Originally published in Business Digest, October 1997

Redstone Rolling

by Jack Fehr

Location, contrary to the popular mantra, is not always the end-all when it comes to commercial real estate companies. Despite its perch overlooking Lake Champlain on the newly renovated second floor of the old Union Station, the company’s location means little to Redstone Commercial Group’s co-founders Larry Williams and Doug Nedde. For their clients, however, location can mean everything. Case in point: a two-and-a-half year search that finally netted the new manufacturing facility for Magic Hat Brewery.

"We were trying to find an industrial property within the Burlington city limits that had room for expansion," says Magic Hat president Alan Newman. "But we kept running into dead ends. Doug and Larry are very creative, and their perseverance was extraordinary. They’re clearly one of the best commercial real estate companies around."

That’s because — ironically — location is not the only thing that factors into the right commercial real estate site. "Location means different things to different clients," says Williams, "but we’ve been successful because we have taken a comprehensive approach to the business. If you’re looking to sell a building, we’ll put together a marketing program to help you sell it. If you’re looking to buy, we’ll help you buy. We’ll manage your property, find you a leased property or investors and even develop property."

"We don’t just lease and sell properties," emphasizes Nedde. "We’re a full-service company."

[Doug Nedde & Larry Williams] Doug Nedde (left) and Larry Williams have known each other since they were kids growing up in Shelburne, and both graduated from UVM. They worked together for Rick Davis at the Davis Company until 1992 before splitting off as Davis Co. Commercial Group. The business was renamed Redstone Commercial Group a year ago. (Photo: Jeff Clarke)

Redstone’s chameleon characteristics make it hard to define the 5-year-old company. Half of its business is brokerage, selling and leasing their property and others, such as the old Grossman’s building for Magic Hat on Bartlett Bay Road in South Burlington.

The company, however, has its hands in a number of other pots. They just received the go- ahead to begin building on a 50,000-square-foot lot they own near Wal-mart, where they expect interest from consumer home goods stores such as carpets, tile and doors. They also manage property for about a quarter-million square feet of area retail and industrial space, including the Champlain Marketplace, and they’ve even built residential property, including a 25-unit elderly condo complex in Brandon.

That the pair and newly named partner, Steve Donahue, have such a broad range of experience should come as no surprise. Donahue, who joined the company two years ago and became a partner this year, worked previously for Lang Commercial Real Estate. In the mid-1980s Williams and Nedde worked for the Davis Company, founded by Rick Davis, before spinning off into their own company, the Davis Company Commercial Group, five years ago.

In addition, all hold memberships in various trade associations and the like: All three are members of the Chittenden Commercial Real Estate Association; Williams is also a member of the International Council of Shopping Centers (ICSC) and the National Association of Homebuilders; Donahue, too, maintains membership with the ICSC, and holds the certified commercial investment member designation.

A year ago, Nedde and Williams changed the business name from Davis Company Commercial Group to Redstone. "There was too much confusion over the name," says Nedde. "So we hired someone to come up with 150 names, and we picked Redstone from those names."

"All the principals went to UVM (graduating three years apart from 1982 through 1985)," says Williams. "And they have the Redstone campus."

"Red stone is also indigenous to Vermont," adds Nedde, "and we already had the color red in all our marketing and advertising."

If the name selection seems at least somewhat haphazard, little else about the company is. Williams, with his civil engineering degree, and Nedde, with a double major in economics and political science, cut their real estate teeth on development and brokering for the Davis Company. Just as the recession bottomed out in 1992, the duo decided that these twin areas of expertise were the right blend to make a go of a new business.

"There are 38 other commercial brokers in the area," says Nedde, "so we felt we had to differentiate ourselves by providing full service."

The company, according to Williams and Nedde, has operated at a profit since it opened its doors, and has grown at a 50 percent annual rate for four years. Actual numbers? "I’d rather not let our competition know," says Nedde coyly.

As older companies struggled with the recession in 1992, Williams and Nedde established a niche with banks, helping them to sell foreclosed properties around the county. "We had 10 to 12 bank-owned properties at any given time," recalls Nedde, "and we wound up establishing long- lasting relationships with these banks.

