The differentiating factor between PM Realty Group of Houston and other full-service commercial real estate firms, asserts president Rick Kirk, is the company's flexibility to implement long-term investment decisions, instead of short-term gains. PM Realty, a 46-year-old, privately-held firm, can focus entirely on its clients' objectives and needs - not shareholder expectations - and foster long-term relationships that allow the company to expand its client base.
In fact, PM Realty's entire growth strategy is centered around existing clientele, says Kirk. Although the company takes advantage of new opportunities, its primary strategic initiative is business development with the clients it currently serves.
PM Realty is one of the real estate firms that is truly national in scope. Also, it does not pursue advisory services, ownership or new development businesses that tend to compete with a real estate service firms' client base.
Team expands company PM Realty Group was founded by Fletcher Emerson Co. to provide services to the Texas National Bank Building in Houston. After several name changes, ownership and structure (see timeline), in 1996 the company established its current executive management team. In addition to Kirk - who came to PM Realty after an 18-year management and leasing career with Dallas-based Prentiss Properties - management team members include James Gunn, executive vice president of property services, and J. Ernest Johnson, executive vice president of corporate services.
Today PM Realty Group has more than 1,000 employees, 14 divisional and regional offices and manages a diversified client portfolio valued at more than $7 billion. According to Kirk, the company is strictly a service firm focused on its clients' property and facilities management, leasing, marketing, corporate services andmanagement needs. The company conducts business in nearly every state, serving institutions, investors, corporations, REITs, government agencies and healthcare providers. Some of PM Realty's high- profile clients include Chase Bank Texas, Chase Manhattan Bank, G.E. Capital Investment, Kmart Corp. and Lockheed-Martin Corp.
In 1999, PM Realty added 24 million sq. ft. to its management and leasing portfolio with about 75% coming from existing clients.
Responding to clients' needs PM Realty's two main business operations are property and corporate services. Gunn, who heads property services, also joined the company from Prentiss Properties, where he headed a large eastern region portfolio of office and industrial properties for numerous institutional and private investors. Today, he oversees the delivery of PM Realty services to the company's 120 million sq. ft. of office, industrial, R&D, manufacturing, retail, multifamily and special-use space.
Gunn underscores the company's flexibility by responding to customer needs. "Clients are crying out to have on-site and field people accessing resources and support from the corporate offices," says Gunn. "As a private company, the only constituency we have to address is our clients."
Johnson joined PM Realty with 16 years of real estate experience, including several years as an executive vice president with JMB Properties Co. in Los Angeles, and as leasing representative for J.D. Sims & Co., a developer based in Charlotte, N.C.
Johnson says that corporations are looking at two key issues today: utilization and disposition. On the utilization side they are asking, "How can we reduce the costs of operating our real estate assets?" and "What do these real estate assets do for the company?" On the disposition side, the question is whether capital is best deployed in real estate assets or back into the corporation.
This strategy sometimes involves new and creative methods, such as forming an alliance or partnership. For example, PM Realty is in the process of taking on a portfolio for an organization and sharing the income from that business, similar to a rebate. This is an example of how PM Realty is expanding through existing clients.
The key drivers of growth To manage its growth, Kirk says his firm focuses on four main drivers: a continued investment in information technology; personnel development and training; quality control and benchmarking; and expansion.
Elaborating on information technology, Kirk proclaims that it is critical to his company's success to be aware of every form of high-tech reporting clients demand today.
In addition to information technology, PM Realty is distinguishing itself through personnel and training. James Dismukes, a 20-year veteran in the real estate business, plans all of PM Realty's training, including inhouse and outside development.
With its quality control and benchmarking initiatives, PM Realty conducts a baseline operational audit of every property added to its portfolio, then measures itself against that baseline to assure that progress is being made.
Kirk says that PM Realty plans to expand its services in to major U.S. markets. "It's easy to enter a new market. All a client has to do is ask us to go there," says Kirk. "The key is to develop a reputation, local presence and resources that allow us to expand in that market."
Growth strategy, not consolidation Though multi-faceted, PM Realty's growth strategy does not include consolidation. "Strategically, we are not part of the industry's consolidation movement. We feel we are large enough to garner the proper eco- nomies of scale, yet small enough to provide personal attention to our clients and their individual assignments," says Kirk.
He also believes it is more important to maintain a distinct way of conducting business within an organization that is consistent from region to region, than it is to consolidate. "In the real estate services business, your assets walk out the door every night," he asserts. "It's all about the quality of the people you provide to serve your clients. To me, growth through acquisition, except on a limited scale and then only with organizations with which you have an outstanding chemistry, doesn't make sense."
Rarely the lowest bidder As PM Realty pursues its client-focused business plan, the closer it partners with existing clients, the more often supplemental business comes its way. "Our objective has been to provide value so that our clients' supplementary business doesn't even go out to bid, but becomes a negotiated," says Kirk.
When PM Realty does bid on projects, its objective is not to be the lowest bidder, but to provide the most value. "When I joined this firm, I had to convince our people that we could successfully compete based on the level of quality and service we provide, not just price," says Kirk. "Today we are rarely the lowest bidder, and in many cases are right at the top end."
Kirk says clients are demanding more from their services firms, and are willing to pay for quality, responsiveness and creativity. He says this type of client-centered service, is best provided by companies focusing on the clients' needs, not shareholders' expectations, which results in long-standing partnerships.
1954 - Company founded by Fletcher Emerson to provide facility management services to Texas National Bank Building in Houston.
1955 - Fletcher Emerson Co. employs more than 110 people and provides management services to many buildings in the Houston area.
1974 - Fletcher Emerson Co. sells to Century Corp. The company is renamed Property Management Systems.
1970s to 1980s - Property Management Systems expands dramatically during the real estate boom, acquiring numerous third-party assignments from pension funds and insurance company owners around the country.
1987 - Property Management Systems becomes a subsidiary of Banc Plus Savings Association, which is also owned by Century Corp.
1990 - A management group, with the financial backing of Jupiter Realty Corp., organizes a buyout, and Property Management Systems emerges as PM Realty Group.
1996 - The current executive management team joins PM Realty Group and leads the firm to diversify and expand its services, including the aggressive expansion of its leasing program.
1999 - PM Realty Group adds 24 million sq. ft. to its property management and leasing portfolio, expanding it nationally to more than 120 million sq. ft.
2000 - Today, more than 1,000 PM Realty Group employees, under the leadership of Rick Kirk, offer an array of specialized services, including: property and facility management; leasing and marketing; corporate services; investment services; construction management; asset management and development; engineering services; portfolio administration; disposition and acquisition; consulting and due diligence; and healthcare services.