Expanding into New Markets
Responding to growth opportuni- ties across the country, St. John Properties has created an innova- tive Partner-in-Training program that educates quali ed individuals interested in development on every aspect of commercial real estate development. The program takes four years to complete, and trainees are mentored in every area of com- mercial development, including site selection, acquisition, develop- ment, design, construction, leasing, marketing and property manage- ment, according to the company. In addition to this rigorous training, trainees must obtain a Master of Business Administration or a Master of Science in Real Estate during the four-year period. On success- ful completion of the program, graduates are sent to a region of the country where St. John Properties sees major growth opportunities. Program participants have come from both inside and outside the company. Four individuals have completed the program, and three are currently enrolled. Financial Consistency and Stability Although St. John Properties has never defaulted on a loan in its 47-year history, it has been tested time and again through numerous downturns in real estate and eco- nomic cycles. Three tough lessons the company learned in the 1980s and 1990s, however, helped it to navigate the recession of 2008 successfully and put it on its cur- rent growth path, according to St. John Properties president Lawrence Maykrantz .
Tiered classrooms, which promote group interaction and problem-solving by allowing students to move seamlessly from lectures to discussions, are among the design features at the University of Maryland’s Edward St. John Learning and Teaching Center.
When St. John Properties nds a site it likes, its architectural and engineering team puts a design together, and then the company’s leasing agents scrutinize it. “Our leasing people tell us what to build,” says St. John, “because they are the ones who have to lease the space.” Once the concept passes muster, the land goes under contract, usually with a 90-day window to conduct due diligence. After clear- ing the land for purchase, St. John Properties makes a substantial payment on the contract with the stipulation that it has 18 months to obtain a building permit. St. John Properties initially builds two speculative buildings on the property. When those buildings become 50 percent occupied, work begins on the next two buildings. If a market or economic downturn occurs, and the rst two buildings are not yet 50 percent leased, the company stops building at the site until market conditions change.
just slow us down,” explains the chairman. In 2018, the company developed and broke ground on 1.2 million square feet of speculative space from its Maryland headquar- ters. It has also begun to develop or construct 600,000 square feet in other markets for a total of 1.8 million square feet of multi- and single-story of ce, retail, ex/R&D and residential space. For 2019, St. John Properties expects to add an additional 1.3 million square feet of space. How Projects Are Developed St. John Properties’ development sweet spot is the 50-acre site, al- though the company will go down to 25 acres or up to 200 acres for the right location. Like everything else about the company, its projects’ size must satisfy the company’s focus on the long view: it wants projects that it can build out over seven to 10 years – not the in-and- out 5-acre, single-building project.
Reprinted with permission from Development magazine, published by NAIOP, the Commercial Real Estate Development Association
FALL | 2018 DEVELOPMENT 69
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