DESPITE THE ECONOMIC HAILSTORM of recent months, office development giant Hines has emerged relatively unscathed. And for good reason. Since the early 1990s, Hines' firmly established offensive and defensive corporate policies have stood the Houston-based company in good stead through difficult market conditions. With 33.6 million sq. ft. of office space developed in 2001, Hines finished first in NREI's 2002 ranking of the Top 25 Office Developers.
“Most of the policies that we've implemented were started back in the early 1990s when development stopped,” says Hasty Johnson, executive vice president and CFO. “That time period had a big effect on what we're doing today. So even since Sept. 11, we really haven't changed very much.”
Johnson attributes much of the firm's economic stability to its commitment to geographic diversification, especially international expansion. Founded in 1957 by Gerald D. Hines, the company originally concentrated on local real estate in Houston, but began diversifying across the U.S. in the mid-1980s. When the real estate downturn hit in the early 1990s, Hines began looking for global investment opportunities.
Now, in the past year alone, Johnson estimates that nearly 50% of the firm's growth has been outside of the United States — primarily in Europe. And Hines isn't working on simple projects, either. “I call it the masochistic approach to real estate,” Johnson jokes. “The more complicated and difficult the project is, the better we do.”
Case in point: Hines' largest project currently under development is not in the U.S. The firm has partnered with two French companies to build the 8.75 million sq. ft., mixed-use Renault Project in central Paris over the next nine years. The site, just southwest of the city's center, will incorporate offices, residential complexes, retail facilities and museums. Groundbreaking on the $300 million project is scheduled for fall 2003.
Along with international expansion, Hines also increased its third-party development business beginning in the mid-1990s. Currently, the firm's largest third-party development in the U.S. is the $500 million redevelopment of the 5.5 million sq. ft. Renaissance Center, the world headquarters for General Motors, in Detroit. In addition, Hines recently completed the headquarters building for Morgan Stanley in midtown Manhattan, and worked with Lehman Brothers to renovate the new building when Lehman bought it from Morgan Stanley.
Third-party development has proved to be a sizeable portion of Hines' portfolio. While the company has taken on several high-profile third-party projects, including the Renaissance Center, it significantly curtailed new development over the past year.
In 1999, Hines started the development of 7 million sq. ft. of space, compared with 1.7 million sq. ft. in 2001. The drop in third-party development was slightly less dramatic. Hines started 6.1 million sq. ft. of third-party development in 1999, and 2 million sq. ft. in 2001.
Hines also has learned a few lessons on cutting its losses over the past year. “Clearly, Sept. 11 confirmed that we went into recession in the United States,” says Johnson. “One of the things we've learned is if we are about to start a development but don't have a tremendous amount of money in it, we will cancel it and go ahead and take our loss. And we cancelled several developments after Sept. 11,” including properties in San Francisco, Denver and Washington, D.C.
As 2002 unfolds, Hines is taking a wait-and-see approach to the economy and the accompanying development decisions. “We're just being very careful in the United States right now,” Johnson says. “To me, it's a very confusing market.”
Top 25 Office Developers
The Top 25 Office Developers survey is based on totals provided by participating companies. Developers were asked to record their volume of activity for the calendar year, and were ranked accordingly. Results include completed development and newas of Dec. 31, 2001, and are given in square feet.
2800 Post Oak Blvd., Houston, TX 77056-6118
Phone: (713) 621-8000
Fax: (713) 966-2053
Web site: www.hines.com
Officers: Jeffrey C. Hines, President; Gerald D. Hines, Chairman; Hastings Johnson, Exec. VP/CFO
Total Office Space Developed or Under Construction: 33.6 million sq. ft.
Transwestern Commercial Services
150 N. Wacker Dr., Suite 800, , IL 60606
Phone: (312) 499-1900
Fax: (312) 499-1904
Web site: www.transwestern.net
Officers: Robert D. Duncan, Chairman; Steven D. Bandolik, President/CEO
Total Office Space Developed or Under Construction: 25.2 million sq. ft.
10350 Bren Rd. W., Minnetonka, MN 55343
Phone: (952) 656-4444
Fax: (952) 656-4750
Web site: www.opuscorp.com
Officers: Gerald Rauenhorst, Founding Chairman; Keith Bednarowski, Chairman; Mark Rauenhorst, President/CEO
Total Office Space Developed or Under Construction: 11 million sq. ft.
