Commercial Real Estate Q&A: Lee Arnold

LEE ARNOLD
Founder and CEO, Colliers International Tampa Bay, Central & Southwest Florida, Tampa

Continuing a trend toward corporate consolidation in the region's commercial real estate industry, Colliers International Tampa Bay, Central & Southwest Florida — a firm whose roots trace back to 1974, when CEO Lee Arnold founded his first brokerage operation — announced earlier this month that it has been acquired by Colliers International Group Inc., a publicly held company with more than 500 offices worldwide.

In buying its Tampa Bay affiliate of 20 years, Colliers will absorb the area's largest commercial property manager, with more than 9 million square feet in its portfolio, offices in Tampa, Clearwater, Orlando and Fort Myers and more than $1 billion in annual transactional volume.

Arnold spoke to the Business Observer this month about what the company's sale will mean for his firm going forward.

What do you expect to change as a result of the transaction?
I expect that I will pick up additional responsibilities for the entire state of Florida, but as part of a public company now, I foresee that we'll have the capability to make acquisitions, build additional teams and integrate equipment. It'll be more of a function of access, speed and greater communication going forward. We were at the point of trying to decide what our growth pattern was, so this solves a huge question for us about how we'll manage our growth. I think the biggest impact, though, will be on the finance department, not on our brokerage or property management divisions.

What do you expect to stay the same?
In terms of people on the ground, they shouldn't see a whole lot of change, other than the normal change that occurs when a company is growing. All the local executive team is going to stay in place, and I'll remain CEO. Our compensation plans, they'll all stay the same. If anything, our people will have better health care, a better 401k plan, and most importantly, a better runway for their career with the larger organization.

What does this transaction mean for you personally?
I'll be taking on an added role for Colliers' offices in Miami and Jacksonville. As such, I expect we'll be operating more as a single unit in regards to Florida.

What does this do for Colliers International?
They have the ability to streamline their operations dramatically, so it's a real boost to their economies of scale. But perhaps most importantly, a client can sign a contract and have it apply to the entire state of Florida going forward.

The acquisition comes at a time of consolidation in the commercial real estate services industry. Was this aimed at gaining critical mass?
To be directly a part of a company as large as Colliers International is going to mean that we're now part of the big time, with all the services and depth that that can bring. So in a “normal,” positive economy, I'd say we can grow about 20% in regards to revenue and (earnings before interest, taxes, depreciation and amortization), but in our new environment, I think it's fair to say we can start talking about doubling or even tripling the size of our business — as a result of acquisitions and the added horsepower we'll be able to bring for our clients' benefit.

Is there a cost savings component to the deal for Colliers International?
To a degree. The company will now be able to buy certain things more in bulk, so that will generate some savings — things like data services, insurance, that sort of thing. And from an intangible sense, there will now be more leadership spread over the number of agents we have collectively, and a better ability to coordinate operations throughout the company.

After 40 years of running your own company, are you happy with the way the deal with Colliers International ultimately played out?
Yes, I'm very pleased. They were very fair. There's a certain period of intensity right now, but as a practical matter they're not putting any restrictions on my movement that I wouldn't have done anyway. I think this way, with the added bench strength, we'll be better off in the long term and the short term. It's better all around, I think, not to have a super majority stockholder controlling a service business. And now, with the sale, I'll be a part of some of the parent corporations' committees and such, which I think will be very fulfilling.

— K.L. McQuaid