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Come Together
A resort properties guru and a respected commercial Realtor are out to reinvent how deals get done in the real estate industry. They might be on to something.
real estate strategy by Mark Gordon | Managing Editor
David Jennings aimed sky high earlier this year when he sought a new office and banner name to house his fledgling Sarasota-based commercial real estate business - slumping market or not.
Around the same time, Longboat Key entrepreneur Larry Starr, founder of a multimillion dollar resort properties company, was also seeking a bigger venue for his barrier islands residential real estate operation. Like Jennings, Starr didn't intend to let something like a market slump get in his way.
If a big splash was what Jennings and Starr were going for, then consider their effort to be a perfect 10 dive. The pair, who knew each other through a business connection between Starr and Jennings's wife, formed a joint real estate venture.
But the new company, Sarasota-based RealtyOne Alliance, isn't just a run-of-the-mill commercial/residential real estate partnership between business acquaintances. Instead, the RealtyOne business model turns the traditional real estate business model upside down, or at a minimum, turns it outward and sideways.
Jennings and Starr have done that by creating a peel-it-back type of real estate business. The company's core is set up with an in-house stable of brokers and Realtors.
The twist is that in the same office, in the outer rings surrounding that core, RealtyOne has another stable of real estate-related professionals, from a contracts lawyer to an equity capital specialist to an interior designer to a commercial construction firm. There's even an apartment rental management firm and a high-end resort properties company in the fold.
In total, 14 outside firms have a physical presence in RealtyOne's 7,000-square-foot downtown Sarasota office, on Ringling Boulevard. And together, those partners allow the entire company to perform at a high-level in a key aspect of real estate: speed. If and when the RealtyOne system is working, it can turn a two-day wait for a return phone call into a two minute walk down the hallway.
The outer core group of companies and individuals doesn't work for RealtyOne, per se, but all parties have a vested interest in seeing the other entities succeed. The partners in the alliance work on a combination of their own deals and RealtyOne projects. They get paid in fees and a break in office rent.
"We are a different business model than a traditional brokerage because we are the glue that pulls this all together," says Jennings, who had been a senior commercial broker at Sky Sotheby's International Realty in Sarasota for almost three years. "We have a different business model than your Prudential or your Coldwell Bankers."
Supersize opportunities
RealtyOne is the brainchild of several late spring and early summer conversations over coffee between Jennings and Starr, chats that ended in what Starr referred to as a "wait a minute moment" when the duo realized the supersize opportunities the business model offers.
Although RealtyOne only officially opened for business Sept. 1, early results are strong. Jennings says in just the first two weeks of September the office closed on $6.5 million in contracts, most of which were for commercial properties. Another $7 million in deals is pending.
"Everyday we find another reason why being on the same floor facilitates deals to happen," says Starr. "The expert you need to get a job done just happens to walk by your office every minute."
Adds a supremely confident Jennings: "We haven't left the station yet, but we'll probably be the dominant commercial brokerage in Sarasota by the end of 2009."
Jennings' bold financial projections, at least in the short term, are equaled by the initial buzz surrounding RealtyOne.
That buzz starts with frenzied biweekly meetings held at RealtyOne's office, where brokers farm out across the floor to meet with their counterparts in other industries, to see what deals are pending and who can help who move something along. "They either need broker services," says Jennings, "or we need their services."
The toughest challenge Jennings and Starr have faced so far is of the how-to-say-no variety. That is, they have to decide which partners to bring on and which ones to turn away from the alliance. While they stop short of saying the model is completely exclusive to one company per industry, they also want to give credit to the companies that are already there.
The challenge might actually solve itself in the next few months, since the spots are nearly filled up. There are only two offices left for partners in the alliance. One spot will likely be filled by an insurance agency.
Quick contracts
The partners in the alliance almost unanimously agree that Jennings and Starr are on to something big.
"It allows contracts to get done quicker," says Chris Abbott, a former land site developer for KB Homes who now runs a seven-employee marketing and graphics business catering to the real estate industry. "I can do work for everyone that's in here."
Richard Spanski, owner of Sarasota Construction, Inc., liked the concept so much that he decided not to move into a new office he had just built for his firm in east Sarasota County. He moved into RealtyOne's office instead.
"It's like being in a big corporation with all the assets they have, but none of the overhead," Spanski says. "It's going to be amazing."
Exactly the type of responses Jennings and Starr were going for when they sketched out a plan for RealtyOne in March. Back then, Jennings was in need of a new office and firm, as he had contractually maxed out his potential at Sky Sotheby's - the primarily residential brokerage had limited the commercial division to no more than 5% of the total listings. "Right out of the gate," says Jennings, "it was a dream to outgrow that umbrella."
Starr's company, RealtyOne Florida, had also outgrown its space. The Longboat Key-based realty firm's lease was expiring as of April and Starr contacted Jennings to help him find new space. Starr, and the company's eight full-time agents, wanted to move downtown to be closer to bankers and other business interests. The beachfront condo sales that had fueled the agency's growth had slowed, too.
Starr is used to growing a business: The recipient of the Review's Entrepreneur of the Year award in 2000, Starr initially found success in the resort property industry. He founded Florida Vacation Accommodations in the late 1980s, a company he grew and ultimately sold to ResortQuest, one of the largest vacation rental properties in the country. And he remains with the company today, in a limited role overseeing new Gulf Coast-based projects.
Now, not even a full month into RealtyOne, Starr and Jennings are already thinking about where else the business model can work. One idea Starr has is to try it in other markets where ResortQuest properties are located, to take advantage of similar market opportunities.
"We've got something that we think is bigger than the Gulf Coast," says Jennings. "But we want to [first] make sure we can handle this."
REVIEW SUMMARY
Businesses. RealtyOne Alliance, Sarasota
Industry. Commercial and residential real estate
Key. The firm has created a new model for running a commercial and residential real estate firm
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