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Beyond Stone & Mortar
Charles Robbins and Bernard Croghan are counting on a steady stream of businesses that want all the services of a big firm without a lot of the overhead - and sometimes without even the office.
By Sean Roth
Real Estate Editor
n the job training' is how Bernard Croghan describes his first introduction to real estate development. It was the late '70s, and Croghan, a commercial and real estate lender with Provident National Bank in Philadelphia, was trying to fix the mess left by USF Investors. Provident National Bank had just acquired the troubled California-based real estate investment trust, and it had been left to Croghan and his team to clean up the Florida properties.
"Some were literally being foreclosed on," Croghan says. "It was our job to fix the problems and resell them. At El Conquistador (in Bradenton), we were appointed the receiver for the country club. We redesigned the development and resold it to builders. It was my job to recover as much of the investment as we could."
That on the job training served Croghan well. He is now co-owner, along with his partner, Charles Robbins, of the two ComCenters in Manatee County. The partners are largely credited with bringing the virtual office concept from larger cities such as Atlanta and Tampa to Manatee County. Now, the duo is extending a form of the ComCenter concept to downtown Bradenton.
Robbins and Croghan first met in the early-'80s, when Croghan, who still worked for Provident National Bank, moved to El Conquistador. Robbins, who was an executive vice president, chief operating officer and chief financial officer with Barnett Bank of Manatee, lived next door. Eventually, the two discovered common interests, including tennis, and became close friends.
Meanwhile, Croghan was learning the real estate game from his work on the failing real estate ventures - from shopping centers and condominiums to mobile homes and hotels.
"A lot of times it was just mitigating the damage from the developments," Croghan says. "Seldom did we take one of these sites over and make it into a huge project. But it was a different time. We were in the middle of the gas crunch. Prime had grown to about 15%. I was spending all my time analyzing all these problems, but after awhile I discovered I didn't want to go back into banking anymore."
Around 1983, Croghan left Provident to go into development with a group of eight investors. His first project, Ridgewood Mobile Home Park, was a 500 home-site subdivision along with a 26,000-square-foot shopping center next door. Croghan decided to shake things up a bit by allowing the mobile owners to actually purchase their home site, essentially condominiumizing the park. He ran it for about four years, but the project was far from a success.
"I was barely able to give the investors their money back," Croghan says. "It was a personal learning experience for me ... to never have a large company with lots of overhead. At the same time, the development occurred right in the middle of a downturn in the mobile home industry. Our pace of (lot) sales went from 100 a year to 50 a year with the same overhead."
But Croghan had developed a taste for entrepreneurial freedom and was not about to go back to working for someone else. "It was frightening," he says. "It was a mixture of exhilaration and panic. Going back into the corporate world was just not an option."
In 1987, Croghan found his second project building a 52,000-square-foot, four-story outpatient services center for Manatee Memorial Hospital. To get investor backing though Croghan accepted a much smaller stake in the project. The project required roughly two years of planning.
"The hospital had to be sure it had the support of doctors," Croghan says. "The hospital was also owned by management from out of town; so accomplishing a decision was pretty much a miracle."
Croghan says the project was ultimately profitable.
At about the same time Croghan was finishing the outpatient services center, Robbins had reached his limit with Barnett.
"There had been some regional consolidating," Robbins says, " and the bank wanted me to move out of town." Having lived in Bradenton since 1957, Robbins, chose instead, at the age of 42 to go into a business he had no working experience in - selling insurance.
Robbins started his insurance business with no employees at a small office on 26th Street West. He formed a captive-agent relationship, similar to a franchise agreement, with Nationwide Mutual Insurance. It was a risky proposition, but Robbins says he was there at the right time and he took to selling insurance. The company is now profitable and employs nine agents.
While Robbins was building his business, Croghan, through a banker involved in the outpatient service center, had just met retired businessman H. Ray Baden. Baden and Croghan eventually purchased several acres on State Road 70, a mile west of Interstate 75, from Pat Neal and Frank Buskirk to develop a five-building, 56,000-square-foot medical complex called Health Park East. After the development was completed, Croghan sold the development to Baden. He was more interested in three parcels east of the center.
It was during a particularly heated tennis match in 1997 when Croghan and Robbins decided to form a partnership to develop the three S.R. 70 parcels. But the two also decided, the parcels would not be just a paint-by-numbers office building development. They wanted to tap the office market, but they also wanted something with a niche, something a little different
So for about two years, Croghan and Robbins hit the office trade shows and convention circuit.
"We really felt there was a need for quality services in Manatee County," Robbins says. "We always felt there were a number of road warriors living in the major housing developments - the traveling salesmen -people who need a quality office space to meet with clients and who also would like some of the more centralized services."
There were already some executive office centers in Bradenton, Croghan says, "but because they don't emphasize the services aspect, their rents were very low. It was essentially cheap office space. They were generally not profitable."
