Realty Capital tries doing deals differently

By David Wilkening
Florida Real Estate Journal

Orlando – Real estate investors provide the money. Brokers do the deal. That’s generally how it works, in an oversimplified fashion. But Realty Capital is doing things a little differently. Increasingly, the brokerage firm is the partner in the deal.

“There aren’t a lot of projects done this way,” admitted Jeff Brock, Realty Capital’s founder. But there are advantages on both sides. Brock, by all accounts, intimately knows the Central Florida market. His firm not only handles the financing but carries the deal through all stages, including approvals and on to property management when the building is done. And the investors?

“They don’t have any tax consequences. And they get the benefit of 50% ownership of the property,” Brock said. Brock and his partner, Charles Frederick, president of the firm, say they envision that such arrangement will be increasingly common in the future.

Any downside? “It may be a little bit more complicated in terms of pulling together all the documents and getting everyone together,” Frederick said.

At 10 years of age, Realty Capital has emerged as one of the fastest-growing commercial real estate companies in Central Florida. “We feel we’re unique because while we’re involved in the local market, we also have a national presence,” Brock said. Realty Capital is a member of RealSource real estate network, providing it access to national and international services. Those include tenant and buyer representation, disposition, design/build, site selection, property management and general consulting.

RealSource is a for-profit, growing nationwide corporation of commercial real estate brokers who attempt to help their clients via networking. Partners share technology and property portfolios, and pool their resources.

A native of Toronto, Brock moved to Orlando in 1991 and worked for Lincoln Properties. In 1995, at the age of 32, he founded Realty Capital as a traditional one-person brokerage office. Frederick, the son of Orlando’s most famous mayor, has years of experience in leasing and property management. He joined Brock as president in 1997.

In the past decade, the firm has grown from one employee to 40; last year, Realty Capital did more than $80 million in sales/lease transactions; handled 12 lease transactions for a total of 1.2 msf; and managed more than 700,000 sf of property. “We’ve had great growth and we’re on target this year to hit $100 million in total volume,” Brock said.

Brock looked at all areas of Florida and some other southern cities such as Atlanta before deciding to settle in Central Florida. “When I moved here in 1991, the market certainly was not what it is today. But I saw the potential. There was very supportive infrastructure and a very attractive environment with a lot of undeveloped land. It was well-positioned for growth,” he said.

The company’s success in various projects, Brock and Frederick maintain, is because of their emphasis on having local knowledge of the marketplace. And their clients back this up.

“Because there is so much activity in the market…so much potential opportunities…you need to be sure that people know the individual characteristics of your particular property,” said Steve Schrimsher, president of Schrimsher Properties. You can’t just put up a sign and sell something. Somebody has to actively pursue and get information to qualified buyers. You have to be committed to working at it, and that’s what Jeff does,” he said. “As my friend Dene Allred, a real estate broker in Dallas, puts it: “There’s very little traffic on the extra mile but I think Jeff Brock lives there.”

“Jeff is the best broker I ever met. He’s brokered several of our deals,” said another client, David Bates, president of Republic Properties. “He knows the market and he follows through with every detail.”

Kevin Cole, an Orlando investor who has been active for the past 18 years in medical office condos, said Brock showed his marketing skills in handling some of his properties. Cole had been mainly targeting the growing market of local physicians, but Brock convinced him to start marketing to physicians while in their final years of medical school even before settling in to practice in Orlando. “They’re very upfront and honest and very professional,” he said of Realty Capital. “We liked the way they do business in professional, upfront relationships.” “They’re very creative and understand the market. We have employed them as our sole real estate firm to do all our marketing, leasing and sales,” he added.

Realty Capital has so far focused on the general Orlando area but is now looking for more deals in Volusia and Brevard counties. “In some cases, the coastal markets have not seen the appreciation of other areas in Central Florida,” Brock said. He and Frederick see real estate supply and demand as being somewhat at an equilibrium, with vacancy rates at a comfortable pace. “The hottest areas right now are residential and retail,” said Frederick. Inevitable rising interest rates could help cool that market down, but he does not see that happening in the immediate future or any serious slowdown. Class A office is doing well, he said, while industrial properties are getting harder to find.

About 60% of the firm’s business involves property management of some type. But joint development continue to be a focus. One advantage for doing that type of operation is that it gives others in a brokerage firm an opportunity to invest. In addition, Brock and Frederick said, brokers who are also investors develop an insider’s expertise that they might not otherwise have without their own direct involvement.

Realty Capital’s biggest project ever is a $50 million joint venture to build a 400,000 sf retail center in Orange City on a 55-acre tract. A 90,000 sf Kohl’s Department store is opening in early October as the anchor. “This will be the premiere regional retail center in West Volusia,” Brock said. “We’re exploring similar opportunities in surrounding counties. We’re really going to promote more joint development programs,” he added.