Executives at Koll Real Estate Group (KREG), when asked about the firm's founder, Don Koll, repeatedly utter the word "entrepreneur."
The word brings to mind ideas of energy, talent, confidence and risk-taking - all similarities between Koll, now chairman and CEO, and the Newport Beach, Calif.-based company he started in the early 1960s and has spent the past 30-plus years reinventing.
"The firm began as a general contracting firm, then moved into industrial, then added suburban office parks in the 1980s and retail around 1990," says KREG president Richard Ortwein.
The development company merged in 1993 with KREG, a recently formed public company. The firm has residential and commercial components, with the latter divided into six geographic regions - East Coast, Western, Northwest, Southwest, Phoenix and Asia.
The company, which has a pro forma net worth of approximately $140 million, has developed more than 60 million sq. ft. of commercial properties over the years and currently has under way more than 30 commercial projects totaling 10 million sq. ft.
The organization includes several affiliated firms, including Koll, Koll Resorts International and Koll Bren Realty Advisors. A property management division was sold last year to Los Angeles-based CB Commercial Real Estate.
Asia-bound While KREG is no stranger to risk-taking, perhaps no endeavor has tested the limits of its entrepreneurial spirit more than the firm's move into China and other parts of Asia. After several initial forays into the Far East on industrial projects, KREG began working with C.P. Group, a Bangkok, Thailand-based conglomerate - including retail firms - well-versed in doing business in China.
The result was development of $350 million Chia Tai Riverfest, a 1.3 million sq. ft. entertainment and retail shopping center on the banks of the Huangpu River in Shanghai, a city of 12 million permanent residents and a constant transient population of 3 to 4 million. The center has been under construction for more than a year and is scheduled to open Nov. 15.
The site, which is owned by C.P. Group, has several advantages, including proximity to the Bund, the city's historic commercial district. It is also adjacent to Shanghai's main tourist attraction, The Shanghai TV Tower, the so-called "Eiffel Tower of Asia."
The development is being managed by Jim Mueller, chief executive officer of C.P. Koll Investment Co. Ltd., the joint-venture firm formed by Koll and C.P. Group. Mueller reports that 31 percent of the project's space is already leased, with strong interest coming from retail and entertainment merchants across the globe.
But it has not been easy. "It is a real challenge for a Western business person coming into China," says Mueller. "We are definitely earning our money over here."
Adds Ortwein, "We grossly underestimated the complexities of cultural and business differences."
>From a retail standpoint, the market presented numerous challenges, not the least of which was transportation. "It is a very immature market in every way," says Mueller. "There are virtually no private vehicles in a city of 15 million people." Initially, the center will have five times as many bicycle parking spaces as automobile spaces.
But while transportation methods are different, managers of American malls might envy the numerous ways shoppers reach the site. These include subway, ferry, taxi cab, bus, bicycle and, of course, just walking, which many do.
"Furthermore," Mueller explains, "shoppers will range from the very affluent to people who don't have indoor plumbing at home. You have to pay attention to the needs of both groups and everyone in between."
On the business side, even more differences exist. While Western business is based on the signed contract, in China such documents are basically meaningless. "Getting something done is based on personal relationships," says Mueller, who points out this is where Koll's partner was invaluable.
Still, Mueller stresses, C.P. Koll Investment Co. Ltd. can bridge cultural gaps for Western retailers and make locating in China easier. "We offer them Western business practices and the Chinese market," he says, adding that the market contains 50 cities each with a population topping 5 million.
C.P. Koll also is working on Mall of Taiwan, a 1.2 million sq. ft. project on that retail-starved island, and another project in Malaysia, a former British colony whose law and business practices are based on British common law. "Both Taiwan and Malaysia are easier markets for Western businessmen to operate in," says Mueller, "but every country is different in Asia."
However, the company is not through in China. The firm has been chosen as exclusive developer of 20 Lotus Supercenters in China and Thailand by the year 2000. Owned by C.P. Group, Lotus Supercenters have been called the Wal-Mart of Asia. Some of the stores will be freestanding, and some will have additional shop space like a traditional shopping center in the United States.
Recent turmoil in the Asian economy has slowed development of these projects but has not stopped them. "Everyone has taken a step back to re-evaluate," says Ortwein. "But while caution is the watchword, we are making transactions."
Indeed, C.P. Koll Investment Co. Ltd. should begin $1 billion of development in Asia over the next 12 to 18 months, Mueller says.
Medley of property types Back home, meanwhile, the firm is placing a focus on retail as well. "As markets have improved and the resources of our company have strengthened," says Ortwein, "we have attempted to take various property types to different parts of the country wherewe felt the markets were strongest."
In one of its less traditional mixed-use projects, Koll recently was chosen along with Westrec Marina, the largest marina owner and operator in the country, to redevelop the marina in the West Channel Development Area of Los Angeles. The marina will be renamed Cabrillo Way.
In addition to 700 boat slips and a 1,000-unit boat storage facility, the project will include 60,000 sq. ft. of retail space featuring themed restaurants, specialty retail and a boat mall. Koll has some experience in marina projects, having built Everett Marina Village, a 42,000 sq. ft. project in Everett, Wash., with retail, office and restaurant space.
The firm eventually wants to focus on masterplanned communities, where it can bring to bear all of its property expertise - residential, office and retail - on the same project. For now, though, Koll is generating its retail expertise with individual retail projects in selected markets.
Partner approach As it does in Asia, Koll partners with other firms in developing new retail markets in the United States. For example, Koll merged its Phoenix division with Arizona-based Bromont Development Group, a mid-sized industrial, office, residential and retail development firm with $310 million in projects under its belt.
Koll had joint-ventured on several projects with the firm and its president, Walter Rector, since 1995. Today, Rector is president of Koll's Phoenix division.
"Koll and I found each other, and through their financial resources they offered the opportunity to move into other markets across the state," says Rector. "Koll was a relative unknown in the Phoenix retail market, but now they are a large player."
Explains Ortwein, "We try to identify a strong local firm and then partner with them through a joint venture or acquisition. We have a variety of other marketplaces targeted."
Rector says the ideal prototype center for the market is Scottsdale Horizon, a 156,000 sq. ft., grocery-anchored center with five outparcels, located in a strong residential market. "Scottsdale is experiencing explosive residential growth," says Rector.
In addition to development expertise, Rector says, his firm was able to provide scissors for the red tape. "Developers need inroads to local government, and we are the best in the market at getting approvals."
Koll will give him plenty of chance to prove it. "We are going to re-emphasize retail and focus on in-fill sites in Phoenix. We expect to expand from the $100 million in projects in 1997 to $300 million this year," Rector estimates.
Rector also heads the new East Coast office, which opened in February in Tysons Corner, Va., and currently is seeking retail development opportunities in the Washington, D.C., Maryland and Virginia markets. Further areas for potential expansion include the, Indianapolis and Cleveland markets.
"We are actively looking for developers to join the Koll team," says Rector, who knows first-hand what such a partnership can provide. "The Koll name is like gold with both bankers and tenants, and along with the financial resources they bring to a firm, a developer has the opportunity to quadruple his business."
The firm's success, even in so many varied property types and markets, is tied to the entrepreneurial spirit the company's founder has instilled in it and its people.
"The way the company quickly adapts to changing times has been critical to our success," says Ortwein, "along with Don Koll's willingness to give all of our offices and divisions a greatof autonomy to conduct business in the best way possible."