to ring in $100 million in revenue in 2006.

The Barber Group Inc. of Fayetteville is two months away from starting site work on what could be one of the biggest property tax revenue generators in the city of Fayetteville, a the 26-acre mixed-use project called Bellafont.

Plans for the Joyce Boulevard project call for two 16-story condo buildings and two 10-story office buildings. The project will be a mix of more than 200,000-SF of condo space, more than 240,000-SF of office space and more than 120,000 SF of retail space. It has a build-out value of $250 million to $300 million and could bring in a potential property tax revenue of $750,000, based on current rates.

“That number is extremely conservative,” Barber said of the $750,000. Of course, that number doesn’t include potential sales tax revenue.

The Northwest Arkansas Mall generated $732,000 in property tax revenue in 2005, he said.

And Barber is busy calculating the potential property tax revenues of another project: the proposed 15-story Divinity hotel project that is under technical plat review with the city of Fayetteville.

That project could bring in another $620,000 in property tax revenue, in addition to tourism and sales tax dollars.

Barber said the company sees a need in the area for high-end luxury commercial projects, whether that is an upscale hotel brand in Rogers or the upscale lifestyle space of Bellafont.

But the group also has Homeworks Inc., the residential development and construction arm of the company that builds homes priced $300,000 and less. Barber Development builds the homes $300,000 and above.

For the Record

A company that grows at a break-neck speed begs the question, “How did they do it?”

Barber said they have some “creative” financing tactics, but up to this point, the group has only used financial institutions and its own money to finance projects.

“Obviously, we’ve had some family investments,” Barber said.

Barber’s father-in-law, John Ed Chambers III, is president and CEO of Chambers Bancshares Inc., which owns Chambers Bank of North Arkansas and Chambers Bank of Danville.

He said the group’s size has been distorted somewhat because of its aggressive marketing campaign.

“There are just as many people taking just as much of a risk as we are,” Barber said.

Of course, the larger projects, like a planned hotel off Dickson Street in Fayetteville, a hotel slated for New Hope Road in Rogers and a hotel/condo project planned for downtown Nashville, Tenn., will require long-term investors.

But many people want to know more about The Barber Group.

How is The Barber Group able to develop such an incredible inventory? And still pay the bank note?

Barber said they have their own construction company to do the infrastructure work, and on the residential side, it’s all about calculating those interest costs into the lot and home price beforehand. Not to mention, when they build a home for someone, that person takes out the loan to build the home and buys the lot from The Barber Group. The group is merely providing construction services along the way, for a set fee.

And there are times when they’ve lost money, he readily admits, but the investor knows The Barber Group won’t change the upfront cost when they commit to it. The residential construction side of the company has been a great source of revenue for the group.

“Banks have taken a risk with us, and we are just a product of a great market,” Barber said.

Rate of Return

Speaking of revenue:

Has rate of return on investment gotten more challenging in the last year? Is 10 percent to 20 percent return on a Barber investment still a good figure?

Barber said because the company started buying land in the summer of 2003, and the fact that the firm has focused on making small, steady returns, that it will still bring returns of 10 percent to 20 percent on investments.

“Sure, returns will continue to diminish because of the escalating prices of residential land, higher interest rates and the obvious rise of our construction materials because of events beyond our control,” Barber said in an e-mail. “We are still providing our residential investors with fixed cost construction prices leveraging our buying power because of the volume of homes we build each year.”

But managing mixed-use projects is a challenge, he said. It requires lots of long-term planning. Bellafont, for example, they’ve been planning for two years.

“The biggest challenge of any mixed-use development is figuring out which pieces of the puzzle need to be placed where first,” Barber said. “The key is placing the tenants in the right place where they have the best chance to be successful inside our developments.”

And what about market absorption?

“I think market absorption is all relative to what market you’re going after,” Barber said in an e-mail. “Obviously, there are some positives to supply catching up to demand because it will weed out some of our competitors.”

He said real estate is “en vogue” right now and having the right product is imperative.

For The Barber Group, the right product is a range of offerings from affordable housing priced below $200,000 in Clabber Creek, Timber Trails and WellSpring subdivisions, all in Fayetteville, to the $300 to $350 per SF condos in The Legacy Building.

Barber said the group had more than 2,200 residential lots under development or in the planning stages in 2005. It’s a number that Barber said puts the group “right on target” with its construction schedule.

Of that 2,200, The Barber Group has sold or has under contract more than 750 lots, Barber said.

What are you doing to diversify?

“We are investing in every arena possible except what we think has already been overbuilt,” Barber said. “We are fortunate to be able to build affordable homes inside the city because we tied up our land a few years ago.”

Barber said they are always “across the board, but never bored!”