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Business Observer Thursday, May 28, 2009 12 years ago

The Chase Slows

A leading Gulf Coast commercial real estate agent is jumping off the fast track, saying big deals region-wide are too scarce to hunt after. His old firm, which he helped found, is soldiering on.
by: Mark Gordon Managing Editor

A leading Gulf Coast commercial real estate agent is jumping off the fast track, saying big deals region-wide are too scarce to hunt after. His old firm, which he helped found, is soldiering on.

One of the Sarasota's more active brokers during the boom is quitting his broker-manager job, only half-joking that he could make as much money on unemployment as he has in commercial real estate the last six months.

Dave Jennings, who co-founded Sarasota-based RealtyOne Alliance last summer as a one-stop shopping for a variety of real estate services, is leaving the firm he helped start. And rather than hit the unemployment line, Jennings is going back to his real estate roots, as a broker for Coldwell Banker.

Jennings will focus on homes and properties in the niche area of Sarasota known as the North Trail, where he also lives. It's an area that includes the Indian Beach and Sapphire Shores neighborhood and is a diverse cross-section of waterfront homes, mom and pop businesses and college apartments. Jennings will keep his commercial license active too, under an industry designation known as residential community commercial (RCC).

But while Jennings hopes to eventually gain some commercial real estate traction, he's not too confident in the health of the overall commercial real estate market right now.

“The commercial deals in town are just anomalies,” says Jennings. “There are no trends out there and nothing to chase.”

Jennings says RealtyOne's concept of corralling agents, title folks, insurance underwriters and other disciplines under one umbrella can work and is still “one of the best business plans in town.” Jennings' reasons for leaving were more personal.

First off, he says he made more money on commissions in selling $150,000 homes on the North Trail six years ago than he has at RealtyOne. The income drop wasn't only caused by the lack of deals; as a manager of a dozen or so agents, Jennings' job was to assign leads, not to do the deals himself. So the big commissions were going to others in the firm.

That situation then bred another problem: Jennings didn't like sitting behind a desk and directing others. He missed being out on the street and doing it himself.

“I got myself into a management position only to realize I didn't like being a manager,” says Jennings. “I was getting spread thinner and thinner and it wasn't any fun.”

Meanwhile, the brokers and agents that remain at RealtyOne say there is plenty of fun — and money — to be had in the current market, despite the recession. The firm is in the process of hiring new agents and expanding into new space, the result of capitalizing on the current crux of the market: Selling, leasing and managing bank-owned properties.

Jennings has climbed the management ranks once before only to climb back down. His first career was in business-to-business sales, working for a few companies that specialized in food service machines, such as industrial refrigerators and icemakers.
He peaked as a national sales manager for a large Wisconsin-based company, Manitowoc, when he got out of the business in 2000 to become a residential Realtor along the North Trail.

After a few years of selling homes, he moved into commercial real estate, right on the cusp of the boom. He ran the commercial division for Sky Sotheby's International Realty for a few years before co-founding RealtyOne.

Jennings now says he looks forward to becoming known as one of the go-to residential and commercial brokers on the North Trail, a hyper-focus that he says is a key to being successful in real estate sales. He is on several neighborhood revitalization and business alliance boards in the area. And in just one week into his new gig, Jennings has already met with half a dozen potential clients and picked up a few listings.

“I take the niche concept very seriously,” says Jennings. “Now I could walk to all my listings.”

A growing alliance

Larry Starr doesn't sound like a commercial real estate executive trying to dodge a market-wide slump and recession.

Indeed, the co-founder of Sarasota-based RealtyOne Alliance says his firm and its new business model have been doing so well, it's actually growing. It recently hired a few new brokers, adding to its stable of more than a dozen specialists and it's in the process of moving into additional office space in downtown Sarasota.

Starr and local commercial real estate broker Dave Jennings founded RealtyOne last summer as a way to create a unique smorgasbord of real estate services in one place, beginning with sales and winding its way through everything from title insurance to equity capital to interior design. It housed all this under the RealtyOne banner in a 7,000-square-foot office in the Regions Bank building in downtown Sarasota.

In addition to owning a Longboat Key-based residential real estate firm, Starr previously founded and ran a multimillion-dollar resort company.

He and Jennings came up with the RealtyOne concept last year after realizing the possibilities in combining all the services. Jennings left the firm earlier this month to focus on residential and commercial sales in the neighborhoods just north of downtown Sarasota.

The original intention at RealtyOne was to get behind as many commercial real estate deals — sales and leases — as it could handle. But as the market turned into one dominated by foreclosures and bank-owned properties over the last six months, RealtyOne adapted with it.

Hence, Starr says the agents have found jobs in performing workouts for banks with property as far north as Tampa and as far south as Venice. Deals range from a 90-unit condo workout in Tampa to renovating a failed condo conversion project on Siesta Key.

RealtyOne has surpassed $20 million in sales, leases and pending contracts in 2009, a number that includes a few residential sales. The firm's insurance arm, Atlas, has written $75 million in policies and its title arm has closed on $25 million in title work, according to John Brazelton, the managing broker who took over for Jennings.

Still, Starr says the firm would be much better off if the market wasn't struggling like it is. But he's hopeful that the past month, in which he says potential buyers with cash on hand were hitting the office regularly, is a harbinger of times to come.

Matt Schulz, RealtyOne's director of operations brought in to manage the growth a few months ago, echoes Starr's thoughts.

“We are in a challenging market,” says Schulz. “But if we could ma ke it through this, when the market turns we could emerge as a real force.”

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