Hutcheson

Gibbons

Less than 3 years ago, a composite of companies, including the 100-year-old firm Goodman Segar Hogan Hoffler, became Advantis Real Estate Services Company. In the process of adding and improving the full range of services in offices that previously had specialties, the young company gives itself two more years to become "a top-two tier full service commercial real estate provider in each market we serve," according to company president Petch Gibbons.

And the company is located "in virtually every primary or secondary real estate market in the Southeast, from D.C. down to South Florida," adds Advantis senior vice president John Hutcheson.

With more than 500 employees, the Atlanta-based company has 11 regional offices. Each of these offices is a full service office, providing brokerage services, including office leasing, investment sales, corporate consulting and tenant advisory services; property and facility management services; and construction services. The company also has approximately 25 management offices throughout the region.

Mergers and Acquisitions

Advantis is a company formed by mergers and acquisitions over the last 10 years. In the mid-1990s, Goodman Segar Hogan Hoffler, a company that was formed in 1899, merged with Virginia Realty, Vanguard Associates Inc., Larson, Ball & Gould and Bryant Associates. The St. Joe Company acquired the blended company in 1998, after which the company merged with Florida Real Estate Advisors to create a regional powerhouse with over $1.4 billion in annual transaction volume and a 30 million-square-foot management portfolio. In April 1999, the company became Advantis, creating a new name to re-brand the compilation of companies. Advantis then acquired Sharp Boylston Companies and merged with SouthGroup and Morris McNair & Associates. "We've tried to find firms that brought more to bear than just the local market knowledge," says Hutcheson, who served as chief financial officer with Goodman Segar Hogan Hoffler. "We try to find firms that are additive to the company, either from a product specialty, a technology specialty or geographic focus." He explains, "If you trace [Advantis'] history back to its oldest firm that started in the Hampton Roads area in Norfolk, Virginia -- that was a firm focused on landlord representation and property management with a construction component. The first couple of acquisitions, with Virginia Realty in Richmond and the firm in Raleigh-Durham, Vanguard Associates, were with similarly minded firms -- they were landlord-, leasing- and property management-focused. In 1997, when we acquired the Larson Ball & Gould firm in D.C. and the Bryant & Associates firm in Atlanta, they were primarily tenant rep firms. They brought the tenant rep focus to the company and we've been able to leverage those specialties across the whole company. When we merged with Florida Real Estate Advisors, [that company] was heavily involved in investment sales and they've been able to leverage that investment sales expertise across the company. Morris McNair in D.C. was another firm that was well known for their investment sales capabilities.

Company Structure

While merging firms with varying specialties, the company has focused on making sure each office offers the full range of services. "When the firms were merged, we had pockets of product services. Over the last several years, we have worked hard to bring to bear in each of the local markets the services that they were missing," says Hutcheson. "For instance, recently, we hired a gentleman in D.C. to focus on construction. We didn't have construction services in the D.C. market. In Orlando, we were primarily focused on landlord leasing and property management, but we were able to recruit recently a couple of tenant rep and investment sales brokers to help us expand into that full service environment in Orlando," Hutcheson explains.

"The organizational plan is to continue to build our foundation of full service by recruiting top brokers in the Florida market and then trying to acquire a top management company in the Washington region," adds Gibbons. "We are speaking to a few companies to acquire a management services company to complement the very strong brokerage capacity we have in the Washington region."

Company Affiliations

Advantis is a business unit of The St. Joe Company, based in Jacksonville, Florida. "Being owned by The St. Joe Company creates a lot of financial capacity. They are a publicly traded company and have a lot of resources and capital base that give us a solid background -- particularly in the current real estate market. They provide us with the financial capacity to withstand any downturns in the market," says Hutcheson.

Gibbons agrees. "Our sponsor, St. Joe, continues to be a vibrant, dynamic, growing company, even in a downturn market, and that gives us the resources to compete," he says.

Another alliance embraced by Advantis is the company's association with GVA Worldwide. "GVA is a strategic international partnership that extends Advantis' local expertise worldwide," says Gibbons. "This alliance includes more than 40 full-service, locally owned real estate firms with about 85 offices on 5 continents. From time to time, our clients have needs that go beyond the markets that we specifically serve. If one of our clients has a requirement in New York City, Boston, Chicago or San Francisco, we have an alliance of companies that we can go to in order to provide them with a high standard and consistent service in those markets. [GVA] is an alliance of independently and wholly owned companies that have agreed to service our clients as we go beyond our own boundaries of markets that we serve. And they do the same with us."

