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Business Observer Friday, Feb. 26, 2016 6 years ago

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The commercial real estate industry is consolidating into ever-bigger players, but one firm shows how boutiques can capture a market.
by: Jean Gruss Contributing Writer

Bigger isn't necessarily better.

As the commercial real estate brokerage industry consolidates and the big players get even bigger, Investment Properties Corp. stands out as an example of how a small boutique firm can still thrive in that environment.

The Naples commercial real estate firm, which recently marked its 40th year in business, has been involved in some of the biggest deals in recent years. These included the sale of the land for the Hertz global headquarters in Estero and the sale of nine buildings on tony Fifth Avenue South in Naples for $100 million.

“We've had a nice run since the market came out of the storm,” says David Stevens, one of the four principals of the firm.

IPC flirted with larger firms in the past. From 2000 to 2004, the firm was affiliated with Grubb & Ellis, for example. “We didn't find it worthwhile to continue the affiliation,” Stevens says. “We know the supply.”

IPC's business model works in Naples in part because commercial real estate remains largely in private hands among wealthy individuals and families. “You can't bring an Atlanta transplant,” says Stevens.

“We've developed a lot of relationships,” says Craig Timmins, another principal in the firm. “People still want to do business with people they know and trust.”

Institutional investors have discovered Naples and purchased some prime properties with IPC's help in recent years, too. “We also speak REIT,” says Stevens, referring to real estate investment trusts, publicly traded companies that own and manage commercial real estate.

That wide network developed over the years helps IPC close deals that aren't advertised. Some sellers prefer “off market” deals because it keeps publicity to a minimum. “Some people don't want to go through the process,” Timmins says.

When John Conroy Jr. founded the firm in 1976, Naples was off the beaten track. But his timing was fortuitous because Interstate 75 was extended south of Tampa and the Ritz hotels were built in the decade that followed. “Everybody knows Naples,” Gonnering says.

As the market grew and values surged, the principals of the firm felt no urgency to expand outside the region, though the firm does work in south Lee County's booming areas of Bonita Springs and Estero. “South Lee County to us is a lot like Naples,” says Timmins.

But the firm hasn't felt a pressing need to expand to other location such as Sarasota, Tampa or the east coast. “One of the reasons we're successful is we stuck to our knitting,” says Gonnering.

Certainly, as Naples grew and values rose, so did IPC's business. “People want to be here and the market is expanding,” Stevens says. “It's real estate fantasy land,” Gonnering chuckles.

Naples has recovered strongly from the downturn, with buildings fetching some of the highest valuations of the state outside Miami. “Naples has that magic bubble and ability to recover,” says Stevens.

In particular, Naples is attracting high-net-worth retirees from the Northeast and Midwest in large numbers. “That faucet never really goes off,” Stevens says.

Looking ahead, the path of future growth is paved eastward along Immokalee Road to Ave Maria. For example, one of the best-performing McDonald's restaurant in the region is located near the intersection of Immokalee Road and County Road 951, east of I-75, says Clint Sherwood, the fourth principal of the firm.

Still, even if you can find land, affordability and permitting are big hurdles. “The biggest challenge is finding zoned affordable land,” says Gonnering.

Follow Jean Gruss on Twitter @JeanGruss

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