Lincoln Property Co.
500 N. Akard, Suite 3300, Dallas, TX 75201
Phone: (214) 740-3300
Fax: (214) 740-3441
Web site: www.lincolnproperty.com
Officers: Mack Pogue, Chairman; Tim Byrne, President/CEO, Residential Division; Bill Duvall, President/CEO, Commercial Division
Total Office Space Developed or Under Construction: 6.3 million sq. ft.
Carter & Associates/ONCOR International
1275 Peachtree St. N.E., Atlanta, GA 30309
Phone: (404) 888-3000
Fax: (404) 888-3006
Web site: www.carterusa.com
Officers: Billy Mitchell, Chairman/CEO; Tom Senkbeil, President/COO
Total Office Space Developed or Under Construction: 4.1 million sq. ft.
The Alter Group
5500 W. Howard St., Skokie, IL 60077
Phone: (800) 637-4842
Fax: (847) 676-4325
Web site: www.altergroup.com
Officers: Michael J. Alter, President; Richard Ciatto, Exec. VP, Sales; Randolph Thomas, Exec. VP, Development
Total Office Space Developed or Under Construction: 4.0 million sq. ft.
Duke Realty Corp.
600 E. 96th St., Suite 100 Indianapolis, IN 46240
Phone: (317) 808-6000
Fax: (317) 808-6786
Web site: www.dukerealty.com
Officers: Thomas Hefner, Chairman/CEO; Gary Burk, Co-COO; Denny Oklak, Co-COO
Total Office Space Developed or Under Construction: 3.9 million sq. ft.
Higgins Development Partners
101 E. Erie, Suite 800, Chicago, IL 60611
Phone: (312) 943-4999
Fax: (312) 943-9768
Web site: www.higginsdevelopment.com
Officers: John W. Higgins, Chairman/CEO; Jerry Pientka, President; Tom Samuels, Exec. VP
Total Office Space Developed or Under Construction: 3.2 million sq. ft.
Trammell Crow Co.
2001 Ross Ave., Suite 3400, Dallas, TX 75201
Phone: (214) 863-3000
Fax: (214) 863-3138
Web site: www.trammellcrow.com
Officers: Robert E. Sulentic, Chairman/CEO; H. Pryor Blackwell, President, Development and Investment Group; William F. Concannon, President, Global Services Group
Total Office Space Developed or Under Construction: 3 million sq. ft.
Equity Office Properties Trust
Two N. Riverside Plaza, Suite 2100 Chicago, IL 60606
Phone: (312) 466-3300
Fax: (312) 454-0332
Web site: www.equityoffice.com
Officers: Sam Zell, Chairman/President/CEO; Richard Kincaid, COO; David Helfand, CIO
Total Office Space Developed or Under Construction: 2.4 million sq. ft.
U.S. Equities Realty
20 N. Michigan Ave. Chicago, IL 60602
Phone: (312) 456-7000
Web site: www.usequities.com
Officers: Robert A. Wislow, Chairman/CEO; Camille P. Julmy, Vice Chairman; Nancy A. Pacher, President/COO
Total Office Space Developed or Under Construction: 2.3 million sq. ft.
CarrAmerica Realty Corp.
1850 K St., N.W., Suite 500 Washington, D.C. 20006
Phone: (202) 729-1700
Fax: (202) 729-1150
Web site: www.carramerica.com
Officers: Thomas A. Carr, CEO; Philip L. Hawkins, President/COO; Stephen E. Riffee, CFO
Total Office Space Developed Or Under Construction: 2.202 million sq. ft.
The Gale Co.
200 Campus Dr., Suite 200 Florham Park, NJ 07932
Phone: (973) 301-9500
Fax: (973) 301-9501
Web site: www.thegalecompany.com
Officers: Stan Gale, Chairman/CEO; Mark Yeager, President; Kathy Wielkopolski, CFO/COO
Total Office Space Developed or Under Construction: 2.2 million sq. ft.
Taconic Investment Partners LLC
111 Eighth Avenue, New York, NY 10011
Phone: (212) 220-9945
Fax: (212) 220-9949
Web site: www.111eighthavenue.com
Officers: Paul E. Pariser, Principal; Charles R. Bendit, Principal; Andrew J. Nick, Principal
Total Office Space Developed or Under Construction: 2 million sq. ft.