Gibbons estimates that 10 to 15 percent of the company's current revenues are through GVA. "I think business that we do with and through our GVA affiliates in other markets will continue to be a growing portion of our business," he adds. The real estate business has become increasingly institutional on the owner side, and the large institutions do business in a diversity of markets. "There is a continuing growth of institutional business on the owner side that transcends our markets," he says, adding that there are also large companies in the United States that have a use for large amounts of office space in a diversity of markets.

Keys to Success

Hutcheson and Gibbons both stress Advantis' emphasis on flexibility and customized solutions. The company maintains its focus on local markets and "creating an environment that creates a consistent work product but allows some flexibility in creating services that our clients need," explains Hutcheson. "We believe firmly in getting to know our clients and understanding their needs. Instead of delivering a cookie cutter approach, we believe in understanding our clients' needs first and then customizing our services to meet the needs of the client. We're not focused on rigid adherence to standards or practices. We've created resources that our agents, our property managers and our construction superintendents can use to deliver products to clients, but there is some flexibility given to local market managers instead of off-the-shelf, out-of-the-box type solutions."

"The size of our company makes us very unique in the commercial real state business in that we are big enough to provide our clients with the support, resources and service in our respective markets," states Gibbons, "but we're also small enough that we don't have the obstacles of a big company. This is a much more personal and intimate company than a large national company."

The company is also capitalizing on the current economic downturn. In fact, Gibbons says, "I think the downturn in the economy has affected our company very positively." Explaining the Advantis advantage, Gibbons says, "While the market continues to get more difficult, our competitors' stock prices are really dropping and that reduces the support and resources they have for their internal brokers and therefore their clients. The flip side is The St. Joe Company's stock continues to perform even through a tough market. That provides Advantis with continued resources and support so that we can provide additional and more customized service to our clients. Also, as our national competitors are going through a financial downturn, that avails more professionals and brokers on the market for us to recruit, which we have been doing."

"We were able to recruit a couple of top brokers in the Orlando market that we don't think we would have had the opportunity to recruit in a good market because nobody wants to interrupt their income stream by changing firms," Hutcheson adds. "In a downturn in the market, people are less sensitive to that. We are actively out recruiting for top producers in the market."

The company has also seen an increase in property management opportunities as some properties come back to lenders. "That is one benefit of being a full service company -- you are able to take advantage of turns in the market," notes Hutcheson.

Investment sales has also done well in this current market; people are trying to reposition their portfolios or cashout of a profit position in a building they own. Advantis has seen a significant amount of investment sales activity in D.C. and Florida.

Southeast Focus

"We think there is an opportunity to be a firm that specializes just in the Southeast. It was really a decision we made to focus and be a Southeast specialist versus trying to be all things to all people, which is one of the challenges the national firms face," comments Hutcheson. "We believe the Southeast is a consistent market in the way business is done and the way that real estate markets operate. Local market knowledge is transportable in the Southeast."

As a subsidiary of The St. Joe Company, Advantis is particularly suited to the Southeast. "The St. Joe Company owns approximately 1 million acres of land in the state of Florida, which they are developing for residential, commercial, hotels and so forth. They've been selling some of that land off in parcels. As they sell that land, they are acquiring assets -- buildings -- in the markets that Advantis is located in. I think one of the reasons we're focused in the Southeast is that The St. Joe Company is comfortable acquiring assets in those respective markets," says Gibbons.

Executives at Advantis have also chosen to remain focused on the Mid-Atlantic and Southeast regions because these areas are targeted for continued growth. Statistics have shown that over the next 5 to 10 years, there will be continued increases in residential and commercial markets in these regions, Gibbons claims.

As for future expansion plans, Gibbons says, "Our plan is to really grow organically in the markets that we are in. We don't have any plans to grow outside the markets that we already serve. The only reason we would go into markets outside the ones we already serve is if our existing clients have a need that we can serve in those markets."

"We continue to be local market-focused. We're in a lot of secondary real estate markets that some of the national firms don't serve, and we believe that part of our competitive advantage is that we have local market knowledge of most of the primary and secondary real estate markets in the Southeast. The reason we have [this knowledge] is because we've gone into markets and acquired firms that have been in those markets -- in some cases for 100 years," boasts Hutcheson.

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