Luxury by Lutgert
DEVELOPMENT by Jean Gruss | Editor/Lee-Collier
Scott Lutgert quickly learned the value of customer service when he went to work for his father's Naples residential development company at age 25.
Shortly after it was built in 1970, residents at Lutgert's Colony Gardens condominium complex complained of leaks around the windows when it rained. When the young Lutgert heard about the problems from fellow salesmen, he rushed out with a legal pad and knocked on every door in the new complex.
"It was our name on the building and we were damn sure going to make it right," he recalls. Although the building had been completed and virtually sold out, Lutgert immediately hired an engineer to fix the leaks.
Although little known outside Collier County, Lutgert's legendary devotion to customers has made the company that bears his name a fixture in exclusive Naples development circles. The company is best known for its Park Shore development in Naples, a stunning 760-acre beachfront development of condominiums laid out in a serpentine fashion that it started in 1964. Today, the development features 17 luxurious condo towers.
Feeding off that hugely successful project, the company has expanded into commercial development, luxury residential and commercial brokerage, insurance, title and mortgage operations. Lutgert executives are so well versed in real estate development that they recently started a consulting arm that has advised other developers around the state on deals so far totaling $5 billion.
The company also plans to expand north, has it has found that customers who were looking for upscale properties in Naples also frequently considered Sarasota as an alternative. It plans to expand its luxury residential brokerage arm later this year by opening Premier Properties of Southwest Florida, a 15-agent office at the Plaza at Five Points on Central Avenue in downtown Sarasota.
The privately held Lutgert Cos. and its founding family don't disclose any financial information, including annual revenues or any sales data. Unlike most residential brokers who trumpet their transactions, Premier Properties won't say how much business its 225 agents generated. "This is a quiet company that doesn't beat its chest," says Thomas Bringardner Jr., general manager of Premier Properties.
The Lutgert Cos. is actually a collection of more than 50 companies owned and controlled by the Lutgert family. Patriarch Raymond Lutgert gradually turned over the reins to his son Scott in the 1980s. Scott's son Kurt Lutgert is vice president and his daughter, Kristin Lutgert-Cartwright, is a marketing executive with the company's commercial properties division. Scott Lutgert, now 61, declines to discuss succession plans.
Meanwhile, longtime associates Richard Baker and Howard Gutman run the company's two divisions. Baker, 67, is president of Lutgert Development and Gutman, 51, is president of Lutgert Holdings. Together, Scott Lutgert, Baker and Gutman make all the major decisions.
Lutgert is one of the most highly regarded companies in Southwest Florida and executives work hard to maintain a spotless record. Scott Lutgert is one of the founding members of the Naples Wine Festival that raised $14 million in January for disadvantaged children, beating the $10.5 million raised at the celebrity-studded Napa Valley last year. The Lutgert family also gave Florida Gulf Coast University $5 million for its business school last year, which was renamed the Lutgert School of Business.
"One of the most important things in any business relationship is integrity," says Paul Marinelli, president and chief executive officer of Barron Collier Cos. "It would be very difficult to find any company that has more integrity than Lutgert Companies."
Barron Collier, which is transforming east Collier County with its 5,000-acre Ave Maria development, has teamed up with Lutgert on several projects. These include the Estuary in Grey Oaks residential golf course development and The Mercato, a 53-acre development in Naples that will include shops, restaurants, condos, townhomes and offices.
"Even today," Marinelli says, "when we do business, we start with a handshake and then follow up with the documents."
Know the customer
Although he was armed with an MBA from the University of Chicago, Scott Lutgert says he didn't learn real estate development until he started working as a salesman. "I learned the business from the customer," he says. "That's really a key that stuck with me."
Lutgert got his start in the development business when Naples was barely on the map and sales were slow, which is hard to imagine in today's booming housing market. Customers would come in to Lutgert's sales centers and some of them ended up buying elsewhere.
"Why did they do that?" Lutgert says he asked himself then. To beat the competition, he says he realized the company had to deliver value and quality. By value, Lutgert means a developer has to deliver more than what the customer wants or expects. Furthermore, that value has to last over time. Lutgert says quality means delivering a flawless product.
On their face, value and quality sound like simple concepts. But in the complex and competitive world of real estate development, they're anything but easy.
For example, by listening to his customers, Lutgert realized they wanted the size and privacy of a single-family home without hassles such as caring for a lawn. Lutgert pioneered the concept of "homes in the sky." In 1991, Lutgert was the first developer in Southwest Florida to sell one residence per floor at its Enclave tower in Park Shore. Each condo measures 5,600 square feet. Later, in 2002, Lutgert developed The Regent, a tower that featured five penthouses measuring 12,000 square feet each.
In the late 1980s, before counties adopted stricter buildings codes, Lutgert's buildings featured laminated glass. The reason: the glass reduced the chance of leaks and it provided better insulation. By the time the stricter codes were adopted, the laminated glass was already a standard feature of all Lutgert condos.
Lutgert strives to stay ahead of an increasingly competitive market. "The real estate market has become more sophisticated and more demanding," Lutgert says. "We continue to look for things that have lasting value."
The company's most recent towers feature some of the most cutting-edge residential amenities to wow prospective customers. For example, it recently started selling Tavira, a 26-story condo tower at the Bonita Bay development in Bonita Springs with prices starting at $1.6 million.
