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Business Observer Friday, Aug. 29, 2003 15 years ago

Broker of the Year: Big Box Master

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From Clearwater in Pinellas County to Fort Myers in Southwest Florida, commercial broker David Conn works his magic. His specialty: Big box tenants such as Target and Staples.

Broker of the Year

Big Box Master

From Clearwater in Pinellas County to Fort Myers in Southwest Florida, commercial broker David Conn works his magic. His specialty: Big box tenants such as Target and Staples.

By David R. Corder

Associate Editor

"What if?" David Conn wondered about the aging Clearwater Mall. Unbeknownst to him, it was a question that would transform this commercial real estate professional into one of the highest sales producers last year on Florida's West Coast.

As a commercial retail specialist and senior vice president at CB Richard Ellis, Conn knew about the leasing struggles at the once popular Clearwater Mall - the enclosed retail center that evolved into a white elephant as it succumbed to changing demographics and customer tastes.

On a chance, Conn pitched The Sembler Co. of St. Petersburg on a possible joint redevelopment venture with the mall's existing owner, New York-based New Plan Excel Realty. He knew well Sembler's reputation as one of the top retail developers in the southeastern United States. He also knew well about New Plan's frustrations over the failed retail center at State Road 60 and U.S. 19.

"It's one of these things sleeping right under your nose," says Craig Sher, president of The Sembler Co. "Sometimes it's easier to work outside your own backyard than in it. So what David did was wake us up to the Clearwater Mall and then make the introduction to New Plan Excel Realty. We took it from there. His job was exactly what we wanted him to do - make the introduction."

And what an introduction it was. Conn, as the venture's exclusive leasing agent, has filled nearly 95% of the site's leaseable space, even as redevelopment work nears the final stage of transforming the mall into an 800,000-square-foot center - an open-air retail development composed mostly of big-box national tenants.

"The project had a lot of challenges," Conn says. "There was asbestos in the Burdines building. A big water line that served the city of St. Petersburg ran right through the property. We had to relocate that. There was residual tenancy at the mall we had to buy out."

The redevelopment of the Clearwater Mall is a good example of why Conn ranks among the Tampa Bay area's top commercial producers and why the Gulf Coast Business Review chose him as the 2003 Commercial Real Estate Broker of the Year.

Conn estimates he has produced from $500 million to $700 million in total value of sales and leases over his 17-year-career with CB Richard Ellis and its predecessor. Around $100 million came just in 2002. A sizeable percentage of that came from his work on the Clearwater Mall. This year he forecasts total volume of sales and leases at about $50 million.

Despite the mall's success, Conn considers his part in the joint venture as something of an anomaly. His specialty is as a big-box tenant representative. He represents Target and Staples on Florida's West Coast. He also works with Home Depot on an assignment basis. Those are the type of clients he recruited for Atlanta-based JDN Realty Corp., prior to its merger this year with Developers Diversified Realty, at Lake Brandon Plaza and Lake Brandon Village. Those two neighborhood retail centers in southwest Hillsborough County, with a total of 288,220 square feet of leaseable space, maintain long-term leases with big-box retailers such as CompUSA, Sports Authority and Lowe's.

"I do these kind of deals," he says referring to the Clearwater Mall venture, "but my focus really is on big boxes. They're the big retail tenants. That may mean site-selection work, representing tenants themselves. It could be doing surplus disposition work for the tenants. Or it's representing developers with ground-up construction. The universe I try to stay in is the big box."

It's Conn's years of experience, knowledge of local markets and his specialization that makes him somewhat a unique resource, in the opinion of Raymond F. Sandelli, Conn's boss and CB Richard Ellis' Florida senior managing director. "Over the course of a number of years he's learned how (customers) look at the markets and the strategic framework of their organizations," Sandelli says. "As those elements come together, he sees opportunities not so much from his view but the potential from (the customer's) view."

What impresses Sandelli the most, however, is the balance Conn maintains in his professional, family and community life. He's an active member of the Kiwanis Club, for instance. "He's sold us a lot of rubber chickens," Sandelli says about the Kiwanis use of vintage-style toys as fundraising tools. "Those service organizations have become a very vital part of the partnership between the public and private sector. They're a conduit of information for the exchange of ideas."

Just as the Clearwater Mall nears its grand-reopening, Conn already has switched much of his focus to what is his largest project to date - the planned Gulf Coast Town Center, a 1.7-million-square-foot open-air retail center at the southwest corner of Interstate 75 and Alico Road in Lee County. He represents the Richard E. Jacobs Group, the project's developer. "This project is going to be an example of what regional retail development is going to be going forward," Conn says. "Instead of building enclosed regional malls, I think developers are going to take a look at what we're doing here."

