Second Act

Second Act

By Sean Roth

Real Estate Editor

With the $110-million Atrium on Ringling in Sarasota, developer Leonard Garner, 75, has entered the second act of his business life. The project is the most expensive in his career.

On the site of the former Dickinson & Gibbons law firm office at 1750 Ringling Blvd., Sarasota, Garner is developing a 17-story building with 88 condominium units, 40,000 square feet of office, 4,500 square feet of ground-floor retail and 365 parking spaces. The condo tower element is octagonal, and the center of the development will feature a 3,000-square-foot open-air courtyard - "the hole in the donut," Garner says.

It's a true mixed-use building," Garner says. "The residential component is an oval, which means when you get off the elevator the longest walk you have is 40 feet either way around."

The typical Atrium condominium will have suites starting at 2,400 square feet, designed to capture the customers relocating from single-family homes. "These people may want to give up some of the maintenance of a larger home," Garner says, "but what we are attempting to do is give them the same feel and level of amenities as a luxury home."

Although Garner chose not to have a reservation period, Prudential Palms Realty agent Cheryl Loeffler, who is marketing the residential portion of the project, has a waiting list with 55 names. John Harshman, president of Harshman & Co., is selling the commercial space. Garner expects to start writing contracts later this December.

Among his other current holdings, Garner owns two commercial lots in Ellenton near the Prime Outlets; a 191-lot residential subdivision in Venice; a 15-acre commercial tract off Tallevast Road in Bradenton; and a 250-acre parcel in DeSoto County.

Garner approaches real estate from what he describes as more of a northern development philosophy. "In New Jersey, everybody does everything in-house," he says. "Down here everything is segmented. There's a dairy farmer that sells to a developer, who brings in an architect, a planner, an attorney and a general contractor. Everybody gets a piece."

In contrast, Garner is his own planner and has taken all 15 of his past land rezones through the process. With his construction background, he coordinates the architect and engineers because, as he says, "I understand the economic impact of their decisions."

Developer or selling coal

When Garner graduated with an economics degree from the Wharton School at Penn, the United States had just entered the Korean War, and he was drafted into the armed services.

After he got out of the U.S. Navy, he joined his father in the wholesale coal business in New Jersey - a job he didn't really want. It didn't last long.

While serving one of his routes, one of his customers, a group of aging brothers, gave Garner a deal he couldn't refuse. "They would give me the coal business if I would rent the coal yard from them."

Garner agreed and at age 23 he operated the yard for five years. Around 1960, Garner decided to expand the business into more of the plumbing, heating and air-conditioning industry.

"I had to go back to technical school to learn how to service heating and cooling systems," Garner says. "But within two to three years, we won a job to handle the plumbing and air-conditioning for a project the size of Sarasota Mall. It was only because we were the lower bidder, but we made a profit and that established our reputation. Even better, the people who owned the center gave us all their work after that."

The plumbing and HVAC company grew. At its height, Garner's Hart Mechanical Corp. was the fifth largest mechanical-contracting company in New Jersey.

Within 10 years, Garner decided to expand the firm even further.

After winning the HVAC contract on a laboratory for Revlon, Garner was able also to take on the project as general contractor. "Doing just the mechanical we had close to 200 people in the field, along with 10 to 12 field superintendents," Garner says. "We just promoted our best supervisory people not to just handle the mechanical but the general construction as well. It went well."

After that year-long project, Garner's Leonard Garner Group signed a contract with Faberge to build the cosmetics company a new research laboratory. And that led to a relationship with one of the largest owners of commercial space in the United States: Hartz Mountain Industries, which owned nearly 70 million square feet of industrial space. Garner became Hartz's exclusive mechanical contractor for eight years.

Watching all of his employers develop buildings convinced Garner that he should do it, too. He put an architect on staff and hired a licensed planner.

Garner says the majority of his education on development came from his customers and the 25 to 30 buildings a year his company constructed. He financed his developments with the cash generated from the contracting business and mortgages.

At the high point of his firm's development business, the Leonard Garner Group was receiving monthly rental income of about $700,000 a month. In today's dollars that's equivalent to about $3 million a month and that rental income was on top of any income the company derived from construction.

Then in the late 1980s, Garner's life fell to pieces. The Northeast real estate market collapsed in the wake of the 1986 tax changes and the failure of the S&L industry. Mortgage capital to support commercial investment disappeared, and the commercial market devalued over night.

If Garner wanted to refinance a 5-year-old office building fully occupied, the banks refused, Garner remembers. "In some cases, the reduced value triggered some banks to call the mortgage," he says. "The next devaluation would trigger a new wave of appraisals, which triggered more banks to call in their mortgages. It was a vicious circle."

While Garner had enough liquidity to pay off some of the mortgages, he was forced to sell most of his properties for 50 cents on the dollar.

Then, in 1989, his wife died. She had leukemia. "To be honest I couldn't have cared less where I went when I came to Florida," Garner says. "All I wanted was to be anywhere else. Some friends suggested, I come spend a week with them in Sarasota. I was happy to find that it was a nice place.

In 1990, he moved to Siesta Key.

Take two

"I promised myself that I would always work out of my house," he says. "I also said I would never hire anybody [as a staff]. I would keep the scale small - which I didn't do. The opportunities just became too great."

The Leonard Garner Group's first project in the area was the Hamilton Club on Siesta Key. Then he bought five acres in Englewood on State Road 776 and built four single-family homes. He still owns about one-and-a-half acres of commercial land there.

"It was really a hodge podge the first few years," Garner says. "He converted a level of parking in the SouthTrust building downtown to office space. He built homes, condos and warehouses.

Garner, who uses the corporate name of JRG Development Corp., continued to do some general contracting work but only with jobs that came to him and people with whom he had strong relationships. One of those was the 20,000-square-foot DeSears Appliance & Home Entertainment store in Venice.

As for the future, aside from completing the Atrium and the two Ellenton lots, Garner is focused on providing affordable workforce housing. He says he plans to develop 420 residential units in a three-story development on 17.5 acres, not specifying where.

"The development business in Sarasota is predominantly done by investors and higher-level planning consultants," Garner says. "They bring in the land-use attorneys, architects and engineers and then they package it all together. Their sole function is to provide the funding. Some don't even have a background in development. What is different is this is what I have always done for a living. This will be a service to the community, economically, beneficial to me and compatible with the neighborhood."

Garner AT A GLANCE

New Jersey Career

• 39 years in New Jersey as a plumbing, air-conditioning and ventilation system mechanical contractor for more than 1,500 building, including more than 50 hotels (more than 8,000 rooms), more than 10,000 multifamily units, 4 million square feet of office and industrial buildings, four regional shopping malls, retail and institutional facilities.

• 31 years as a general contractor building more than 200 buildings, including 35-story apartments, warehouses, hotels, office buildings, hospital surgical centers and shopping centers.

• 18 years principal of Leonard Garner Group, a development and construction company. The company developed and managed more than a million square feet of office and industrial space, more than 200,000 square feet of retail space, several thousand residential units and various other projects.

Sarasota/Manatee Career

• 15 years as a land developer built a 45-lot and a 191-lot subdivision, an 180,000-square-foot retail center, more than 100,000 square feet of warehouse buildings and a 48,000-square-foot retail center.