Expanding interests - with a local focus

THE BALTIMORE SUN

One of the first things entrepreneurs are taught is that if their businesses are not growing, they are falling behind.

The second thing is that growth must be carefully managed.

These are more than adages. They are closer to biblical commandments, because the corporate graveyard is filled with skeletons of firms that failed to heed the advice.

Few companies have executed both strategies with greater focus or efficiency than Manekin LLC, the Columbia-based real estate conglomerate.

It is neither the company it was nor is it the company it will be. Still, its top custodians are almost fanatical about not permitting Manekin to become something it is not.

"They understand their niche in the overall real estate development community, and they work their market very well," says Richard W. Story, chief executive officer of the Howard County Department of Economic Development. "They won't overextend."

The reward for this assiduousness is six decades of continuous service, sustained growth, 165 employees, 150 buildings encompassing more than 12 million square feet, $125 million annually in revenue and a portfolio of businesses that span the real estate spectrum. And it has made the company's partners wealthy.

It is an extraordinary track record for a firm founded by two brothers six decades ago this year in a basement office, not as a diversified real estate company but as a modest brokerage operation, and in an industry in which cyclical pressures and unpredictability have proven devastating for so many others.

"A relatively low number of privately held businesses survive one generation to the next -- it's well less than half," says R. Colfax Schnorf Jr., senior vice president and director of development for Manekin. "We've survived the switch in generations and the whole ownership groups. I think that's remarkable."

Manekin's history can be broken into pre- and post-Richard M. Alter.

He has been with the company 35 years, the past 16 as president and chief executive officer, shepherding Manekin through much of its growth as well as through tumultuous periods.

Before Alter, though, there was a quite successful Manekin.

The company was founded in 1946 as a real estate brokerage by brothers Bernard and Harold Manekin. It was small and focused on brokering commercial office space.

It gained its reputation, though, by playing a pivotal role, first, in the redevelopment of Baltimore and, later, in the critically important transformation of Columbia from a distribution center to a high-scale employment hub.

"From the 33-acre Charles Center that was the genesis of Baltimore's renaissance in the early 1960s to the Lord Baltimore Hotel to Oriole Park at Camden Yards, the Manekins ... either developed, owned or influenced virtually every significant downtown building project of the past 50 years," Sun reporter Kevin L. McQuaid declared in a 1996 article.

The company remained strictly Baltimore until the early 1960s, when it acquired property in Anne Arundel County and helped develop Parkway Center, a 220-acre industrial park for General Motors Corp.

It was still basically a family affair and brokering office space remained the company's core business. But the Manekins made possibly their most important hire when they brought on Alter in 1971.

Alter was a fresh graduate of the University of Maryland School of Law, having returned to school after his Air Force Reserve unit was activated and sent to Vietnam after the USS Pueblo, an intelligence ship, was attacked and captured by the North Koreans in 1968.

"I came here more because I knew I didn't want to be a lawyer," he says. "Once I got here, I enjoyed what I was doing. I've been enjoying it for 35 years now."

Alter was hired as a broker, but it was not long before he moved the company in new directions by doing Manekin's first project in Columbia.

It was a small deal -- a 38,000-square-foot miniwarehouse in 1974 -- but it proved important to the company and the fledging new town being created by Rouse Co., particularly its commercial component for what now is a sprawling office park, Columbia Gateway.

"I saw the business opportunity to grow with Columbia," he recalls. "Instead of living just off of brokerage, we'd have some development opportunities. To diversify, basically."

Since that initial project, the company has built dozens of office buildings in Columbia. For several years, it seemed that all commercial projects in Columbia carried the Manekin name.

Story says that Manekin's belief in Columbia Gateway was essential to the success of the office park.

"They were the first developers here," he says. "The tone they set was: This is not another distribution center. They set the tone for this to be an office environment and the market followed them."

Alter was promoted to partner in the early 1980s and named president and chief executive officer of the company in 1989. He has continued to expand Manekin's services and its geographical boundaries.

