In the early days, Simon Konover closed his development deals on a handshake. It was more than 40 years ago when such a thing was possible and the founder of Konover & Associates Inc., was starting up his real estate company. Despite changes that have swept the real estate industry and the emergence of today's litigation-happy society, the spirit embodied in the simplicity and integrity of a handshake to seal a deal still remains at the Farmington, Conn.-based company.
Such a mind-set permeates the way the company develops property, works with communities and environmental groups, and how it views employees. "Simon's son, Michael [the company's CEO], learned how to operate the business at the knee of his father, so to speak, and the values his father had are the same ones Michael practices today," comments Michael Goman, president of Konover Development Corp., the company's development affiliate.
Those values have helped the company to ride out the cycles in the real estate business and grow into one of New England's largest commercial real estate firms.
The privately-held company is composed of several specialty areas, including finance and investment analysis; construction management, general contracting and design/build services; and acquisition, leasing, and management. Konover Development Corp.(KDC), specializes in developing suburban retail centers in New England and upstate New York. Typical Konover projects include stand-along drugstores, grocery store- or home store-anchored strip centers, and regional centers, with square footages that range from 10,000 to 500,000.
Goman describes the company as "a citizen of New England" and expects its focus to remain on New England and upstate New York. It currently leases and manages more than 70 shopping centers totaling over eight million square feet. Among its current projects are a 350,000-sq.-ft. regional center in Meriden, Conn., an 80,000-sq.-ft. community center in South Windsor, Conn., and a 350,000-sq.-ft. power center in Auburn, Me.
Courting communities Konover places a heavy emphasis on getting buy-in from residents-through community meetings-before finalizing a project. In a charrette-style approach, the community often brings up useful ideas that can be incorporated into a project. For instance, residents may point out a beloved, historic structure in the center of town, which can serve as a starting point for a design. In addition, they express ideas for improvements that could enrich community life, and outline preferences for certain kinds of stores and restaurants.
"We find that by talking to the community early we can be open and address their concerns and get on to what the community wants and will support. In almost every case they come up with great ideas," says Goman.
In a recent project, for instance, a rails-to-trails path bordered the center's site and KDC agreed to improve it to enhance the town's recreation opportunities. And at Simsbury Commons, a 259,000-sq.-ft. community center in Simsbury, Conn., KDC learned that the police department, because of its headquarters location, had trouble servicing a certain part of town in a timely fashion for emergencies. In the renovated center, KDC created a police substation that shortened the drive time for the Simsbury Police to safer levels.
In addition, the station is used by residents throughout the year for bike safety clinics, child seat installation clinics, and other safety programs. "It didn't take a lot of money, but the good will you build and the degree to which you can make your project part of the community is dramatic," says Goman. "Unless you talk to the community and build rapport, those ideas don't come up and you miss great opportunities."
The approach also mitigates the image many in the general public hold of developers as the big bad wolf, and it's good for the company's image. Goman says playing the big bad wolf developer isn't beneficial for the company's long-term goals, nor is it the way the founder of the company wanted to do business.
"Real estate is a long term business, and you can't go at it with short term thinking and be successful. Companies like ours trade on the currency of our credibility. We can spend it wisely or foolishly. It's critical to us never to have town suspect we're not being upfront.
When we finish a project and move to the next project, we suggest town officials call the people where we just finished a project. They're our best reference. Openness makes the process more satisfying for everyone and more likely that what we do will be successful."
Goman says the company's forthright style also contributes to Konover's bottom line in a subtle way-happy employees.
"The ability to work in a way that's open and straight brings a great sense of satisfaction when we finish a project. Turnover can be brutal and costly in a tight labor market, and our approach helps us reduce it. People feeling proud of what they accomplish has tremendous value. It's another reason why we can't spend our credibility unwisely. What we do wrong today will hurt us six months later," he says.
Good neighbors Another way in which Konover aims at being good developer neighbors is its partnership with the Nature Conservancy, a private conservation group that aims to preserve plants, animals and natural environments.
The Nature Conservancy's custom of forging alliances with landowners, business leaders, corporations, and governments aligns closely with KDC's approach. For instance, in one of KDC's current projects-a 400,000-sq.-ft. center in Keene, N.H.-the developer learned that the center's site contains wetlands. It's working with local officials to develop the center and preserve the integrity of the wetlands.
Goman strongly believes that development and environmental concerns can work hand-in-hand and that these unfriendly times-because of urban growth boundaries and anti-growth sentiments-for developers are unfair. "We're advocates of balanced development: We have no interest in tearing down a favorite historic building, developing on a tract next to a scenic river, or destroying ecologically important land," comments Goman. "What isn't happening enough is a discussion between community members and developers about how to develop and where development should be."
And for anti-development advocates who question the value of retail in a community, KDC presents a counter argument. Goman recalls his childhood in a small Canadian town and says it was a big deal when a new grocer or retailer opened in town because it brought progress, jobs, and taxes. It's not that different today, he argues.
"People want good schools, shopping, recreation, access to their houses of worship, and jobs for seniors, teenagers and college students, and parents who need flexible schedules."
KDC argues that for each homeowner who pays $1 in taxes, the household consumes between $1.40 and $1.60 in community services, whereas every commercial dollar paid consumes .40 to .60 cents in services.
"Every commercial dollar in taxes is a net add. You don't need to be a rocket scientist to figure out that the goal is to balance out community development with the amount of revenue needed to support growing school systems and recreational facilities. Growing communities need to add commercial tax bases," says Goman.
He further points out that most communities don't want heavy manufacturing; many towns can't support warehouses because of a lack of insufficient access to transportation; office structures in suburban areas are usually very small; and not every place can become a high-tech corridor like Silicon Valley. That leaves retail to contribute to the commercial tax base. "It fills an important niche in the economic health of a community in a fairly benign way," says Goman.
One reason for the developer's success is its approach to staffing projects. A lack of an internal bureaucracy allows the company to react quickly to a given set of challenges or opportunities. And, rather than having one person in charge from whom all expertise flows, the company takes something of an in-house assembly line process, aiming to align each person's skill set with a specific task. "The development game is such today that you have to have the best people working in each area," observes Goman. Among the specialists are:
Market research-Demographic and market researchers scout out potential new markets by using in-house technology such as databases, mapping, and global positioning systems.
Design development-In-house architects can sketch out a plan quickly for a site so that each time Konover is courting a new client it doesn't have to send out ideas to an architectural firm and wait a week for a loose design.
Site acquisition-Based on the findings of in-house market researchers, site acquisition experts scout markets, towns, and sites to determine the_best places for new projects.
Leasing-The team markets new center ideas to retailers to see if there are enough deals to make a go of a project.
Community affairs-Community affairs liaisons contact town officials to provide a preliminary idea of what's in the works and solicit feedback from city planners, community groups, and residents.