Gig Harbor lands a publicly traded company. Will more follow to Pierce County?

Tacoma – all right, to be technical about it, actually Gig Harbor – has just landed its latest publicly traded company, a newsworthy item for three reasons:

■ That anyone is doing an initial public offering in the midst of the pandemic, a recession and huge uncertainty is a sign that the economy isn’t dead yet; as disruptive as COVID-19 has been so far, business activity, even investment for future growth, still manages to lumber on.

■ This new IPO is not in biotech or some similar fashionable tech-related sector, but in housing development.

■ Tacoma and Pierce County have long suffered from a shortage of corporate headquarters and an unfortunate tendency to lose what few they have to relocations, mergers and acquisitions and failures.

Harbor Custom Development Inc. became the latest addition to the state’s roster of publicly traded companies when it completed the sale of more than 2 million shares and an offering price of $6 dollars. The stock now trades on Nasdaq under the ticker symbol HCDI.

Let’s get some basic numbers out of the way. For this first six months of the year, Harbor Custom Development recorded revenues of $18.3 million and a loss of $1.4 million. The company has 40 employees. Sterling Griffin, the company’s chairman, president and chief executive, holds about half of its stock, according to the S-1, the basic disclosure statement for an IPO filed with the Securities & Exchange Commission.

Harbor Custom Development describes itself as a “developer of premium single-family lots and residential communities in the nation’s fastest-growing metro regions.”

Its focus has been on the “acquisition of land to develop property for the construction and sale of residential lots, home communities and multi-family properties within a 30- to 60-minute commute to the Seattle metro employment corridor,” with active or sold-out residential communities in Gig Harbor, Bremerton, Silverdale, Bainbridge Island and Allyn.

The company says it is looking to enter similar markets in the U.S., starting with Portland, Denver, and along the I-95 corridor in Georgia and South Carolina.

An S-1 makes for informative reading for anyone interested in understanding a company taking a big step of going public. A standard feature of the S-1, “Risk Factors,” is mandatory reading for those considering an investment in such a company or who just want to understand the market, the competition and the challenges those companies face. The “risk factors” section is the one place a company is compelled to be at least somewhat candid about what it’s up against.

The Harbor Custom Development S-1 contains a lengthy list of risk factors one would expect of a company in its business – interest rates, the housing market, the availability of reasonably priced developable land, the mortgage market, access to capital, environmental rules controlling land development, the stock market – and more than a few words on topics like pandemics that a year ago likely wouldn’t have merited a mention.

Harbor Custom Development’ s stock represents not just a reading of investor sentiment about the company but on the regional and U.S. housing market. It wasn’t that long ago that housing development was at the epicenter of, and trigger for, the Great Recession and the meltdown of housing finance. But it seems a lot longer than a decade ago; in the interim we’ve experienced the fervid inflation of housing prices in the Puget Sound region and a boom in high-rise housing construction in urban cores like Seattle and Bellevue.

In the aftermath of the pandemic, and a general rethinking of the desirability of office-tower employment and in-city living, a stock like Harbor is an interesting play on higher-end suburban development.

“As unemployment rises, the risk remains that the housing market will turn against our favor as people lose their jobs and homes go into foreclosure, leading to an increase in supply, and a decrease in demand,” the company says in its S-1. “However, this risk is mitigated by record-low interest rates as well as a strong local economy bolstered by large companies such as Amazon, Facebook, Microsoft, and Google.”

That might be a lot to burden one small stock with. So to our expectations that one small IPO can revive or invigorate Tacoma and Pierce counties portfolio of publicly traded companies, which at present numbers just to (Columbia Bank and TrueBlue).

The addition of Harbor Custom Development to that portfolio won’t close the gap between Pierce County and King County in terms of the companies based there. The difference is not just in the number of companies but the disparity in their size and influence. The publicly traded companies based in King County include some of the best-known brands and influential corporations in the world — Amazon, Microsoft, Starbucks; even those companies that might be categorized as “second-tier” because of their geographic reach or size are still impressively influential —Alaska Air, Costco, Nordstrom, Paccar.

But it’s a start; three is better than two. Bigger, more influential companies can grow out of small companies. Having the headquarters even of a small but growth-oriented company matters. It’s where the executives are, and the employees, and where those companies make decisions about not just their own business activities but the charitable and philanthropic activities upon which their home communities depend.

Maybe there are more small but ambitious companies, unknown as of now outside of their particular business niche, waiting for their own moment to go public. Even if none of them grow to a size and prominence of an Amazon or Microsoft, a place like Tacoma — all right, to be technical about it, Gig Harbor — can still make a nice living for itself and its citizens with a handful of successful, albeit small, publicly traded companies. But first it has to get to having even a handful.

This story was originally published September 12, 2020 at 7:00 AM.