The company moved its main offices to Columbia in the late 1980s, and in April it broke ground for a new headquarters -- a $9.4 million, 52,000-square-foot facility in Columbia Gateway.

Today, the company provides a full array of services, from leasing office space to construction to managing projects for others. It recently ventured into the residential sector.

But Alter also guided the company through two profound periods. The first was the recession of the early 1990s. It was devastating for the real estate market, and many companies did not survive.

"It was a cataclysmic depression of almost 1920s proportion for the real estate industry," Alter is quoted in a history of the company. It was "life-threatening" for Manekin, he says, because the company had grown "fat and happy" and had strayed from its "service roots." Manekin was forced to reduce staffing -- the only layoffs in the company's history -- but struggled through.

The second period came in 1997 when Alter and the other partners bought out the Manekins. To finance the deal, they sold half of the company's service unit to San Francisco-based AMB Properties Corp. in a transaction estimated at $150 million.

The partners later acquired the 50 percent stake they sold to AMB, although it continues to manage properties for the California firm.

Unlike many companies that change their names after a buyout, Alter says that would have been imprudent. "The Manekin is a good name in the community," he says. "We never really considered changing the name. It was unnecessary -- the name is a good one."

A key to the company's success has been its willingness to expand into markets -- like Columbia -- before the competition. It has done so in Frederick and along the Interstate 270 corridor, in Loudoun County, Va., and more recently in Harford and Cecil counties.

"We have ended up congregating our activities in a number of areas," says Alter. "We have gone into areas early in their development cycle. ... All these places basically had a lot of population and a lot of employees, but not much commercial [office] space, so we saw the opportunities to bring jobs to them. It's worked pretty well."

But Manekin is also content with being a premier regional real estate company, and it would require extraordinary circumstances for the company to push its boundaries too far.

"We're a big fish in a small pond," says Alter. "We are Baltimore, not Washington. We're Columbia, not Reston. We're Frederick, not Tyson's Corner."

There are no immediate threats to sustaining the company's growth, he says. "Conditions have been relatively good," Alter says. "Job growth obviously drives our office development game. ... We're seeing that companies are growing, and the defense industry here is having the beginnings of what we hope will be a continuing growth pattern."

The bulk of that growth, though, may not be in development, says Schnorf.

"The opportunities continue to be maybe less on the development side and more on the service-provider side," he says. "If you look at our income over the last three or four years, there's probably been greater growth on the service side."

The service components include managing properties for others and seeking cost reductions in areas such as maintenance, repair of buildings and custodial functions.

There are challenges, though, that require vigilance. "We've seen dramatic increases in the costs of construction and the costs of land in the last year or two," says Schnorf. And recent actions by the Federal Reserve Board are driving up the cost of borrowing.

Alter also says, "The money market has been supercharged." The company recently bid $5 million for a piece of property, only to see it sold for three times that.

"We're never that far off," he says. "There's been some dumb money in the market place. I think there will be some corrections."

And Manekin executives are always mindful that they are in a business that is cyclical.

"We've enjoyed a relatively good cycle," says Schnorf, "so we worry about the cycle declining."

But Manekin will not remain static, Alter says. The company expects its relatively new residential component to grow and although there are no plans to enter other fields, the company is considering some, such as providing janitorial and landscaping services to clients.

"Mortgage banking would be more of a possibility," Alter says. "We're paying someone else to perform for us that we could potentially do ourselves and for others."

One thing that is not likely to change is the company's philanthropy. It began with the Manekin family and is engrained in the company.

Manekin contributes to numerous charities and frees its executives to serve with civic organizations.

Every year, for instance, the company sponsors a Christmas party, but, Story says, it is "not a celebration of the company's success, but of the organizations that have been successful through their support."

Manekin, he says, is "an absolutely good corporate citizen in every way. They are in business to be successful, but they are the quintessential good citizen in that they give back to the community."

That has been possible only because Manekin has prospered over so many years.

Alter is proud of the company's record.

"Surviving all the cycles in our business and all the evolutions in our industry as well as the change in ownership," says Alter, "says a lot about a company that can endure all those changes and still be thriving."

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