WP Commercial LLC
26 Main St., Chatham, NJ 07928
Phone: (973) 701-2200
Fax: (973) 701-1115
Web site: www.wpcommercial.com
Officers: Richard Previdi, President/CEO; Mark Schaevitz, COO; Steve Jennings, Director of Leasing
Total Office Space Developed or Under Construction: 2 million sq. ft.
Orix Real Estate Equities Inc.
100 N. Riverside Plaza, Suite 1400 Chicago, IL 60606
Phone: (312) 669-6400
Fax: (312) 669-6464
Web site: www.orixre.com
Officers: James H. Purinton, President/CEO; Michael McCullough, Sr. Exec. VP, Dev. & Const.; Jeffrey Plack, Exec. VP/Chief Administrative Officer
Total Office Space Developed or Under Construction: 1.9 million sq. ft.
300 S.E. Second St., Ft. Lauderdale, FL 33301
Phone: (954) 627-9377
Fax: (954) 627-9305
Web site: www.stiles.com
Officers: Terry Stiles, CEO/Chairman; Doug Eagon, President, Stiles Corp.; Tom Kates, President, Stiles Realty Co.
Total Office Space Developed or Under Construction: 1.8 million sq. ft.
Mack-Cali Realty Corp.
11 Commerce Dr., Cranford, NJ 07016
Phone: (908) 272-8000
Fax: (908) 272-6755
Web site: www.mack-cali.com
Officers: Mitchell E. Hersh, CEO; Timothy M. Jones, President; Barry Lefkowitz, Exec. VP/CFO
Total Office Space Developed or Under Construction: 1.61 million sq. ft.
Koll Development Co.
8411 Preston Road, Dallas, TX 75225
Phone: (214) 696-1700
Fax: (214) 373-3108
Web site: www.kolldevco.com
Officers: Steven VanAmburgh, CEO; Tobin Grove, Exec. VP; Murray Newton, Exec.VP
Total Office Space Developed Or Under Construction: 1.6 million sq. ft.
Liberty Property Trust
65 Valley Stream Pkwy., Malvern, PA 19355
Phone: (610) 648-1700
Fax: (610) 644-4129
Web site: www.libertyproperty.com
Officers: Willard G. Rouse III, Chairman/CEO; William P. Hankowsky, President/CIO; Robert E. Fenza, Exec. VP/COO
Total Office Space Developed or Under Construction: 1.5 million sq. ft.
335 Madison Ave., 7th Floor New York, NY 10017
Phone: (212) 883-2500
Fax: (212) 883-2700
Web site: www.clarionp.com
Officers: Stephen Furnary, Managing Director/Chairman; Frank Sullivan, Managing Director; Charles Gressman, Managing Director
Total Office Space Developed or Under Construction: 1.47 million sq. ft.
Patrinely Group LLC
1980 Post Oak Blvd., Suite 1600 Houston, TX 77056
Phone: (713) 840-2700
Fax: (713) 840-2705
Web site: www.patrinelygroup.com
Officers: C. Dean Patrinely, Managing Principal; Leonard J. O'Donnell, Principal; Michael E. Nicholls, Principal
Total Office Space Developed or Under Construction: 1.45 million sq. ft.
9550 W. Higgins Rd., Suite 200 Rosemont, IL 60018
Phone: (847) 292-4300
Fax: (847) 292-4313
Web site: www.mcshane.com
Officers: Hunter Barrier, President; Robert G. Byron, CIO; James E. McGill, Exec. VP
Total Office Space Developed or Under Construction: 1.42 million sq. ft.
Forest City Enterprises Inc.
1100 Terminal Tower, Cleveland, OH 44113
Phone: (216) 621-6060
Fax: (216) 263-6208
Web site: www.FCEINC.com
Officers: Albert Ratner, Co-Chairman; Samuel H. Miller, Co-Chairman/Treasurer; Charles A. Ratner, President/CEO
Total Office Space Developed Or Under Construction: 1.4 million sq. ft.
Brookfield Properties Limited
BCE Place, Bay Wellington Tower, 181 Bay St., Suite 4300 Toronto, Canada M5J 2T3
Phone: (416) 369-2300
Fax: (416) 369-2301
Web site: www.brookfieldproperties.com
Officers: David Arthur, President/CEO; Philip Mostowich, Sr. VP, Eastern Office; Thomas Farley, Sr. VP, Western Office
Total Office Space Developed or Under Construction: 1.33 million sq. ft.