Beazer Homes CEO Allan Merrill on sustainability and affordability

Success in business is rarely a solo act.

Great careers are often shaped by great mentors, and exceptional teams make for exceptional companies. 

Allan Merrill, Chairman, President and CEO of Beazer Homes, attests to both truisms. Under Merrill’s leadership, Beazer Homes has become a leader in delivering durable, energy-efficient homes, becoming the first national homebuilder to deliver 100% of its new homes to match or exceed the Department of Energy’s Zero Energy Ready Home standards.

That achievement – standing apart by standing for customer values – was made possible by Merrill’s vision and leadership, but also by the company’s more than 1,000 employees in divisions across the country. 

In an interview with HousingWire’s The Builder’s Daily, Merrill discussed how Beazer Homes addresses affordability through sustainability, and how his team cultivates culture through charity and service. 

But first, we discussed his background and journey to Beazer Homes, one that was paved through a mixture of hard work, forward thinking and guidance from influential mentors. 

The path to Beazer Homes

Merrill’s interest in homebuilding began with a college job working for a homebuilder. While working there, he gained valuable experience – literally from the ground up – in multiple facets of homebuilding. 

“I was working on land development things, and then land acquisition things. And then the next summer, I was working in sales. So I went back and did it again, and I felt like there was an entrepreneurialism to it. There was a development piece, like you got to see things that you did. There was something very tangible. And having had the experience of being a sales counselor, only briefly, that idea of being able to help somebody achieve a dream, the emotion associated with that, was super rewarding,” he said.

Once he graduated from the University of Pennsylvania’s Wharton School, Merrill began a career on Wall Street, working for Dillon, Read & Co., which later became part of UBS. Two of the managing directors at the company were on the boards of homebuilding companies, one for Ryland Homes and another for Pulte. 

“Relatively early in my career, they started taking me [along with them], as a person who knew a little bit about housing. Despite my youth and inexperience in banking, they would take me to board meetings, so I got a level of engagement in the industry that was good fortune.”

A little later in his career, Barbara Alexander, a former boss and someone that Merrill called “the hardest-working woman on Wall Street”, created a career-defining opportunity for him. That opportunity came from Brian Beazer, the founder of UK-based Beazer PLC, which was previously a publicly-listed company in the United Kingdom. 

Merrill was tasked with handling the sale of the company’s U.S. homebuilding business after another firm acquired Beazer PLC in 1991. However, instead of selling, Merrill advised Beazer to buy another homebuilder. At the time, homebuilding was at a low point, so there were companies available at favorable valuations. 

“It was 1992, and I said to him, ‘You know, I really think we ought to be buyers, not sellers.’ It wasn’t the Great Financial Crisis, but that was a time of great distress in the housing industry. Home sale volumes had really collapsed. And so I pitched him on this idea of buying another homebuilder.”

Following that advice, Beazer purchased Watt Housing Corp. and waited until market conditions improved to take the expanded Beazer Homes public on the New York Stock Exchange in 1994. Merrill later joined Beazer Homes in 2007, first as Executive Vice President and CFO.

In 2011, he was named President and CEO.

“There’s no way I knew, being in the New York Stock Exchange in February of 94’ with the company ringing the bell, that on its 25th and on its 30th anniversary, I’d be there as CEO ringing the same bell,” Merrill said. 

Sustainability and the affordability equation

Beazer Homes’ emphasis on energy efficiency and durability took off after Merrill became CEO 15 years ago. The builder focuses on improving affordability largely by reducing monthly payments and ongoing costs, something that Merrill sees as a key differentiator.

Designing homes that are durable and require less ongoing maintenance is a big part of that affordability equation. As a homeowner, there is nothing worse than spending thousands of dollars on repairs and maintenance. Beazer Homes is laser-focused on reducing those ongoing costs. 

For example, in most homes, HVAC systems include an outdoor unit and an indoor component, often placed in an attic or closet. Beazer instead locates all equipment in conditioned space, protecting it from harsh temperature swings that cause wear and inefficiency. That design choice may increase initial costs, but it lowers operating, maintenance and replacement expenses over time, improving overall affordability.