The developer plans to build something of a retail hybrid - a mixture between a retail power center and a lifestyle retail center. Both are open-air facilities, but lifestyle centers offer a wider variety of national retailers.

"We're in the fairly early stages," Conn says. "We just started marketing it in April this year to prospective tenants. (The Jacobs Group has) had it under contract for some time, but we hope by the end of the year we'll announce most of our major anchor tenants."

The tenant mix should include big-box tenants, off-price discount retailers, a couple of department stores, some interior mall-type tenants and an entertainment component, Conn says, adding, "I think it will be a unique and successful project. The interest has been very strong. Simon Property Group is trying to build a million-square-foot (retail center) on U.S. 41 (in Lee County). So we do have a competitor. That's probably our biggest challenge."

That doesn't bother Conn, however. Experience has taught him to sell the best opportunity to the right retailer.

"Each retailer has its own unique requirements," he says. "A lot of that may be determined by the existing stores in the market. Sometimes it is a spacing issue. Some tenants have a much more regional draw than other tenants. Others are much more co-tenancy driven. Others are just looking at demographics. Obviously, economics comes into play as well."

By David R. Corder

Associate Editor

David Stevens made a good first impression on the decision-makers at Toll Brothers Inc.

The Philadelphia area-based luxury homebuilder first picked the principal partner at Naples-based Grubb & Ellis IPC to handle leasing of the 70,000-square-foot Naples Lakes Shopping Center at Collier Boulevard and Rattlesnake Hammock Road. The decision was mutually beneficial. "We helped them get some national tenants," Stevens says. "We were quite pleased. Prior to them getting a certificate of occupancy we had the whole center leased. It was an introduction to a relationship."

Next the luxury homebuilder offered Stevens a contract to sell the Publix-anchored retail center. In May, with Stevens help, the homebuilder sold the retail center for $10.05 million to a Fort Lauderdale-based investment group.

As part of the professional relationship, Stevens also brokered the acquisition of 400 acres of land for the firm's Belle Lago single-family community on Koreshan Road in south-central Lee County.

Stevens' work earned him recognition as a runner-up for Gulf Coast Business Review's 2003 Commercial Real Estate Broker of the Year.

Sales success is all about relationship building, says Stevens, who formed Investment Properties Corp. in Naples right after he earned a bachelor's degree in real estate finance in 1983 from the University of Florida. Ten years later he merged IPC with John R. Wood Inc. Nine years later, he and partners - Craig Timmins and Bill Gonnering - spun off of John R. Wood in a friendly divestiture and merged Investment Properties Corp. with Grubb & Ellis.

"I noticed a trend this year in long-time (Naples) property owners choosing to sell their properties," Stevens says. "So what's happening, in the case of a couple notable shopping centers, we did the leasing and had a long-term relationships with the owners. Then they decided to liquidate their assets."

In one instance, Stevens had developed a 13-year relationship with one shopping center owner. In another case, Stevens represented the owner for eight years. "We've had clients who have had properties for a number of years and have chosen this environment in which to sell their properties," he says. "That has led to highly productive sales."

Last year, for instance, Stevens produced from $65 million to $70 million in total volume of sales. That's about the same volume of sales he produced in 2001. This year he expects to produce about $80 million in total volume of sales. He also attributes his success to a multidisciplinary approach to sales and leasing of commercial properties.

"I think that's the key," he says about his market strategy. "Colleagues of mine (who specialize) may have up and down years, with some of the up years so admirable that sometimes I would like to trade places with them. There are times when a particular part of our business is hot."

For instance, Stevens says, the Naples area has become a desirable destination for institutional, syndicated and private investments. As the stock market softened, Naples commercial real estate became even more desirable.

"But simultaneously, you have investors looking for large commercial tracts," he says. "I've been able to hone the cycle, if one segment grows cold. And office leasing is a particularly cold discipline because of the noticeable loss of demand. If you're going to bank on office leasing income you're going to have a down year. So I focus on income-producing properties, retail and residential. My success is the ability to work in several different areas at the same time."

While demand is considerable, Stevens acknowledges it's not so easy to supply it. "The hard part is finding the property," he says. "I can't tell you how many times a day I get calls from people who want to invest. Having lived here for 35 years and doing this kind of work the past 20 years, you develop a network of contacts to figure out a way to find out who is ready to sell and at the right time."

