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Sembler Co. Diversifies
DEVELOPMENT by Sean Roth | Real Estate Editor
Mel Sembler's The Sembler Co. used to be all about a squeaky tight focus. With scant few exceptions, the developer built grocery or five-and-dime store-anchored shopping centers throughout Florida for Winn Dixie, Eckerd and other large retailers of the day.
But now Sembler is a different animal entirely. It's not just a retail- or a mixed-use developer, a big building developer or a small building commercial developer. It's now into condos, big-boxes and converting traditional malls into open-air centers. It's also heavy into developing in Atlanta, west and eastern Florida and will likely enter several other east coast states soon. Sembler even opened a residential division.
It's this diversification, says president and CEO Craig Sher, that should carry St. Petersburg-based Sembler and other similarly positioned retail developers through what could be some dark days ahead in the retail and development industry. The company doesn't give out revenue information.
Sher says the diversification happened both by design and organically following market opportunities. It just so happens that it occurred as he and Mel Sembler's two sons, Greg and Brent Sembler, moved into higher positions in the company.
"We really decided this in the late '80s, when we first got into property management and leasing," Sher says. "We wanted to have some regular income during the ups and downs in the real estate market."
That decision led the company to pursue more relationships with freestanding users such as RBC Centura. At the same time, a number of Sembler's steady clients have experienced explosive growth, including Target and Publix.
'True mixed-use'
In the mid 1990s, Sembler started developing in Puerto Rico, led by Greg Sembler. Last year, the company made it official, opening a small office on the island. The company has plans to add two about 150,000-square-foot shopping centers to its portfolio there.
Now Sembler focuses equally on projects in Florida and Georgia, primarily near its 30-person Atlanta office. Most of the developer's largest mixed-use projects are in the Atlanta market because of its population increase, Sher says. Projects in that area include more than 1 million square feet of retail and about 2,000 homes.
In Florida, the project that eclipses all others is the Winter Garden Village at Fowler Groves. Described by Sher as the next evolution in the mall to open-air center conversion trend, called "de-malling," Winter Garden combines a traditional power center, a new Main Street area for more upscale tenants and an area of outparcels. The development will feature 1.15 million square feet of retail.
"Across the street we are going to be selling some land for townhomes and condos," Sher says. "That makes it a true mixed-use development. So you've got a real town center, if you will. There's nothing really missing."
Build faster
In the Tampa market, Sembler is building everything from a Sweetbay-anchored shopping center in downtown St. Petersburg, known as Tangerine Plaza, to partnering in the planned luxury waterfront condominium project Ovation with JMC Communities.
Sembler, of course, isn't alone in diversifying its product line. Even larger developers such as Manatee County's Benderson Development Co. Inc., which has its own major town center development planned for southern University Parkway on the Manatee Sarasota County line, also takes time to develop a smaller office park nearby.
But Sembler is taking the speed approach, building more square feet faster than its national competitors. Trade magazine Chain Store Age recently ranked Sembler as the sixth fastest growing developer, based on 2005 square footage developed, listed at 2.15 million square feet.
Lee Arnold, CEO of Clearwater-based Colliers Arnold, says that Sembler's diversified approach is successful because the company doesn't step too far outside of its specialty.
"They may diversify the way they approach mixed-use projects particularly in more urban projects," Arnold says. "But they always stay true to their retail core
To support the geographically diverse projects, Sembler has continued to open new offices, including small offices in Washington, D.C., and Boca Raton.
"What we have learned over the years is that the further away from home we are, the worse we do," Sher says. "We are hoping to change that trend by creating more homes."
Growth in Washington
For the moment, the Boca location is a support office for the company's existing projects on the east coast. However, the Washington office looks to be more of a growth office. Located near Dulles International Airport, Sher says the office will extend the company's reach to North and South Carolina, Maryland, Virginia and other nearby states.
With more employees - 12 times the number of employees in the St. Petersburg office alone since its founding and total of 138 companywide- different product types and four more offices, Sher's challenge is to maintain a consistent corporate message.
"I liken myself to an orchestra conductor," Sher says. "I don't really play any instruments anymore -certainly not very well - but I know how to keep the band together."
Sher's top development worries stem from an uptick in costs. Overall construction costs, which includes material increases and labor prices, jumped 30-40% this year Further, he reports that casualty, windstorm and builders risk insurance premiums are up 300-500%.
The slowdown has hurt the Sembler Co.
"We haven't made a budget in a long time and we're pretty good at that," Sher says. "You literally don't know what you're going to open up when the bid comes in. We're hoping because of the residential slowdown that it will free up the trades and free up materials."
With a lot of commercial-development at once, Sher is confident that one or more of the product lines will be profitable, regardless of the economy.
"That's our niche," he says. "That way we're ready to weather the storm.
Transition Time
A Sembler is likely to take the top operational spot for major retail developer The Sembler Co. in the next few years. Craig Sher, who took over the top spot from company founder Mel Sembler, says the company has started work on a leadership transition plan for the family-owned company. The successor at this point looks to be Greg Sembler, one of Mel Sembler's sons; his other son, Brent Sembler, is currently the finance chairman for Florida gubernatorial candidate Charlie Crist.
"You have Mel, at age 76, whose focus has been on things other than the business and has been for sometime," Sher says. "Twice U.S. ambassador, leader in his industry and lots of other things. So it's time for the next wave of leadership."
Sher expects to stay involved assisting in a number of the more strategic company decisions.
As for his parting suggestions for Greg Sembler, Sher says, "Put your employees first. I always say, 'We have 140 families to worry about.'"
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