In Southwest Florida, most commercial real estate brokerages are considered “full service” if they sell, purchase, lease and manage investment and income-producing properties. Also, other than a few independents, most are either affiliates or alliance partners of national entities.
And then there is Equity, Inc., which is redefining the commercial brokerage business model.
Besides offering its clients a full range of transactional services, Equity also provides full-scale development, construction, asset management and debt-placement services, among others. “Our brokers can service the client at a high level across the platform,” says Frank Duran, Equity’s senior vice president of real estate services. “With Equity, they can access a single source for all of their real estate-related activities, whether it’s an acquisition or disposition.”
Further, unlike an affiliate or alliance partner that is independently owned and operated by a local broker, Equity owns all of its branch offices. “Most national companies come in and just have a satellite office — there’s no other commitment to the market, other than generating fees. We are not franchisees,” adds Duran. “We’re local people with a corporate name and a national reach.”
In addition to three locations in Ohio (where it was founded it in 1989), Equity has offices in Austin and San Antonio, Texas and four Florida branch offices: Tampa, Orlando, Fort Lauderdale and Naples, which opened in 2013. “Equity treats each market with a unique local presence,” says Duran. Collectively, they transact business in 41 states.
Despite being relatively new to the Southwest Florida market, the Naples brokerage boasts a commercial portfolio of approximately 450,000sf of managed properties. According to Duran, the firm has been so successful in representing landlords, tenants, buyers and sellers, its transactional growth has jumped by more than 48% in just the last year.
Since opening, the local staff has also grown significantly, from two employees to 10, including a construction expert, five agents and two property managers. To accommodate the growth, the office expanded from one suite to three earlier this year and expects to expand again by early next year.
Equity’s Value-Add Approach
One of Equity’s distinguishing features is its willingness and ability to identify — and participate in — development opportunities. “Most of the properties we buy are value-add,” says Duran. “These are properties that already have cash flow in place,” but whose value could be enhanced. Doing so typically involves bringing in new tenants to mitigate vacant space or making improvements, or both. Equity also looks beyond the obvious to maximize a client’s return on investment.
“What appears to the novice investor to be a property with very complex problems may look like a great opportunity to us,” says Duran. “Maybe the owner doesn’t have the expertise or infrastructure to mitigate those issues, but we do. Solving problems is a key to helping our clients.”
Development is another value-enhancing vehicle. “Maybe there’s a vacant parcel adjacent to the property. If there’s demand in the market to develop it, we could create additional value through that piece of dirt,” he says. Such was the case at Berkshire Place, a 20,000sf retail center that Equity developed on Radio Road in Naples, next to another Equity development, Berkshire Commons. Both have attracted numerous national and regional tenants.
Thomasson Place at the corner of U.S. 41 and Rattlesnake Hammock Road, is another closely-held asset that Equity is developing, financing, building, leasing and managing. Although construction has yet to begin, the medical/retail center is already 80% leased. Upon the project’s completion, Physicians Regional Urgent Care will occupy 8,000sf of the 14,500sf center.
Typically, Equity acquires, improves and holds properties for 3 to 5 years or longer and has an exit strategy in place for disposition. How and when that happens is contingent upon the property, ownership structure, market conditions and investment objectives, among other factors.
According to Duran, it doesn’t take a massive financial commitment for Equity clients and investment partners to invest in commercial property. “We have such a broad platform that they can come into the market at a very high level without making a huge investment,” he says. “Someone who has $200,000 to invest is just as important to us as a $1 million investor.”
Equity can also accommodate investors who prefer not to part with their funds until a deal is about to close. “You can sign a pledge and your money stays with you until we’ve identified the acquisition and are ready to close. That way, from the day we make the capital call and you give your money to us, it’s generating a return,” says Duran.
Broad Platform, Superior Results
Besides identifying prime investment opportunities, Equity can transact them with lightning speed. “Time kills all deals,” notes Duran. “The great thing about the Equity platform is that we can act quickly once we identify an acquisition.”
In addition to its brokerage, property management and development divisions, Equity comprises a family of companies designed to bolster its competitive edge.
