by Michele Newbern Gillis
Staff Writer
Three different types of developers got together last month at the Commercial Real Estate Women of Jacksonville luncheon at the Southpoint Marriott to give a better insight as to how they work and how they decide which projects to take on.
Drew Margol, senior vice president of tenant relations for Equity One & Management, an owner, developer and operator of community and neighborhood shopping centers; Margaret Jennesse manager of the Northeast Florida region for The LandMar Group, a residential community developer and Bill Spinner, owner of Group IV Developers, a local general contractor who specializes in industrial, commercial and residential projects made up the panel.
Susan Evans of Auld & White Constructors was the moderator.
Each of the speakers represented different sides of commercial real estate including retail, industrial and residential.
“My company is a subsidiary of REIT Equity One based in Miami,” said Margol. “We have about 200 shopping centers from South Florida up in the into the Boston markets and as far west as Louisiana. The company is focused primarily on grocery-anchored shopping centers. We own a lot of centers with Publix, Winn-Dixie and some Food Lions. We definitely try to stay focused on the community and neighborhood style shopping center as opposed to power centers or town centers, even though that trend could change as trends in the market change.”
His focus in the company is tenant representation. Among those he represents are Staples, T.J. Maxx, Marshalls, Ruby Tuesdays and Ace Hardware.
Spinner comes from three generations of construction workers and tried to no avail to get out of following in the family’s footsteps.
“We all try other careers but I guess I was just blessed that I had bad grades,” he joked. “Our company specializes in industrial development. In Jacksonville right now, we have about a million square feet of industrial space under development on the Northside. We are excited about that. With Mitsui coming in, Jacksonville is currently about 5 million square feet short of industrial up there. So, that’s something we have going on. We have a 900,000 square-foot project going on at Cecil Commerce Center. We are excited about this town and looking forward to seeing what the next couple of years bring.”
Jennessee spoke about the LandMar Group.
“LandMar Group has been primarily a residential developer in the Jacksonville market since 1987,” he said. “We have grown substantially over the last several years.”
The company currently builds in four regions including Southeast Georgia, Northeast Florida, Central Florida and Southwest Florida.
“My role is the regional manger for our Northeast Florida operations,” said Jennesse. “Typically, most of our communities that we go into are mixed-use. We will do something that is 4,000 residential units with 700,000 square feet of commercial. We are very opportunistic so at the same time we might buy a few acres on the ocean and do a small condominium project.
“We look to have a strong hold in the marketplace and to really take advantage of any individual opportunities. Our culture is very much driven on creating communities for life. Creating communities that are sustainable and have high-end amenities and set up so people will have an activity base that they can enjoy right there in their neighborhood.”
Evans asked the group what factor they consider when looking at a potential project.
“What does it take to move forward and what stops you dead in your tracks?” said Evans.
Jennessee said her company is very methodical when they look at new acquisitions or property.
“There is part science and part art to this business,” said Jennesse. “We need both sides of it. We spend a lot of time on the science side of it. We are constantly looking at demographic information including population growth, household formation or job growth.
“From there, we kind of extrapolate that out to the area where we are doing business, then breaking that down to make sure when we are running performance to buy a piece of property that we have hard data on that supports our assumptions. Most of what we do and the time we spend are on the assumptions that we put into a model. and then the model will fall out at the end.”
As far as the art side, Jennesse said her company doesn’t mind a little risk factor when the stats aren’t really there, but you want to create a market.
An example of that is when CR 210 was still a desolate area but LandMar Group and Arvida went in and bought a piece of property for development right next to each other.
“Everyone thought they were crazy,” said Jennessee. “You have to have a little bit of that in you so you can buy the land and create a market. You have to be able to look at both sides to that.”
As far as stopping in their tracks, Jennessee said they really don’t try to push projects that aren’t going to work.
“If there is an oversupply in a certain market, and we can’t beat the absorption levels we are looking at to meet the returns we need, then that would stop us pretty darn quick,” said Jennesse.
Spinner said his company piggybacks on Jennessee’s research to determine if development should go ahead or not.
“The industrial market follows retail and housing,” he said. “They spend a lot of money researching the business geography of a specific region and the demographics, too. We just kind of cozy of to interstate highways, ports, rails and all the intermodal connections that we need for distribution. If the numbers work, the rents are high and the land is reasonable, we will come in buy the land and do our due diligence.
“It’s pretty simple. We do all the research involved before we close. But if our performer works and our numbers work, we will charge ahead and the banks will give us lots of money and that’s where we are at.”
Spinner said environmental surveys can affect if they go ahead with a project or not.
“Right now, the big issue is gopher tortoises,” he said. ( On August 1, the animal became an endangered species.)
“So, now we have to protect them,” he went on. “My pet peeve is having water and sewer. It is vital to having quality tenants. You are not going to get a national tenant if you offer them septic tanks.”
Margol joked that his company basically lets Jennessee and Spinner do all the work and they just follow with their projects.
He said they look at companies like LandMar to see what they are doing with residential.
“We look to do a grocery-anchored shopping center with a small amount of local space and an outparcel for a pharmacy,” said Margol. “That’s an ideal scenario because they are building the infrastructure and bringing the growth there. That’s what makes a project work. Sometimes the retailers will tell us of an area that they foresee as an up and coming area, so we will go buy a piece of land and develop it, maybe even a little ahead of the growth.”
Margol said the main thing that stops his company in its tracks is when government won’t give them what they need as far as permits, concurrency or any of the other entitlements needed.”
Competition, especially in this market, is all too familiar to the developers.
“We like to value engineer our properties,” said Spinner. “We do things a little bit quirky, but it works for us. We use concrete for all of our paving. People say we are crazy because asphalt is a lot cheaper, but we look at keeping these properties for, let’s say, a decade.
“We analyzed the cost. We realize concrete is not cheaper for the first couple of years, but there is no maintenance involved. It’s much better for the property and it’s safer for the property. So, we have a safer environment. We think we can compete by educating our clients and try to sell them not only on price per square foot, but on amenities and functionality of the site.”
Jennesse said there is so much housing inventory available that they try to stand out from the rest.
“To differentiate yourself is very challenging,” said Jennesse. “We look at what core competencies that we are going to have internally as an organization that are not easily replicated. We pay very special attention to land planning, architectural requirements, what can and can’t happen next to each other’s houses and creating a lifestyle within the community.”
Margol said his company is a little different because they encourage other retail when they go into a market.
“It builds synergy and we can be the first one to have the major anchor and then we are glad to see other developers come in and do other projects,” said Margol. “It actually breeds other types of retail and that basically just builds the market, a retail pod if you will, in a community which is what we want. That way people are shopping, they are staying in their community to shop and hopefully it is increasing sales for retailers in that market.”