Built to own

Built to own

John Westfall's wants to expand

his strategy of building small one-story detached office buildings from Tampa to Orlando and Sarasota.

John Westfall started Waterford Homes in Tampa in 1980, building custom homes. In the early 1990s, seeing a need for new office space, he shifted to building offices.

But not just any offices.

Instead of glass and metal high-rises surrounded by a sea of asphalt, Westfall formed a strategy that he continues: building small, customized, 2,000-square-foot, one-story, detached office buildings and grouping them into stately, tree-lined, suburban-style office parks.

He renamed the company Waterford Construction & Development and set out to find healthy, growing neighborhoods where people like to do business and pioneer the professional office park concept in Tampa Bay.

The strategy worked. Westfall built 50 office parks in the Tampa Bay area, and one in Kissimmee, for a total about 500 buildings and 1 million square feet of offices. Last year was his best year ever. But this year, while dental and medical office demand remains, overall demand is off.

He scaled back staff and slowed construction. Still, unlike other developers, Waterford isn't stuck holding property.

"We don't build a building until someone buys it," says Westfall, 60. "We don't have a bunch of inventory of buildings. When the market comes back, we'll be ready."

Besides the economy, government hasn't helped. It used to take Westfall about six months to pull permits. Now, it is 12 to 18 months.

That means predicting growth. That is tough.

So Waterford's longer-term plan is looking to expand from Tampa Bay into Orlando, Sarasota and Bradenton. Until now, Westfall stayed in Tampa Bay because he knew the good neighborhoods in that market, having run a business and raised a family here. He is a 1971 graduate of the University of South Florida.

Because of the softening market, Westfall is doing more marketing, honing a Web site to build his brand and trying to convince tentative professionals that now is a good time to buy, with interest rates down.

In 1992, Waterford opened its first office park, Georgetown, on Fletcher Avenue, near Tampa's Carrollwood suburb. After that, he set out to improve on it. But the basic concept remained the same.

Its smallest park is 10,000 square feet. It has built them as large as 100,000. Westfall found that the numbers work better if the parks are at least 25,000 square feet.

In some cases, investors buy multiple $370,000 office buildings. One subcontractor bought six. Investors lease out the buildings, paying off the mortgage in 12 to 15 years. Rising construction costs have made some investments more complicated. Prices have risen from $72 a square foot in 1993 to more than $200 today.

The appeal of the Waterford strategy is that, in some cases, building owners pay less in a mortgage payment then they would in rent. Mortgages don't increase every year like rent. After 15 years, the tenant owns his own building. And he has control of the space, with his own bathroom and air conditioning.

Since Waterford builds near neighborhoods, commuting costs may be less.

"Today, you don't need to go downtown to work," Westfall says, adding the obvious: "Gas prices are going up."

The biggest lesson Westfall has learned as a CEO: Treat people well and delegate.

"Over the years, I've learned not to micromanage," he says. "Let a person do his job."

Despite the national attention to green building standards, Westfall's customers haven't been clamoring for it. "They really haven't asked about it," he says.

Westfall doesn't bid jobs out to all subcontractors, only to those he thinks are quality firms. So he is not looking for the low bidders.

"You can tell when someone accepted a low bid," Westfall says. "It's not a good product."

With 37 years of real estate experience, Westfall is confident the commercial market will improve. But the timing is uncertain.

"I wish I knew," he says. "After the election. In reality, most likely the middle of next year. There's so much uncertainly now."

- Dave Szymanski