The two partners decided to create upscale small office suites and meeting spaces and a separate company that would provide collective service to the tenants. They toured several complexes in St. Petersburg and Tampa to refine their plans. Their goal was to offer small companies, expansion offices of national companies and companies that are in transition most of the collective amenities of the big boys.
The communication center, which they decided to call ComCenter, would offer a central receptionist who could forward calls and take messages, high-speed Internet service, teleconferencing, a mailbox, Web-conferencing and as-needed access to meeting rooms.
For Croghan and Robbins, the ComCenter concept required a delicate balancing act. Most of the services require staffing experienced business personnel or expensive computer equipment. If the partners were to bring on services that customers didn't want or need, it could quickly sap the profit from the entire project. Alternatively, if the partners were too slow with services, their customers might decide to stay as home-based businesses or open their own offices.
In 1999, the two partners developed a 10,000-square-foot multi-suite office building on S.R. 70 called ComCenter 70. As a stop-gap measure, Croghan and Robbins set up River Landings Holding Co. as owner of the building and ComCenters Inc. as the operating company. This would give the company options to make changes to the business plan, including selling part or all of the building if the concept wasn't accepted.
The entire building was leased in five months. Even so, the building was not a rousing financial success, but the interest it generated gave the partners reason to hope that a large facility might make the concept work.
"Our first lesson was you can't make a profit with just 10,000 square feet of space," Croghan says.
In 2001, the two partners built two additional 5,000-square-foot buildings behind the main ComCenter 70 building, bringing the number of available suites up to 45.
The extra 10,000 square feet made a noticeable difference. By 2002, ComCenter 70 was profitable and running at an occupancy rate in the high 90s. "We are almost at 100% occupancy," Robbins says. "We will have one move out only to be replaced by another."
Seeing the growth in Lakewood Ranch, the two partners built a 20,000-square-foot ComCenter building, just east of I-75 and north of University Parkway, which opened in March. The building, while similar in overall size to the S.R. 70 office, featured much larger units - a total of 27 compared to the first building's 45. The Lakewood Ranch office currently has an occupancy rate of about 60% to 70%. Both partners say the development is on track for profitability by next year.
The partners have also hired a full-time operations manager to handle both offices so Croghan and Robbins can focus on the next development
"The ComCenter concept gave us a niche market," Croghan says. "We are unique and have few competitors."
While the Lakewood Ranch development has been getting up to speed, the partners have turned their attention to downtown Bradenton.
Independent of the ComCenter partnership, Croghan is helping develop and lease a medical office building at 701 Manatee Ave. Construction on the 31,000-square-foot building, which will be owned by principals of the Ear, Nose and Throat Associates and Bradenton Internal Medicine, started in July of 2003 and is scheduled for completion in August.
In September, Croghan and Robbins plan to start construction on the first of two 20,000-square-foot office buildings in Riverwalk Professional Park, an about five-acre parcel at the northwest corner of First Street and Third Avenue. "We are condominiumizing that space," Croghan says. "We may wind up starting the second building at the same time (as the first). If we get everyone who has expressed interest so far we already have the first building sold out."
Croghan expects to start converting buyers to contracts in about 30 to 45 days.
The second phase of the partners' business plan for the park is to have ComCenters occupy one of the office suites in the second building, providing some form of collective services to the buildings and surrounding areas.
"I'm not sure exactly what type of services we are going to extend there yet," Croghan says. "I'm (also) not sure what type of demand we are going to see."
After the service portion of ComCenters is established in Bradenton, Robbins is looking next to Sarasota. "Then we will move on to Venice," Robbins says, "but that will be in maybe the next three to five years."
At the same time that the ComCenter is expanding its geographic reach, Croghan and Robbins are also planning internal expansions of the center's service offerings.
"The most exciting thing for me is learning about all the new services we can start offering," says Croghan "I believe we have only started to scratch the surface of the services we can provide. I am going to be spending two days (this week) at an I-T conference. I have no doubt I will find something that will be useful. Right now a very small part of our business is things like on-site car washing and detailing. We provide it cause it saves our clients' time. We could develop more and more concierge services if our clients wanted them."
Croghan says the partners are considering offering licenses for computer software, data backup and mass mailing services.
"A whole lot of research is going into what we offer," Croghan says. "We don't want to wind up buying problems for ourselves and for our clients."
Asked what the biggest challenge continues to be for the company, both partners fell back on the continuing complexities of promoting the virtual office/ComCenters concept.
"The sales pitch has gotten harder," Croghan says. "We have so many different services to extend to different types of clients. Maybe a home-based client is ready to lease an office or maybe they just need to use video conferencing. Or maybe they are ready to use our virtual services. It's a constant challenge to match our clients with the appropriate services."
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