- Equity Construction Services is the affiliated provider of construction services for Equity. It is Equity’s single-source solution for development projects and other construction needs.
- Equity Velocity Funds is a private funding mechanism sponsored by Equity’s principals. Through the various funds it has established, Equity can deploy capital to develop and acquire projects that meet its investment criteria.
- Leverage is Equity’s debt company. Its purpose is to provide positive leverage and maximize investor returns.
Duran says that having a single source for any and all real estate-related activities is a boon to brokers and clients alike. “The Velocity Fund gives us speed to market on the equity side and combined with our Leverage debt company, we’re seamless. That sets us apart.” The distinctions don’t stop there.
Recently, Equity unveiled its newest company, Joule, to help owners and investors enhance energy efficiency in large buildings — something that wouldn’t occur to most people. “We see things a little differently. When you make a building more efficient, you increase your net operating income, which makes the building more valuable,” says Duran. “The cost to operate will decrease and is offset by the investment.”
Through Joule, investors can utilize government-subsidized, off-balance sheet funding to retrofit eligible properties with windows, lighting, roof, electrical systems and other improvements to make them energy-efficient. Typically, the financed improvements are repaid incrementally through a special assessment, which appears on the property’s annual tax bill.
“Although the assessment increases the annual cost to operate, the energy savings far outweigh the (improvement) costs,” says Duran. More important, the property owner doesn’t have to underwrite the entire cost up front. As a result, that debt doesn’t trail the ownership, but stays with the building if and when it is sold.
Attracting Top Talent
Equity’s corporate culture and extensive resources have helped the Naples office attract top-quality brokers. “There are no bosses at Equity. We all own this company,” says Duran. “We are likeminded people who all pride ourselves on having a servant’s heart.”
One of them is Mike Concilla, senior vice president of brokerage and development. He was already a successful developer and leasing agent when he joined the Naples office in 2013, with 30+ restaurants and 25 assisted living facilities on his resume. Since then, he has participated in the development of local retail strip centers, as well as other construction/tenant improvement projects locally and statewide.
“Unlike other brokerages in the area, Equity has allowed me to fully utilize my background in development and construction,” says Concilla. “With Equity, I can offer my clients more than property management and leasing, I can provide a full range of services, all from one place. No other company in Southwest Florida does that.”
Equity’s generous fee structure is another major draw. In addition to income earned from brokerage activities, Equity agents who make construction, development or property management referrals get a fee for each piece of business they generate. For instance, if a broker knows of a construction or tenant improvement project that Equity ends up building, the broker gets a fee. “So there are many ways brokers can earn additional income,” says Concilla.
The ability to serve clients in other markets is another benefit that caught the attention of broker Hamish Williams, who has been with Equity for three of his 24 years in the business. “Rather than nail the agent down to a specific geographical area, Equity encourages us to serve clients in as many markets as we can,” says Williams. It also provides substantial resources to assist them. “We have access to some sophisticated tools, such as LoopNet Premium and CoStar National. Most brokerage firms only have access to local listings.”
Above all, Williams says he appreciates the “quality, high-caliber talent” of his Equity colleagues. “We’re a highly collaborative office, which is a great thing,” he notes. “I’d say the majority of deals I do are in tandem with another agent. I also work on investment sales with the Tampa office.”
Duran refers to Equity’s partnership approach as “brokers without borders,” and is actively recruiting additional agents for all product types, particularly office, retail, medical office and industrial. “We’re in the process of growing the footprint and are talking to brokers every day,” he says, adding that Equity is very cautious about vetting new hires. “If you bring in the wrong people, you upset the culture and the clients; it upsets everything. So we’re very thoughtful and strategic about growth.”
In Southwest Florida, that growth is expected to shift north into Fort Myers and Punta Gorda, as Equity turns its attention to healthcare, senior housing and retail development. Equity also has plans to develop a Sarasota office.
“The market is thriving right now. It’s very fluid and there’s a lot of local activity,” says Duran. “We have a vested interest in Southwest Florida and are putting our money where our mouth is. I think that speaks volumes about our commitment to the market.”
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