Conservative Approach Means Staying Power for Boyle

By Terry Hallohan
– Office Real Estate Leasing Guide –

The six-story Morgan Keegan building going up at Ridgeway Center in East Memphis is one of the last facilities to be developed at the 204-acre, multi-use development of Memphis-based Boyle Investment Co.

Constructed of precast concrete, high-performance glass, high-end finishes and underground parking, it will mirror the six-story Sedgwick building next door, the two facilities standing as crowning achievements in another successful Boyle enterprise.

Memphis-based investment firm Morgan Keegan & Co., Inc., will occupy one-third of the 150,000-square foot Class A building and Mark Halperin, senior vice president of office properties for Boyle, says negotiations are ongoing with other prospective tenants.

Halperin, who has been with Boyle 28 years, is one of the most recognizable professionals in the Memphis real estate market. His longevity at the firm is not unique – a number of executives such as Russell Bloodworth, Joel Fulmer, and Bob Lofton have been with Boyle more than 25 years – which says something about the company and its commitment to building and sustaining long-term relationships.

In spite of his success and notoriety in the market, Halperin still works most Saturdays to make sure the needs of his office tenants are met.

“I’ve got a lot of customer contacts, “Halperin says, pausing. “And a pretty strong commitment to making them happy.”

Halperin personifies the Boyle philosophy, which is always client-driven, with a conservative approach to development that emphasizes quality and long-term value.

“It’s unique in our industry, unique in our market, to stay with one entity for so long,” Halperin says. “I think that’s part of the long-term commitment the company has had to most of us who work here and that’s the same attitude we have in dealing with our customers.”

The long-term relationships Halperin and Boyle have developed are evident. Memphis-based Sparks Cos., Inc., a national agribusiness research and consulting company based in Memphis, has been in the Ridgeway Center since 1981. Boyle is now developing a $20.7 million, four-story 125,000-square-foot headquarters for Sparks Cos. In the northwest corner of Ridgeway Center.

ServiceMaster, Inc., has been another longtime tenant and will occupy 275,000 square feet at Ridgeway Center by the beginning of 2001. And Boyle has maintained a landlord tenant relationship with Binswanger Glass Co. since 1974.

“Those are the kinds of relationships we’re trying to build with people.” Halperin says.

Boyle is one of the most conservative office developers in the local market, a moniker Halperin doesn’t deny, and even embraces.

“We’ve probably lost some deals we could have done because we are conservative,” he admits. “It has to make long-term sense for us.”

Boyle retains ownership of most buildings it develops, so returns are measured over the long-term.

In fact, Boyle could be considered a microcosm of the Memphis market as it relates to other U.S. markets. Memphis is considered a slower growth market, but one that is able to weather market fluctuations better than high growth markets like Atlanta, which can experience massive building cycles during times of economic bliss but a huge surge of vacancy in a recession.

“In our case, we’re still here. A lot of companies have completely changed or didn’t make it through the rough times in the late 80’s. We’ve always been able to meet our financial commitment,” Halperin says.

Earl Blankenship, chairman of real estate services firm CB Richard Ellis Memphis, recently said the big office developers – Boyle, Memphis firms Clark & Clark and Weston Cos. And Raleigh, N.C.-based real estate investment trust Highwoods Properties, Inc. are leveraging the market against one another.

Halperin says that is true to a degree, but the cooperation that exists has roots in the overbuilding period that preceded an ugly market downturn in the late ‘80s that led to high vacancy levels and falling rents.

“Everyone is making a careful attempt to operate responsibly and not let the market get overbuilt, keep the market in balance,” Halperin says. “I think that’s in everyone’s best interest.

The trick is reacting to the marketplace. The whole idea is to finish.”

But that doesn’t mean these guys aren’t competitive. Those in the industry know better.

Highwoods developed the high-rise International Place Towers on Poplar, probably the premier Class A office facilities in Memphis. Halperin says it has been a challenge to compete with a public REIT like Highwoods, which may have access to capital Boyle doesn’t, depending on market cycles.

Mike Harris, general manager of Highwoods in Memphis, considers Boyle a principal competitor, also naming Clark & Clark as formidable, particularly with its successful seven-building Lenox Park complex at Kirby and Nonconnah parkways.

“Boyle takes such a long-term view of things, going out 10-15 years,” Harris says. “They go out and find land they know will be valuable 10 years from now, and wait for the market to come to them.

“As a public company, it makes it a little bit difficult to have that long-term vision.”

As Ridgeway Center nears full development with more than 1 million square feet of multiple use space, Boyle is making inroads on Schilling Farms, a multi-use development in Collierville consisting of 443 acres.

Nick Clark, principal of Clark & Clark, says his company values Boyle Investment Co. as “a quality competitor of integrity.” And despite it’s conservative tag, Clark remembers that Boyle was the first to undertake a major office project – the Sedgwick building – following the office market decline of the late ‘80s and early ‘90s.

“With the construction of the Morgan Keegan Building next door to the Sedgwick Center and the future buildings on the adjoining property, Memphis will have another office complex gem like International Place,” Clark says.

Halperin says providing service to tenants is a way Boyle keeps an edge against the competition.