"There is a stigma attached to foreclosed properties," says Robin Wheel, vice president for Vermont Federal Bank. "It’s difficult to get market price on these properties, but Larry and Doug are very aggressive. Many commercial real estate companies specialize, but they’re full-service. I deal with one person for property management, permits, advertising — anything I need to help me dispose of properties. They’ll bend over backwards for you."

Jim Foster, president of Foster Real Estate and former chairperson for the Greater Burlington Industrial Corp., echoes those sentiments. "They recognize they’re in the service business," says Foster, who has used Redstone to find tenants for his properties, including the Sailworks building in Burlington and the Vergennes Shopping Center. "They’re dogged and are willing to do whatever needs to be done. They don’t tell us, ‘If you do this, I’ll do that.’ Instead it’s just plain ‘We’ll do that.’ They understand the concept of marketing for lots of different properties."

Service, perhaps, never went to such lengths as when Redstone began its search to find Magic Hat Brewery a new site. Having outgrown its facility hidden away on Flynn Avenue, the company was looking for at least 25,000 square feet, with room to double through expansion. They also needed city sewer and water, and wanted easy access for its wholesale operations and a small retail operation, which includes tours of the facility.

Initially, a couple of months of negotiations for the old Chittenden County Transportation Authority on Queen City Parkway in South Burlington came to a halt, and was followed by another fruitless month negotiating for the former Independence Foods location on Maple Street. Next, Redstone and Magic Hat looked into an old IBM building in Essex Junction.

"We began to run out of existing buildings," says Nedde, "so we started looking at new construction. We were also looking for developers to participate in capital improvements, and that was a hurdle. The availability of the old Grossman’s site came out of the blue."

After 30 months of looking, the South Burlington site had everything the brewery needed: 36,000 square feet with room to expand; sewage capacity to handle up to 40,000 gallons of waste per day; and easy access just off Shelburne Road.

"Every time one negotiation broke down, Doug was there the next day telling me how we could start another up again," says Newman. "Redstone knows how to approach the market, what’s available and how to pursue it. They’re a treat to work with."

But are they a treat to work with each other? Can young, aggressive, like-minded men coexist over the long term?

"Larry and I grew up together in Shelburne," says Nedde, who moved to Vermont when he was 5. "His brother, Tim, is my best friend."

Close enough to stay close to each other when they were in school? "Nah, he was two years younger," laughs Williams. That difference in years has obviously been overshadowed by their shared experiences. "As partners, though, we get along very well."

Newcomer Donahue agrees. "We’re tremendously compatible and complement each other," he says. "Larry is more analytical and has experience in development. Doug ... I call him the rainmaker. He finds accounts and business. I work on the fringes, doing a bit of everything." Donahue, more modest than his accomplishments suggest, has leased space in Staples Plaza and brings a retail experience that fits right into the company’s well-rounded strategy.

Modesty, however, doesn’t figure into the company’s profile when Williams and Nedde are asked about the company’s successes. There is, for example, the Riverworks complex in Winooski. "To be clear, we do structured investment partnerships on properties with which we’re involved," explains Williams. "This property had operated at a loss for years. The price of the property and renovations was $1.2 million. We needed to show the banks some cash up front, plus the resources to carry the property at a loss for a while."

Today, Gardener’s Supply Co. and Polhemus are among the tenants in the newly renovated building on Elm Street. Nedde estimates the property at $3.5 million.

"They don’t all work that way," laughs Williams. "It’s not like the '80s, when real estate appreciated 20 percent a year. In those days all you had to be was dumb and lucky. Those days are gone. Today, you create value by adding value, whether through better property management, leasing or whatever."

"Whatever" is whatever Redstone’s clients want. "Some companies have a lot of employees and don’t want the costs associated with downtown," says Nedde. "Some need image, a mountain or lake view. Others need to be within a half-mile of the interstate. We have the full scope of services to meet any commercial real estate need."

This range of services, according to real estate investor Mitch Fleisher, a Redstone client, is what separates Williams and Nedde from the pack. "Larry and Doug are almost always on the money when it comes to estimating project costs. They make it easy for the investor. They bring a perspective that many real estate people don’t bring to the table."

That perspective, says Williams, should result in comfortable growth over the future. "Maybe we’ll add another broker soon," he says. "We’ll continue to grow steadily, but at a rate we can control."