Lauth

You may not have heard of Lauth Property Group — the company might be one of the best-kept secrets in the commercial real estate industry, but that will likely change soon. Lauth is active in several regions of the country, from Colorado to Florida. The vertically integrated, full-service real estate company is working on projects ranging from high-tech office space and industrial facilities to lifestyle centers and healthcare facilities. The privately-held, Indianapolis-based company is expanding with a national business platform in mind.

Gurnick

Heartland Real Estate Business recently visited with executives from Lauth Property Group at the company’s Indianapolis headquarters to see exactly what is going on behind its doors. While there, we met with Bob Lauth, chairman and CEO; Greg Gurnik, president; Mike Curless, executive vice president; Eric Mallory, senior vice president, retail; Todd Jensen, senior vice president, healthcare; Mike Orr, vice president, development, Denver; Tommy Catone, vice president, corporate services, Charlotte, North

Carolina; and Tom McKittrick, senior vice president, development, Charlotte. The firm is owned by Lauth, Gurnik, Curless and the firm’s CFO, Larry Palmer.

Curless

In 1977, Lauth Property Group started as a retail developer. The company quickly developed into an office developer and became active in the property management business. Soon after, the company then began developing industrial and healthcare property types.

“This company is 27 years old,” Bob Lauth says, “and we like to think that we are just getting started.”

Lauth, like most developers, is an opportunity player. Since it is involved in multiple property types, it goes where the action is. Some years, the company may have more retail in its pipeline than office, or more healthcare than industrial. Currently, the company is very active in industrial, retail and healthcare. In 2003, retail was Number 1, industrial was second, healthcare was third and office was fourth in terms of revenue for the company.

Mallory

Lauth entered the construction business in the 1980s and, today, a large part of the company’s technical personnel is dedicated to its in-house construction group.

“It is a major undertaking in terms of overhead and investment in people and technology to be fully integrated in the construction business,” Curless says. “We feel that it provides us with such a unique advantage on a local and national basis that it is worth all the effort we have put into it over the last 16 years. We entered the construction business largely because we weren’t satisfied with the lack of customer control when you hire third-party contractors. Being vertically integrated enables us to maintain our customer relationships from idea to move-in and beyond.”

Jensen

Bob Lauth credits the construction division as being one of the reasons that the company does such a large amount of repeat business.

In 1990, the company branched out from Indianapolis and developed its first out-of-state property in Orlando, Florida, where the company built a 100,000-square-foot distribution center for a client. “That was the beginning, in a lot of ways for us, for a lot of new growth,” Lauth says.

Lauth Property Group has gone on to become a national player; it has done projects in more than 30 states. Its construction company is a licensed contractor in 49 states. It now has regional offices in Charlotte, Denver and Salt Lake City. The company plans to open other regional offices in the next couple of years. Florida and New Jersey are on the short list for consideration.

Orr

“Our growth aspirations went way beyond what we could do just in Indianapolis,” Gurnik says. “Our expansion to other regions was a function of realizing growth possibilities and gaining geographic diversity.”

Another differentiation of Lauth is the company’s perpetual investment in technology. Nearly every person in the company carries a wireless PDA device, keeping them constantly in tune with what is going on. The company also uses several proprietary software programs. One, called ProjectLink, is web-based and enables clients access to their projects 24 hours per day. The company places a web camera at each site to allow constant monitoring through ProjectLink. The system allows a client in Florida to see real-time photographs of the progress at his project in Kansas City, for example. Updated project schedules, meeting notes, budgets and other reports are also posted on the system. Another innovation is called ProjectView, a desk-mounted screen that is plugged into a telephone line and provides real-time photography of a project.

McKittrick (left) and Catone

“The system is particularly effective for us when we are not physically located in a market where the building is under construction,” says Curless, who runs the office and industrial divisions of the company. “Our customers can see the building being completed from start to finish without ever leaving their offices.”

One of Lauth’s biggest current undertakings is INTECH Park, a 210-acre development that, when complete, will be the largest office park in Indiana. Located in Indianapolis, the project will have 2.5 million square feet of Class A office space. Current clients include Eli Lilly and Company, Parker-Hannifin, Alcoa CSI Inc., Borg Warner and Tribune Broadcasting. The complex has dual looped power feeds, fiber optics, a Wi-Fi network throughout the park and an uninterrupted Internet connection. The objective is that INTECH Park will never be without power, phone or Internet connectivity.

INTECH 12 is a 140,000-square-foot office building, occupied by Eli Lilly and Company, located at INTECH Park in Indianapolis.

One of Lauth’s biggest forays into the retail arena is Clay Terrace, a 570,000-square-foot lifestyle center in Carmel, Indiana, that it is co-developing with Simon Property Group. The company broke ground on the center last June. Retailers who have signed leases include Dick’s Sporting Goods, Circuit City and DSW. The company has agreements with Pier 1 Imports and Organized Living.

The center also contains about 70,000 square feet of office space, which has received a lot of attention from doctor’s offices, support services and other convenience office users.

Clay Terrace, a 570,000-square-foot lifestyle center that is a joint venture between Lauth and Simon Property Group, is under development in Carmel, Indiana.

The company also recently developed Indian Creek Commons, a retail center on the east side of Indianapolis. The center contained 70,000 square feet of small shop space that is adjacent to a Wal-Mart Supercenter. Lauth is currently working on several other sizable retail developments across the country.

“The retail segment of our business is growing rapidly,” says Eric Mallory, who joined the company last year from Developers Diversified. “It should continue to be one of the largest segments of business for this company.”

Lauth’s vertical integration helps it land opportunities for retail development. Because it controls the construction of its projects, it can control the timeline and the opening of a building or center.

“We are focused on the schedule during development and, to most retailers, getting in on time is everything,” Mallory says.

Lauth developed a 33,000-square-foot ambulatory surgical center for Medical Consultants in Muncie, Indiana.

Lauth is also making new inroads in the healthcare segment, an area that is highly fragmented in the development community. Lauth’s healthcare division is headed up by Todd Jensen, whose goal is to mold Lauth into one of the leading design/build developers of healthcare facilities in the country. Jensen was previously a partner with the Hammes Company, a nationally known healthcare developer. Lauth has developed medical office buildings, outpatient services buildings, ambulatory surgery centers, specialty hospitals, oncology centers, and medical fitness and wellness centers. Ultimately, hospital construction is another goal for the company. Since a number of the larger hospitals in the country are more than 50 years old, there is a demand to replace or renovate older hospitals around the country. Lauth sees a growing market in medical office due to physicians wanting to own their own real estate as an alternative to other investments.

“A lot of physicians are partnering with developers who allow them to own a substantial portion of the building, but utilize the developer’s expertise and financing capabilities,” Jensen says.

Lauth developed a 45,000-square-foot orthopedic surgery and treatment center for Central Indiana Orthopedics in Anderson, Indiana.

Lauth has been very active in the healthcare segment in the greater Indianapolis area. It is constructing a bariatric surgery center at INTECH Park and has recently built an orthopedic surgery center for Central Indiana Orthopedics in nearby Anderson, Indiana. The regional offices are also searching for healthcare opportunities, the development of which will be supported by the healthcare staff in Indianapolis.

“We have a unique organization that has attracted very talented individuals,” Gurnik says.

“It is all about people,” adds Bob Lauth. “If you can attract and retain the top caliber of people in the right markets, you will have a superior company. That’s what has driven us for 27 years.”

©2004 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.