Premier Properties of Southwest Florida, Naples' leading luxury real estate firm, plans to open its first office in downtown Sarasota this month, during a time when you can hear a pin drop in the real estate market. January through August sales fell 35.8 percent from a year ago, prices increased only .03 percent in that last 12 months, and some residential real estate agents are sprucing up their resumes in search of other opportunities.
Although Premier executives have been planning the Sarasota expansion for more than a year, the business community is abuzz, wondering about their timing. Is it smart to make a splash in a new market-one with formidable competitors-during a real estate slowdown?
"It's a great time to be expanding," insists Tom Bringardner, general manager of Premier Properties in Naples. "We have the luxury of having not only the financial resources, but the management resources and the intellectual resources to take advantage of little blips in the marketplace."
That might sound overly optimistic to anyone who's making a living from real estate, but Bringardner sees the current slowdown as a "very common, very predictable pattern of imperfection in the market." Buyers who have been interested in moving to Southwest Florida aren't choosing to go elsewhere; if anything, they're just postponing a decision, he says. "My gosh, this doesn't mean that people suddenly don't like to walk on the beach in Southwest Florida and that it's not going to get cold in Chicago or in the Hamptons during the wintertime. There are an awful lot of people who want to come down here," he says.
Steve Bailey, who surprised the local real estate community when he jumped from Michael Saunders & Company-where he had been for three years, most recently serving as executive vice president of real estate services-to helm Premier's new office at Plaza at Five Points, is banking on those future buyers. "It certainly was a risk to leave an established entity, but I really consider it a minimal risk because of the history of the company and the fact that Premier has the business model," he says. "This is the ideal time for a company that has staying power and resources to enter a new market area."
Premier Properties, established in 1982, is a division of The Lutgert Companies, a group of private companies in the residential and commercial real estate development and brokerage services, founded by Raymond Lutgert in 1964. Lutgert also handles developer consultation, sales and marketing, personal and commercial insurance, residential mortgage and title industries. In the last 40 years, The Lutgert Companies has not only grown and evolved with Naples, but has taken a lead in how the area has developed. "I think they've had a significant positive impact on the overall development of Naples," says Paul Marinelli, president of the Barron Collier Co.
"They really set a standard in quality, amenities and in terms of marketing Southwest Florida as a destination for people to come to," says David Ellis, executive vice president of the Collier Building Industry Association.
In 2005, Premier generated more than $2 billion in annual sales, from homes in private golf course communities to oceanfront condos and single-family homes to properties in Old Naples. It has 225 licensed sales agents at 13 locations in Naples, Marco Island and Bonita Springs. (Michael Saunders & Company, another rival in the luxury market, has 450 associates in 16 locations and generated $3.1 billion in 2005 sales.)
As Bailey was working in August to hire sales agents-the plan calls for an initial 12 to 15 in the Five Points office-he found the slowdown working to his advantage. The soft market conditions have made agents consider alternatives. He hasn't had to make too many outgoing recruiting calls because a number of agents are contacting him.
"People are disenchanted, they're frustrated," says Bailey, vice president and Sarasota regional manager. "Their productivity is not what it was the past five years. What that does is cause people to really stop and analyze their current situation."
Even before opening its doors, Premier, which expects to be working with properties priced at $1 million and up, started negotiating for additional office space and already plans to increase its sales force, which Bringardner says includes agents from Collier as well as newcomers to the company. "We're looking at an opportunity to grow even more within Sarasota not even having opened our doors," he told Sarasota-Manatee BUSINESS while the initial location was under construction.
THE NAPLES-SARASOTA CONNECTION
In determining how and when to expand, Premier executives considered factors such as the distance between the Naples and Sarasota markets, competitors and the potential client base. "We've been looking at Sarasota for some time, more than a year, talking about opportunities that might exist there," Bringardner says. "We like Sarasota a lot. Similarities are made on a regular basis in Sarasota about it being like Naples."
It's not surprising to Power that Premier set its sights on Sarasota. "So many of the buyers in this marketplace are actually comparing the two markets," he says, noting that he's lost and gained on both sides with clients deciding between the cities. "You see a lot of back and forth referrals."
