When Richard Alter gets stressed out, he reaches for junk food.
Lately, the chief executive of Manekin Corp. has been reaching more and more for the three-pound bag of M&Ms; he keeps in one of his file cabinets and the oversized box of Utz pretzels in another. In fact, he's gained 10 pounds since January.
"The industry is facing conditions worse than anything since the Great Depression and Richard is munching his way through," says Robert Manekin, a senior vice president for the essentially family-owned business.
Manekin's CEO undoubtedly will be doing more munching before the commercial real estate industry reaches recovery.
With more than 50 buildings and 4.5 million square feet of space, Manekin is vulnerable to problems facing the entire real estate industry: declining demand for office space, slow payment by tenants and increased competition amid a sea of excess space.
Manekin's revenues have fallen 5 percent a year for the last two years and the value of its assets has also slipped, says Louis LaPenna, Manekin's chief financial officer.
"Three years ago, real estate was everyone's darling," Mr. Alter says. "They said it was recession-proof, a hedge against inflation and viewed favorably by the credit markets. Today it is 180 degrees opposite. It is viewed basically as a non-growth, non-promising industry."
To cope with the growing glut of office space, Manekin has made leasing deals that would have seemed unimaginable just a few years ago. For example, it recently signed a five-year lease with an important tenant, Don Richard Associates of Baltimore Inc., an employment agency, that involves free rent in the Bank of Baltimore Building for the first two years. Like others in the market, Manekin is also making concessions to tenants that include free building improvements or payments for the tenant's moving expenses.
"Anyone who has vacant space on the market is being confronted with offering substantial concessions," says Robert Manekin, who heads general business development for Manekin and is the son of Chairman Bernard Manekin.
Despite the problems, industry executives see Manekin as a survivor in the shakeout that has already caused a number of casualties in the region's commercial realty field.
To cope, Manekin has slashed costs. It has cut 10 percent of its staff of just over 100 and has reduced executive salaries by 30 percent over two years. It has also withdrawn from high-risk ventures, such as speculative development, and maneuvered back into old lines of business or found its way into new fields.
As many real estate companies go from bank to bank searching for financing, Manekin has partially shielded itself through its decade-long alliance with a Boston-based joint venture partner, Copley Real Estate Advisors.
"Copley is the horse that's brought us here. It's been with us in good deals and in bad," says Donald Manekin, the son of Vice Chairman Harold Manekin, and a partner at the company's Columbia office.
Luckily for Manekin, Copley -- the pension fund investment arm of New England Mutual Insurance Co. -- has deep pockets and a willingness to back Manekin on development projects that still make financial sense. For instance, Manekin recently obtained more than $6 million in financing from Copley to build a new U.S. headquarters for the French industrial company, Telemecanique, in Owings Mills.
"Manekin's greatest strength is having a financial partner who will commit, on short notice, to a build-to-suit project or almost anything else they want to finance," says Walter "Wally" Pinkard, head of W. C. Pinkard & Co., another large Baltimore-based real estate firm.
Leslie Legum, chairman of The Circle Companies and a key player in Baltimore-Washington corridor real estate for more than two decades, says Manekin's financial backing sets it apart from others in the field.
"The trouble with other developers is that the banks are calling them, trying to change their loans, and demanding additional cash. And some of them are going bust because of that," he says.
A pioneer in the redevelopment of downtown Baltimore, Manekin's arms have stretched far into the suburbs. With six offices, Manekin has established a reputation as an entrepreneurial developer of office and research and development space from Owings Mills to Loudon County, Va. It also operates an active brokerage business, leasing space built on its own or by other developers.
These days Manekin is returning to one of its old business lines: managing properties developed and owned by other firms.
This summer, Copley turned over to Manekin's management a million square feet of office space in Northern Virginia, as well as 300 undeveloped acres of land in the area. The pension fund adviser had been dissatisfied with the way the properties' developer, Lee Sammis, another joint venture partner of Copley, had been handling the Virginia developments.
Manekin also has acquired a contract from Cigna Insurance Co. to manage 250,000 square feet of Northern Virginia space that Cigna took back from the developer.
Another new line of business: working as a consultant to banks and other financing institutions that have taken control of depressed commercial real estate through foreclosure.
Fully 10 percent of metropolitan Baltimore's office space is now under the control of banks, according to a study released earlier this month by W. C. Pinkard & Co. Financial institutions often need help handling such properties, and they have come to Manekin for advice on everything from the marketing to the sale of excess space. To get such contracts, Manekin plays off its 45-year-old reputation for keeping tenants happy.
But such "third-party services," as they're known in the trade, are less lucrative than most development activities, says Robert Manekin. "The industry has traditionally paid more to develop assets than manage assets."
Unlike many family businesses, Manekin has handled the question of succession adeptly with Mr. Alter's appointment as chief executive.
