Feature Story
Welsh Companies Florida In It For the Long Term
By Elizabeth W. Pearce

To most brokers, developers and investors, there are two ways to profit from real estate: buy it and flip it or buy and hold. However, to Welsh Companies Florida President George Vukobratovich, the latter is the only way to go. Beyond ensuring the success of his Naples-based real estate firm, the buy-and-hold philosophy has shaped his entire outlook on property acquisition and development while prompting Welsh Florida to diversify.

“Many people still have the impression that we work exclusively as property managers, but we also do leasing and development,” says “Vuko,” who has been a Naples resident and commercial real estate professional for more than 21 years. Currently, his company is developing several prominently positioned commercial, residential and mixed-use properties in Lee and Collier counties, as well as in Minnesota.

Vuko says that Welsh Florida has evolved considerably since his 1996 partnership with Minneapolis-based Welsh Companies. “At that time, Welsh-Minneapolis wanted to grow regionally and nationally, and we’d hoped to work together to achieve a bigger market share for both of us,” he says.

“But gradually, we realized how specialized and specific the Southwest Florida market was, how different the valuations were and how seasonal the marketing was compared to other areas.” He and his Minnesota partners also had divergent goals for the Naples affiliate.

“I was far more interested in long-term holding and ownership than in quick-flip leases and emotionally-driven, impulsive brokerage, which didn’t interest me at all,” says Vuko. Further, he realized that area market values were appreciating daily and that flipping tended to produce lower-quality results.

“If you know you’re acquiring (a building) to sell, you’re going to put in just the bare minimum in order to sell it quickly and maximize your profit. That’s not at all what I wanted to build the company on,” he says. Instead, he envisioned a corporate foundation based on quality properties that were efficient to operate and conducive to retaining tenants.

“We recognized that our clients were looking for an alternative to (stocks) and wanted to be in the real estate market for the long term.” Due to their differences, the partners split amicably in 1999. Although Vuko is sole owner of the reestablished company, he retained the Welsh name for marketplace continuity as well as name recognition.

“It goes back to the people we’ve worked with over the years and the solid relationships we’ve formed in the community,” he said. “The company is bigger than the individuals.”

Today, Welsh Florida has three offices (Naples, Fort Myers and Miami) and employs a staff of 45, including Vuko’s daughters. Joanne handles the bookkeeping and finances for the company’s development projects and owned buildings, and Tanya is her father’s administrative assistant. Despite the distance between offices, e-mail and weekly inter-office videoconferences allow the staff to stay in touch and share information.

The virtual meetings “enable everyone to feel connected,” says Vuko. “It’s really an amazing tool.” Vuko credits much of his company’s growth to investor Gerry Cafesjian, a part-time Naples resident who owns GLC Enterprises based in Minneapolis. The two met when Vuko was originally affiliated with Welsh and have collaborated on a number of projects in recent years.

“Gerry has been instrumental in the success of Welsh Florida,” says Vuko. “He has tremendous vision and experience, as well as the capital to make that vision a reality.” One of their first joint ventures was Willow Park, a former driving range on Airport Road in Naples. Knowing that infill commercial was about to be approved by the county, they bought the facility and redeveloped it as an office park.

At press time, the partners were poised to announce a mixed-use development (pending permitting approval) in a high-profile area of Naples, near the beach. Other projects under development include:

¥ Capri Commons, a shopping center on Del Prado Boulevard in Cape Coral, just south of Pine Island Road. Gates McVey broke ground on the five-acre site earlier this year. When completed before 2004 is out, the project will include 20,000sf of retail/office space and a bank building totaling approximately 6,000sf. Already, a Subway sandwich shop and a national ice-cream chain have signed as anchor tenants.

¥ Forest Royale, an exclusive residential community on the south shore of 110-acre Leech Lake, one of Minnesota’s largest. At buildout, the wooded, 65-acre peninsula will include just 25 multi-million dollar log homes (12 lakefront and 12 interior), as well as a private harbor and boat slips for residents.

¥ A technology park in northern Collier County, just north of Wiggins Pass Road. Groundbreaking on the unnamed, 55-acre project is expected next year after the entitlement process is completed. Preliminary plans call for an office/service park to be developed in stages, with targeted users such as engineering firms and the various trades that serve local residential communities.

“We bring quality to our developmentsÉ from the concrete slab to the roof,” says Vuko, adding that his approach won’t work for those on a shoestring budget.

“We work on behalf of investors interested in long-term real estate holdings. Therefore, our goal is to develop buildings that will withstand the test of time. We want to ensure their longevity.”

The same is true of properties that Welsh acquires and manages for itself, its clients and nearly 350 tenants throughout South Florida. In Lee and Collier counties, Welsh’s management portfolio contains a number of prestigious, Class A commercial properties including: University Park (130,000sf in three buildings); Pelican Bay Financial Center (65,000sf); and South Trust Bank Building (35,000sf).

The company also manages numerous properties along some of Miami’s most prestigious commercial corridors, such as Brickell Avenue and Lincoln Boulevard. To keep occupancy rates high, Welsh Florida keeps a close eye on the appearance of all managed properties.

“The better a building looks, the better quality tenant you’ll attract.” Because improvements also enhance value, Welsh advises clients when building renovations are in order and coordinates the construction needed to bring the property up to date. Finding and retaining good tenants is another management challenge.

“A lot of landlords limp along with tenants (but) we don’t. Our clients give us the latitude to evaluate whether a tenant is credit-worthy,” he says. If there’s a problem, Welsh will discuss with the owner the likelihood of replacing the tenant, as well as the financial implications of an eviction or tenant change. Based on their joint decision, Welsh implements a plan to maximize the property’s financial viability. Also, if a tenant leaves before their lease is up and Welsh signs a new tenant to take their place, the commission is prorated.

“We’ll only charge for the balance on the original lease to replace what was lost, not the entire, new lease period,” says Vuko. “I don’t know of anyone else who does that.” Welsh also prides itself on being quick to address tenant needs.

“I have always found George and his staff to jump to the occasion if I had a problem or question,” says Gail Webster, an executive vice president with Huntington National Bank in the Pelican Bay Financial Center.

“Having been a manager in other buildings myself, I have never worked with a management company that has been as responsive to our needs.”

Because Welsh Florida wants to keep it that way, Vuko remains selective about the clients and projects that the company pursues.

“We’re always seeking new opportunities for projects that will enhance Southwest Florida rather than just develop it. I’m very grateful to be working in this marketplace.”

- Key Members of Welsh Companies-Florida Staff Naples & Fort Myers

¥ Lori Cook: Chief Financial Officer

¥ Jim Doane: VP of Brokerage and Leasing

¥ Jordan Poppa, Kim Gaglia & Laura Puleio: Asset Managers

¥ Aaron Shimmel, Jonathan Kepple & Bruce Preble: Leasing and Brokerage Agents

¥ Steve Joy: Facilities Manager

¥ Jessica Conde: Bookkeeper

¥ Cass Shapard: Leasing and Brokerage Coordinator Miami

¥ Mike Manno: Asset Manager

¥ Alexandra Ramirez:
 

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