Bringardner points out similarities between the beaches, golfing, ecotourism and outdoor recreation, fine dining, culture and the arts in Sarasota and Naples. The rebirth of downtown Sarasota is an exciting opportunity as well, as "people want to live closer to where they work and closer to where they shop and closer to where they dine," he says.
Howard B. Gutman, president of Lutgert Holdings, says the model Premier has developed for real estate brokerage operations can work in other areas that are demographically similar to Naples, and Sarasota is the closest market with those similarities. The mass of high-end properties makes Sarasota attractive and the area is maturing quickly, he says.
Bailey compares Premier's decision to enter the market as the same type of validation the community saw when The Ritz-Carlton came to Sarasota-in other words, more evidence that the city has arrived. A primary source of buyers, Bailey says, are purchasers who look at Naples and will have the opportunity to work with Premier agents in Sarasota as well, where the median sales price is $200,000 lower.
With the similarities and differences in mind, Bailey and Bringardner say Premier is starting with its basic business model and customizing it for the Sarasota market. It's the same strategy Premier used in Bonita Springs and Marco Island. "We certainly don't want to and will not say, 'This is the way we did it in Naples and this will be the right way,'" Bringardner says.
"There will be some surprises, and I think that people can look for us doing some things differently than the way we do them in Naples. Otherwise we would just be taking our Naples template to another community," he says.
GAINING AN EDGE
In Naples, Premier's sophisticated image has worked to keep sales figures strong. Michael Reagan, president of the Greater Naples Chamber of Commerce, says it's done so by focusing on the best properties, providing top-notch service and immersing itself into the community. "I can't think of a person who works for that company who's not deeply involved in the community in a classy, classy way," he says. "Not only their executives, but also their agents, their brokers and their support staff."
In the real estate industry, particularly with the red-hot market of the past few years, Reagan says a focus on nonprofit associations has made Premier stand out. The company is a sponsor of the high-profile Naples Winter Wine Festival and it donates money and time to numerous causes and organizations including The Education Foundation of Collier County, American Red Cross, Florida Gulf Coast University and Big Brothers Big Sisters of Southwest Florida.
"You've got many people, particularly in recent years in real estate, who have a tendency to be so preoccupied with making sales," he says. "They [Premier real estate agents] don't give you the impression they're just here for the money."
Premier is working on a plan for working with nonprofits in Sarasota as well, meeting with community leaders. It has not yet reached the point of announcing major commitments. "The marketing plan and plan for community involvement is a work in progress," he says.
The company declined to give specifics about its financial commitment in Sarasota so far, only speaking in general terms about a "significant" investment for facilities, staff and other infrastructure. A company spokesman says it would not be good business practice or beneficial to give dollar amounts.
Premier's challenge is to brand itself in a marketplace that already has strong competitors. Bailey identifies two pieces: marketing the firm by sharing stories of its success in its hometown and hiring the best in the field. "First and foremost, it's really reaching out to the real estate community and telling your story and bringing confident people to affiliate with you," he says.
The initial plan is to focus on residential resales, followed by the developer services division (Bailey notes that the company has already received inquires from developers about Premier marketing their projects). Premier will be the exclusive affiliate of Leading Estates of the World, a worldwide network of affiliated residential real estate brokerages specializing in the representation of luxury properties, in Sarasota-Manatee. It is the exclusive Christie's Great Estates affiliate in Collier and Lee counties, a designation that Michael Saunders already holds in Sarasota.
A third area of focus will be commercial real estate. The company's commercial properties division currently serves a five-county market, and Premier will explore possibilities for providing commercial sales and leasing brokerage services in the Sarasota-Manatee market, Gutman says.
Premier will face off against several firms already holding piece of the luxury market, including Michael Saunders & Co., Coldwell Banker, Prudential Palms and Sky Sotheby's International Realty. Last year, sales for luxury properties of $1 million plus were down 38.2 percent. The competition is fierce, Bailey admits.
"I certainly think that there have been a number of strong companies that have offered services to the high end and they've done a very good job. I believe that we can do a better job. I'll let it go at that," he says.
While the goal is to sell homes, Bailey says his intent is to create an organization with attributes of respect and teamwork. "I like that environment where people feel free to express themselves without fear of reprisal. That's a kind of company that I would like to see," he says. "It's simple in concept, but difficult to execute."