Mr. Alter joined the firm fresh out of the University of Maryland law school. He was once married to Sandye Manekin, daughter of the vice chairman, Harold Manekin. And even though the couple later divorced, Mr. Alter was named CEO two years ago without a flap.
"At the time, it was viewed as an obvious decision. We had really become more and more of a development company in the late 1980s, and Richard was and is the best development talent in the firm," Robert Manekin says.
NB Manekin's development activities may have diminished recently,
but Mr. Alter's imaginative, informal approach to the business still fits squarely with the corporate culture.
Consensual decision-making, employee "nurturing" and a team approach to its trademarked concept of "Total Tenant Satisfaction" are elements of the Manekin philosophy. Not only does Manekin promise to change light bulbs quickly and make sure snow is shoveled from parking lots promptly. Its property managers also organize ice cream socials for tenants and sign them up for volleyball leagues.
"We're fanatical about customer satisfaction," Donald Manekin says. Happy tenants, he observes, are often tenants who want to expand their businesses with the same landlord.
Says Robert Manekin: "You can look at financial statements. You can look at bricks and mortar. You can look at the valuation of real estate. But at the bottom line, this is a people-oriented
Manekin was started by Bernard "Bernie" Manekin, now 78, and Harold Manekin, now 75, after the brothers returned from Army service in World War II. Manekin's first office was a modest row house on the corner of Biddle and Charles streets, north of downtown Baltimore.
"We did everything to make a buck," recalls Harold Manekin. That included management of a cemetery on Rogers Avenue and the conversion of single-family row houses to apartments on Madison Avenue in Northwest Baltimore. It also included renting apartments for other landlords.
By 1948, the brothers had become disenchanted with the limits of residential real estate and became involved in converting single-tenant factories to multi-tenant spaces throughout Baltimore. These lofts came to house small manufacturing and distribution firms that produced such things as neckties, pajamas and umbrellas.
By the late 1950s, Manekin began focusing on the leasing and management of downtown Baltimore. In 1971, it developed The Rotunda, a popular office and retail center created out of the old Maryland Casualty Co. headquarters building. Also in the early 1970s, Manekin began focusing on development in Columbia, where it has become a leading developer of office and R&D; space in the planned town -- having constructed 2.5 million square feet there.
Manekin pioneered the concept of "incubator space" in Columbia -- flexible facilities that allow companies to add square footage as they grow. The developer has played a major role in such Columbia office parks as Oakland Ridge, Patuxent Woods, Rivers Corporate Park and, most recently, Gateway Industrial Park.
From Howard County, Manekin went to Frederick. It developed a high profile there through its 270 Technology Park, developing office buildings for the Prudential and Lincoln National insurance companies. Once established in Frederick, Manekin also began office developments in Montgomery County, especially along the Interstate 270 corridor, and in Anne Arundel County near Baltimore-Washington International Airport. Recently, it made a foray into Prince George's county as well.
In 1989, Manekin was asked to become the first speculative developer at the Owings Mills Corporate Campus, a 200-acre park on McDonogh School property in Baltimore County. It has already completed three buildings there and is close to finalizing negotiations for a fourth, a build-to-suit office facility.
Manekin has long been active in downtown Baltimore -- starting as broker-manager of one of the first downtown renewal projects, 1 Charles Center, in the late 1960s. Later it developed the Mercantile-Safe Deposit & Trust Co. building, Charles Center South, and 1 Center Plaza.
Two years ago, Manekin completed its most formidable challenge, the $53 million Bank of Baltimore Building, a soaring gray and mauve granite tower at Baltimore and Calvert streets. The building, now 98 percent leased, is where Manekin maintains its headquarters.
Along with its string of successes, however, Manekin has had setbacks.
A foray into Northern Virginia development -- led by a $13 million, four-building project in Leesburg completed in 1990 -- has been put on hold, even though Manekin retains 14 acres of land there. Manekin executives say they tabled the project when they realized how much excess space had been developed in Northern Virginia.
Manekin also made a failed bid to be project manager for the Christopher Columbus Center for Marine Research and Exploration, a marine biotechnology complex rising near the Inner Harbor. The $164 million job was awarded by the city to Columbia-based Rouse, the other finalist in the competition.
Bad as the real estate market is today, Manekin executives believe the glut in office space will only get worse, especially in Baltimore, as projects in the pipeline are completed, bringing more office space onto the market in 1992. Two new office towers -- the IBM Building expansion and Commerce Place -- will add 350,000 square feet to an already crowded market.
"In 1992, the tidal wave of office space in Baltimore will hit," Robert Manekin predicts. "You can hear it in the distance. But it's only when it crashes that you'll appreciate the destruction it will bring."
So, Manekin will concentrate on leasing, property management -- and some limited development. As Mr. Alter says, "This is not a time to be dreaming."