And apparently the time may be right for many long-time property owners, Stevens says. He attributes his suspicion to an all-time low capitalization rate on the region's income-producing properties, particularly retail centers. The cap rate determines the present value of an income property. "That translates into the highest price for these types of properties," he says. "People are not flocking to the stock markets. Plus you have historic lows in the interest rates. So you have hyperdemand for this type of property."

Stevens says property owners are comparing the potential property sales opportunities with their long-term liabilities - roofing and heating, ventilation and air-conditioning costs, for instance.

"It sounds more complicated than it is," Stevens says. "If you can develop the skill in finding property, and finding sellers willing to part with the product, it's not hard to find buyers to step in," he says. "So if you just focus on supply, demand is at your fingertips."

By David R. Corder

Associate Editor

Like a tiger on the prowl, Barry Seidel follows his instincts. That may mean positioning the price on a commercial sale property higher than the current market value. Or it may mean keeping the property off the Realtors' Multiple Listing Service. While not common practices, Seidel says he uses those tactics when it suits his customers' needs.

"I think I have been forward-thinking," says the president of American Property Group of Sarasota Inc. "Most properties are listed on a comparable basis. But with commercial you have to think a little differently because values are going up so fast (in Sarasota). If you list based on last year's values, you're not thinking in the right direction. Properties here are going up faster than most places in America. The proof of the pudding is I'm selling the darn things."

It's Seidel's innovative philosophy that earned him recognition as one of the runner-ups for Gulf Coast Business Review's 2003 Commercial Real Estate Broker of the Year. He consistently is a top producer in the Sarasota commercial real estate market.

Seidel points to the sale of an 8-acre parcel in Sarasota's Osprey community - the site of a new Wal-Mart superstore. "When I listed the property, it listed for $1.5 million," he says. "I sold it for $2.4 million. So what I do when I have clients and see their (property) value changing, rather than looking for a quick sale, I look out for their interests."

Last year, Seidel's company produced from $30 million to $35 million in total volume of sales. While he won't talk specifics, he says his sales activity accounts for about 90% of the volume. Just subtract 10% to figure out a prior year's sales volume, he says. Because he's a little superstitious, Seidel would say only this about 2003 sales: "Let's say we're having a good year."

Repeat business accounts for part of his success. For instance, his role as a dominant commercial broker along the Tamiami Trail has resulted not only in initial sales but his salesmanship has earned him second and even third sales of the same properties. He earns a measure of trust of most parties at the negotiating table.

"I negotiate deals that are good for buyers and sellers," he says. "I like everybody to walk away from a deal satisfied. To me, the ultimate goal is: You don't hurt the buyer; you don't hurt the seller. You must try to protect everyone in the deal to the best of your ability."

And he likes a challenge. That's evident from his favorite deal last year. The managing partners in Sarasota-based Kiwi Investments LLC - Jason B. Harwell and physicians Charles Loewe and Cyrus Badii - hired Seidel to represent them in the acquisition of the three-story NationsBank office building at the northeast corner of Siesta Drive and U.S. 41.

"There was only one tenant; most of it was vacant," Seidel says. "That's what I liked about it."

Now, only about 15,000 of 53,000 square feet of the building is vacant, Seidel says. "That's where the trust come in," he says about the buyer's confidence. "It was a matter of numbers and projections. They saw the value in the investment. I can't take all the credit, because they are savvy businesspeople."

It was also around the same time that officials with Fleming steakhouse, a restaurant group backed by Tampa's Outback Steakhouse Inc., asked Seidel to find them a spot in Sarasota. He pitched the idea of taking the first floor of the Kiwi property. "Because (the building) had the zoning to handle that type of business, I showed them the site, and they fell in love with it," Seidel says. "They're working on it now."

A retired Philadelphia restaurateur, Seidel and his wife, Leslye, a partner in his firm, relocated about 17 years ago to Sarasota.

The couple found the climate and quality of life to their liking. To enhance their lifestyle, the two decided to earn their real estate licenses. "All I work with is the local market," he says. "I don't go beyond. I love Sarasota. It's good enough for me."

Nevertheless, Seidel says Sarasota is not a market without challenges. "Finding product is probably the hardest challenge right now," he says. "I think that's across the board for all the commercial brokers. People would normally be putting their money in and out of the stock market, but they're not doing that now. They're safe in real estate now, and that's why they're not selling. I don't think you're seeing a lot of stuff on the market at all."

David Conn

Title: Senior vice president, CB Richard Ellis, Tampa

Age: 44

Hometown: Lewiston, N.Y.

Current residence: South Tampa

Personal: Married to Jennifer for 10 years. Son, Christopher, 6; daughter, Sarah, 3.

Education: B.A., Hamilton College, 1981.

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