by Sean McManus
Arvida Realty Services, the residential brokerage firm owned by the St. Joe Company, may be the next casualty in a move by St. Joe that some believe is part of an effort to streamline its focus to exclusively developing property.
According to a press release issued earlier this week, discussions are underway with outside parties regarding “strategic alternatives” for Arvida Realty Services (ARS). Headquartered in Clearwater, ARS is the residential brokerage side of St. Joe that shares the same name as the development unit responsible for the Sawgrass development in Ponte Vedra Beach. However, the Arvida real estate development unit is not part of the discussions.
According to a local commercial real estate developer who asked to remain anonymous, the press release is evidence that St. Joe, which is currently engaged in the development of community, commercial, industrial, hospitality, leisure and resort properties — in addition to its brokerages — is streamlining its mission to concentrate purely on developing.
ARS began as Prudential Florida Realty, which St. Joe acquired in April 1998. St. Joe then combined the brokerage services of Prudential with those operating under the auspices of Arvida the developer, which they acquired in November 1997. St. Joe changed the name of its entire brokerage unit to Arvida Realty Services in early 1999 and continued to make smaller brokerage acquisitions. ARS makes about 38,000 deals annually.
The conflict between maintaining an inside brokerage house, on either side, is a common issue for developers.
By having a brokerage subsidiary, you are required to give them right of first refusal in negotiating deals, which means that if you are trying to make a deal with a developer who wants to use a different broker it could kill the deal.
The flip-side is that it allows companies to hear about more opportunities sooner. If St. Joe were to sell off its brokerage businesses, it would potentially open more doors with bigger brokerage houses in the state.