Graywood Developments: Selling in Turbulent Times

It was September 2022, and, despite a long day at the office, Stephen Price had a lot to consider. He had just finished a meeting with the development and sales team at Graywood Developments (Graywood), during which they had discussed one of the latest developments in Graywood’s pipeline—the Centricity project. With a zoning bylaw amendment (ZBA) in hand, kicking off sales for the project was the next step in the process. However, with a looming recession and an anticipated cooling of the real estate market, Price had to decide whether to proceed with a sales launch in the first quarter of 2023, or shelve the launch until market conditions improved. Graywood could ultimately launch sales in January 2023 in the hope of achieving an average selling price of CA$1,650 per square foot, or it could delay the launch until January 2024 and hopefully sell at $1,700 per square foot or higher—though there was no guarantee that the market would improve. He wondered what impact his decision would have on Graywood’s plans to launch its tenth real estate fund in 2023. This case includes a complex merchant developer Microsoft Excel model, whereby students can adjust inputs and observe how key metrics change.