On the sustainability front, Beazer’s typical home uses about 50% less energy on average than most competing new homes. The Beazer team has concentrated heavily on controlling the building envelope, since it plays a crucial role in a home’s performance and durability. 

Standard homes have as many as seven air exchanges per hour, essentially replacing conditioned air every eight minutes or so. Beazer’s houses stretch that to only one or two exchanges in an hour. This tighter construction keeps the home more comfortable, minimizes energy waste and better protects against moisture, pests and long-term damage.

Building those sustainable and durable homes costs a bit more upfront, but pays dividends in the long run, Merrill said. 

“You’re going to spend less money maintaining and servicing your home because of the choices that we’ve made. And we really felt like, for 15 years, that has been a lane that is not crowded. People have not chosen to compete in that lane, and as affordability has become such a prominent part of the housing space, I think we’re in the right spot.”

Beazer Homes’ shifting product mix

After reaching a high standard of energy efficiency in its individual homes, Beazer Homes has shifted its focus to developing solar communities, a strategy it has pursued since late 2023. These solar communities are expected to account for about 20% of Beazer’s product mix by the end of this year. 

Solar will make Beazer’s homes even more energy efficient and provide homebuyers with more long-term cost savings. 

“Our homes are so efficient that a very small amount of solar can get those homes to a place where they are roughly generating what they require.”

On a high level, Merrill pointed to the emergence of data centers, which use a massive amount of power, as another reason why solar is so beneficial. Data centers are expected to account for 12% of all U.S. electricity use by 2028. Solar communities can offset some of that load. 

“I don’t think generally we as a society understand that a limiting condition in GDP growth is power. We can only grow the economy so fast, given a power constraint. Solar is so efficient. It creates an opportunity for us to accelerate development in our communities and make the pie bigger for everybody. If we can add a little bit of capacity through what we’re doing in solar, I think it isn’t just good for our homeowners, it’s also good for the communities where we operate.”

Beazer Homes is also actively shifting a greater share of its deliveries to communities with selling prices of more than $500,000. The strategic rationale is easy to understand, as those higher-priced communities generally offer higher margins. 

Merrill expanded on this strategy, noting that it is about more than price. Beazer Homes is looking to place its energy-efficient homes in places where buyers value those cost-saving features.

Submarkets that are productive for volume and price-driven homebuilders aren’t well-suited for Beazer Homes, which typically can’t compete with those builders on price. As a result, Beazer Homes is shifting to locations where buyers are more likely to value performance and total cost of ownership. 

“We’ve never been the low price leader. That’s not the brand or market position that we operate in. We want to be in locations where we have an opportunity to create an experience for a homebuyer, where they understand the home that we’ve created and the neighborhood that we’ve created are different and better in really measurable ways. So that’s been kind of the shift, as we have been allocating capital to land acquisition.”

How Beazer cultivates culture through service

Merrill also spoke on how Beazer Homes creates a strong company culture by emphasizing service and making employees feel like they are part of something bigger and greater. 

“The truth is, we compete every day for talent. We compete with other builders, but frankly, we compete with other industries. So how do you attract and retain people? You show them a through line where what they’re doing matters and has impact, and where their job also allows or affords them to have a life-work balance, to feel really positive about a give-back opportunity.”

In March, Beazer Homes announced that they have raised more than $10 million for the Fischer House Foundation, a nonprofit that provides free housing for families of veterans and active-duty military that are undergoing medical treatment. 

The partnership developed after Beazer Homes team members began running an annual half-marathon together. The annual race began nearly a decade ago, when Merrill’s assistant challenged him to run a half-marathon, despite having no running background.

What started as a small endeavor snowballed. This year, more than 300 employees and partners traveled and took part in the half-marathon challenge together. Those participants, just like in past years, raised money to support the Fisher House Foundation’s mission. 

Beazer Homes also has an annual national day of service, where employees across all divisions can elect to spend the day volunteering at various nonprofit organizations. The initiative has been a big hit, attracting over 800 participating employees last year. Events like this are one way Beazer Homes creates a unified company culture across its various divisions and geographic areas of operation. 

“That idea that you could look across the company, and you could see on social media and internal platforms what your colleagues and other places were doing and share that experience, that’s the sticky stuff that holds organizations together, and our team has really embraced that.”