Loading
Steve Hovland is a man who knows what he wants.
He wants to sleep more, stress less and focus completely. At 51, he wants to go back to his roots, enjoy the real estate game again, and meet some interesting people — preferably those who also want to lease space from him.
He also wants to develop some top-quality projects that say as much about him as they do the market in which they're built.
“I'm consciously taking smaller bites of things these days,” says Hovland, who formed Hovland Real Estate in Naples in 1991. “I've found that simplicity is necessary. You get too big, and guess what? You don't sleep as much. So the question becomes, what's enough?”
Hovland knows what he doesn't want, too: A return to the days when he jumped from developing one retail center to another, projects that involved tens of millions of dollars and dozens of investors and tenants in consecutively larger and larger deals.
In all, Hovland Real Estate has developed more than 1 million square feet of commercial space.
The company built more than 30 different projects — including Uptown Center, Mission Square, Goodlette Corners and Marquesa Plaza, all in Naples — between 2000 and 2010 alone.
But when boom turned to bust in 2008, Hovland got stung like so many commercial developers. Investors couldn't, or wouldn't, make cash calls to keep projects afloat. Tenants stopped paying rent. Banks got impatient.
His latest project, Old 41 Warehouse, is a reflection of his new attitude.
At 30,000 square feet, Old 41 cost just less than $4 million to develop -- a far cry from the $24 million that was on the line when he built Marquesa Plaza a decade ago.
The project marks a return, as well, to the industrial and office space Hovland built with his father when he first got into the real estate business in the late 1980s.
“I'm going back to my roots, intentionally,” says Hovland. “And it's the most successful project we've ever done. The costs with it were huge — it cost as much on a per square foot basis to build as a shopping center — but I knew there was a market there.”
Sleek and modern compared to other flex product in Collier County, Hovland installed special high-quality glass and other fixtures and parking that exceeded code requirements to differentiate Old 41 from the pack.
The strategy worked. Old 41 is now 100% leased, even though rents, at $18 per square foot, are higher than the bulk of the market.
'The greatest salesman ever'
Hovland didn't go to college after high school. Instead, he sold a newfangled technology — television satellite dishes — door-to-door in then-cable-less Charlotte County.
The job allowed him to pursue a certain lifestyle, too. He would stay up late, sleep in, and then grab a few hours at the beach before heading out to work.
At 24, his father — a real estate developer, broker and builder who founded JM Hovland Associates and developed the Trade Center and Corporate Square business parks in Naples in the late 1980s and early 1990s — inspired him to get his real estate license.
“He was the greatest salesman ever,” Hovland says. “He knew everybody. He impressed upon me that to be a success it was important to meet people in person, to go door to door. We'd have a project, and I'd give the same pitch to every single person I met, CEO or receptionist.
“I'd see a parking lot that was full and I'd go inside to the business and ask if they wanted to expand.”
He worked hard to hone his skills at leasing, which he describes as the “backbone” of the commercial real estate business.
“Any success we've had is because of leasing. Without leases in place, no one will invest in your project,” Hovland says.
He began to realize, too, that development requires a fair amount of risk management.
“With every project, there's something wrong with it — the lots aren't deep enough, the configuration of the site is bad, whatever — and the idea is to minimize that,” he says.
In 2003, Hovland shifted gears and began developing a 74,000-square-foot retail project, Uptown Center.
The $10 million project required Hovland raise $2.5 million. In what would be the first in a successful pattern, Hovland sold shares to investors and kept a small piece of the deal for himself, in exchange for handling government approvals, leasing, management and development.
The following year, Hovland began Mission Square, totaling 81,000 square feet. Unlike Uptown Center, though, he decided to develop it as a retail condominium — at the time a largely foreign concept.
To entice prospective tenants and investors, he typed up a single sheet of paper, noting that retail rents were rising by 5% a year in Naples and that buying space would provide tenants with possible appreciation and a check on future rent growth.
“In hindsight it seems really smart, but really it was just a matter of showing up for work,” Hovland says now. “We had every unit sold before the paint even dried on the signage.”
That success led to his work on Goodlette Corners, another $10 million project, and then to Marquesa Plaza, a 115,000-square-foot center with First Watch, Five Guys, Starbucks, Metro PCS and others.
The $24 million deal required that Hovland raise $6 million from investors.
It opened just in time for the bottom to drop out of the financial markets, sending commercial real estate values tumbling.
“I spent most of my time from 2008 on doing damage control, working with the banks,” Hovland says.
While the bulk of his portfolio remained intact, Marquesa Plaza and Uptown Center became casualties of the recession and went back to their lenders.
“Steve was honest and I saw him trying to pay his bills despite a difficult situation,” says James Deagle, an Ohio real estate developer who has been a long-time investor
in Hovland's projects.
“That gave me a lot of faith in him personally,” Deagle adds. “And he's one of the premier real estate people in all of Southwest Florida. He has a lot of fresh ideas and he's very tuned in to the market, in terms of what will lease and what won't.”
Tenants have stuck by Hovland, too.
“Steve is an honorable guy, he does what he says,” says James Grifoni, owner of Gulf Coast Donuts, which operates nearly two dozen Dunkin' Donuts franchises and leases space from Hovland.
“I've never had an issue with him or his projects but I know if I did he'd always be there.”
By 2014, Hovland's new worldview had gelled.
He partnered up with an old friend, Robert Morgan, to take over property management of his properties. He sold Goodlette Center to Barron Collier Cos., one of the largest real estate firms in the region, for $13.3 million.
He's not planning any more strip centers. Retail development, he believes, has forever changed as a result of online shopping, and service-oriented merchants that populate many centers today require more parking than is feasible to build, at a time when retail land costs are higher than ever.
Not that Hovland wants out entirely. In addition to Old 41, he's planning a two-story office and retail building on Wiggin's Pass Road, in Naples. He plans to break ground early next year, and move Hovland Real Estate's office into it upon completion.
“I'm leaner now, and I have less expenses, and I can focus on one thing until it's done and make sure it's done right,” he says. “With my new attitude, I can't wait to get to work in the morning again.”
— K.L. McQuaid
Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.
