Gates refocuses on Florida

You're going to see a lot more of Todd Gates.

The entrepreneur who built one of the region's largest construction and development firms during the boom years scored a plum assignment recently to build a $242 million children's hospital in Fort Myers in a joint venture with Swedish giant Skanska.

But during the downturn, Gates focused much of his efforts overseas. In particular, Gates developed a demonstration facility for Caterpillar in Panama, which widened its vaunted canal. “Central America never slowed down,” he says.

Gates would travel to Panama once a month, switching places with his executives so they could spend some time at home in Southwest Florida. “I like sleeping in my own bed,” he quips.

But Gates had little choice during the downturn. “Our survival was a product of diversification,” he says. “I don't think anyone predicted how bad it would get.”

Now, Gates says he's refocusing on Florida and has pared down his company to its roots in construction. During the boom, Gates had expanded into other areas such as development.

A higher profile
While much of Gates' attention was focused on Panama, including learning how to speak Spanish, the firm still won projects in Florida during the construction downturn.

In particular, Gates focused on health care and government projects around the state, building schools in the Orlando area, fire stations in Fort Lauderdale, university buildings in Naples, municipal buildings in Lee County and a large medical-distribution facility in Fort Myers. “We were able to focus our resources on where there was work,” he says. “Retail and office completely died.”

Gates doesn't share revenues for competitive reasons, but he says they rose 20% in 2012 compared with the previous year and may rise another 20% this year. “It's not going to take off like crazy,” he cautions. “It's going to be a little bit busier.”

But Gates says one of the lessons from the boom and bust is to grow in a more measured way, carefully choosing the kinds of projects, the types of clients and the selection of partners and investors. “What I learned is it's OK to say no,” he says. “I would focus on quality instead of quantity.”

Landing the Lee Memorial Health System children's hospital project was a coup. Gates partnered with the Swedish construction firm Skanska, whose president of U.S. operations owns a home in Southwest Florida.

This is Gates' first venture with Skanska, but it could be the beginning of a long-term business relationship. “We are looking for other opportunities to do large projects,” Gates says.

Certainly, the children's hospital is significant. Gates beat other noteworthy competitors for the children's hospital, including Manhattan Construction.

The combined expertise, experience and financial wherewithal of the team won the bid, says Dave Kistel, Lee Memorial's vice president of facilities and support services. Skanska has experience building hospitals around the country, and Gates recently completed a medical-distribution facility for LeeSar in Fort Myers, the joint venture between Lee Memorial and Sarasota Memorial. “It's important to reach out to the local contractors and get them involved into the project,” says Kistel. “Gates has a good understanding of local jurisdictions.”

Groundbreaking on the $242 million, 300,000-square-foot building is scheduled next spring. “It's one of the largest projects in Southwest Florida history,” says Gates.

More Florida opportunities
Gates says he's encouraged by the residential real estate activity, which he says is the first sign of a recovery in Southwest Florida. “Homebuilding sets the trend,” he says.

That's because commercial real estate follows residential real estate in the economic cycle. Once builders sell homes, people need shops and offices. “Everybody has to buy bread and go to the doctor,” Gates says.

Gates says the recovery is currently under way in pockets such as the Immokalee Road corridor east of Interstate 75 in Collier County. “There's dirt flying everywhere on Immokalee Road,” he says, forecasting more development on that stretch. “On Immokalee Road there's very little retail. It'll be in pockets like that.”

Development is moving east of Interstate 75 because most of what is located to the west has been built out. In particular, Gates says the inland ports and transportation hubs planned by developers in the center of the state are going to spur new construction. “They're for real,” Gates says.

Companies such as Lykes are planning transportation hubs where goods will be trucked from coastal ports that come by ship through the widened Panama Canal. “The state of Florida is a great big dock,” Gates says.

Gates says the state is doing relatively well compared with other states in attracting private-sector jobs. “We've received a bunch of phone calls and they're all from corporate people,” he says.

Once consumer confidence returns, Gates says the recovery will pick up speed because investment will follow. “There is no shortage of capital; there's a shortage of confidence,” he says.

Besides Southwest Florida, Gates is scouting opportunities in the Tampa Bay area, Orlando and Miami. “Miami's on fire,” says Gates, who notes that 47 new condo towers are under development in that city. “That'll trickle over here and up the east coast.”

Gates says he's encouraged by the state's efforts to attract business, but he's concerned about the federal government. “We have a pro-business governor, low taxes and that's the reason we're growing,” he says.

Children's Hospital Project
What does it take to build a children's hospital?

Consider Lee Memorial's $242 million plan to add a wing to an existing hospital facility in Fort Myers, a logistical feat that will require careful planning and execution by the contractor, a joint venture of Sweden-based Skanska and Bonita Springs-based Gates.

“It's a very, very complex project,” says Dave Kistel, Lee Memorial's vice president of facilities and support services. Lee Memorial consists of four acute-care hospitals and two specialty hospitals with a total of 1,423 beds.

The challenge will be that contractors will have to work while the HealthPark hospital in Fort Myers is caring for patients at the same time. The new children's hospital will be an attached pavilion to the existing hospital and will share facilities such as surgery rooms.

What's more, some of the hospital's existing facilities will have to be renovated and expanded to accommodate the additional children's hospital beds. Contractors will have to move utilities, create a new parking lot and expand the energy plant that houses chillers, boilers and emergency generators. Inside the existing hospital, surgery rooms and laboratories will be expanded to accommodate the increased volume.

Currently, the children's hospital has 98 beds housed within the existing HealthPark hospital building. “The children's hospital is a hospital within a hospital,” says Kistel. When the new pavilion is completed in December 2016, the children's hospital will accommodate 160 beds.

Kistel says groundbreaking for the new hospital is scheduled for late March or early April. The Lee Memorial Health System Foundation has raised $81 million of the $100 million fundraising goal, including $20 million from Paychex founder and Naples resident Thomas Golisano after whom the children's hospital has been named.