The penthouses include two master-bedroom suites, 11-and-a-half-foot ceilings, custom-wood cabinetry, sub-zero refrigerators and three terraces that include an outdoor kitchen complete with grill and sink. The high-rise also features climate-controlled storage areas, bicycle storage, an automated car rinse and a trash system that electronically sorts refuse and recycled materials. Other features include fireplaces, wiring for high-speed data, voice and video, and furnished suites for overnight guests.
"They believe in building a great product and taking care of their customers," says John Gleeson, regional vice president with the Bonita Bay Group. Lutgert's expertise, he says, is attracting customers who will pay $800,000 to $2 million for a condo.
From its start as developer of Park Shore, Lutgert has always followed its customers. That's in large part why the company has no plans to expand to such places as Tampa or Miami-or beyond.
When it started residential brokerage Premier Properties in 1984, the move was in response to Park Shore customers who needed real estate brokerage services to sell their condos or buy another. Today, Premier Properties has 225 agents in 11 offices stretching from Naples to Bonita Springs.
Lutgert knows its customers are on the Internet too. It owns informational Web sites, such as Naples.com, MarcoIsland.com and BonitaSprings.com. The company recognized early on the need to capture business through the Internet because it found that 70% of customers look for properties online before they contact an agent.
In 1983, when Lutgert found out many customers would leave Naples in the summer for cooler climate in North Carolina, the company developed a mountaintop golf-course community in the state called Linville Ridge, about 75 miles from Asheville. "Half of our customers are from Florida," Lutgert says. It's Lutgert's only development outside Southwest Florida.
To provide more services to its residential customers, the company acquired an insurance company in 2000 that it recently renamed Lutgert Insurance, and it started Lutgert Mortgage in 2004. It found that customers who were buying real estate in Naples came from other areas of the country and did not have long-established financial relationships and needed these services.
With its breadth of experience, Lutgert started a development consulting firm called Premier Developer Services in 1996. With a staff of 24, it's behind the scenes of much of what is happening in downtown Naples. For example, it is helping Naples developer Jack Antaramian sell Renaissance Village, a $225 million development that will include shops, offices and condos near tony Fifth Avenue South in Naples.
"What I'm looking for is an opinion on the marketplace," says Antaramian. He cites Lutgert's long track record of identifying customers and tailoring a project so that it will be successful. "It's a source of information you should not do without," he says. Recently, Renaissance Village landed $125 million worth of reservation for half the condos in just over two weeks.
Sticking to Southwest Florida
Lutgert has never considered taking he company public; the stock markets' focus on short-term results would be a distraction for creating long-term value, he says. Real estate is a cyclical business and Wall Street doesn't treat publicly traded builders kindly when revenues dip.
Lutgert officials also say they have no need to raise money in the public markets. Lutgert uses internal cash and bank financing to grow. Lenders it works with include Orion Bank, Bank of America, Wachovia, AmSouth and Northern Trust.
Lutgert says there are so many opportunities for growth in Collier and south Lee counties that there's no need to look beyond those borders. "Real estate is a local market and it takes local knowledge," he says.
Despite evidence of a slowing residential real estate market, Lutgert says he's not overly concerned. He says a stable market is healthier in the long run and wealthy people will continue to buy upscale real estate if they perceive the value is there.
While Lutgert, Baker and Gutman won't discuss future plans, they say plenty of proposals reach their desks.
"We can eliminate 98% of them immediately," Baker says. "We can tell in a minute or two if we like it.
If Baker and Gutman like a deal, they'll bring it to Scott Lutgert and make a decision whether to move ahead.
"There's plenty of business," Lutgert says. "We're confident in the future."
Lutgert follows customers to Sarasota
When wealthy people scout Naples for a luxury home, it turns out they're also often looking in Sarasota.
That's why Premier Properties of Southwest Florida, part of the Lutgert Cos. of Naples, plans to open an office at The Plaza at Five Points on Central Avenue in Sarasota with 15 agents in August.
"We're not moving to Sarasota because it's like Naples," says Thomas Bringardner Jr., general manager of Premier Properties. "It's not."
Premier is moving into Sarasota for the same reason it has successfully expanded in Collier and south Lee counties: It follows its customers. Tellingly, that's also why it is leapfrogging Fort Myers and Punta Gorda where it has had no presence.
A slowing real estate market hasn't deterred the firm from moving into the luxury segment of Sarasota long dominated by Michael Saunders & Co. "I am a little surprised they're here," says Saunders. "It's hard to start from scratch."
Premier Properties executives are not worried about what they see as a flattening of Sarasota's residential real estate market. "The only adjustment is to push harder on the accelerator," says Bringardner.
Still, Premier isn't entering Sarasota with guns blazing. Premier's 15 agents in Sarasota will contrast with Saunders' 438 agents and $3 billion in sales last year. In terms of dollar volume of homes that sold for $1 million or more, Saunders says her firm controlled 41.8% of the market for the 12 months ended February 28. Her closest competitor was Coldwell Banker with 12.3% of the market.
Details of the Sarasota office are still under wraps. Bringardner says "more than a dozen, but fewer than two dozen" agents have contacted Premier Properties about working for the firm. Bringardner suspects more inquiries will come once spring selling season ends.
"We know we can be successful," Bringardner says. "We're well capitalized."