[ Business ]

Building on success: KS Commercial Real Estate Services Inc. has nearly tripled since 1996

By Michael Hooper

The Capital-Journal

When Roger Nauerth of Manhattan was looking for a commercial real estate firm to manage his property in Topeka, a broker suggested he look at KS Commercial Real Estate Services Inc.

Nauerth (pronounced north) had purchased a 35,000-square-foot office building at 2942 Wanamaker Drive for $1.3 million in March 1997, and was looking for a firm to help him get it fully occupied.

KS Commercial suggested some improvements and oversaw Nauerth's $200,000 upgrade to the building and its landscaping. Now the building is fully occupied by a good mix of tenants, including a law firm, a non-profit agency and a telecommunications company. A recent valuation put the property's worth at $2.5 million, double what Nauerth paid for it.

While not every property KS Commercial handles is going to double in value in four years, Nauerth's story illustrates the mission of KS Commercial: Achieving the highest and best use of clients' properties through wise selection of tenants, maintenance and capital improvements.

"They've done a good job," Nauerth said. "I'm very pleased. They've worked hard and have been very professional."

KS Commercial opened in November 1996 with four employees and today employs 11 and is the leading provider of third-party commercial real estate services in Topeka. They have expanded their office three times at 1027 S.W. Gage Blvd. and plan to move again in six months to a space that is twice their current 1,500 square feet to accommodate future growth.

Last year, KS Commercial completed 98 transactions for a combined sales and leasing volume of $14.7 million, totaling 7.1 million square feet. The company provides asset and property management services for 491,462 square feet of commercial property in Topeka, with an overall lease renewal rate of 92 percent.

The company was founded by Ken Schmanke, president, and Phil Morse, chief executive officer.

They had been friendly competitors for 10 years, with Schmanke at Cohen-Esry Real Estate and Morse at Griffith & Blair Commercial Realtors. During the last two or three years they worked as competitors, they occasionally talked about how they would run a commercial real estate office if it were their own.

In fall 1996, Schmanke called Morse and said, "You may not be ready, but I'm ready." They formed the company with a teamwork approach.

"All business that comes through the door is shared," Morse said. "We think we can provide a better service by working together to meet clients' needs. We share information to resolve clients' needs."

As the company grew, employees have been given the opportunity to specialize. Schmanke is responsible for strategic planning and developing new business and assists colleagues as needed. Morse handles investor and user sales.

About 5 percent of revenue comes from consulting, 25 percent from property management and the balance from sales and leasing. Donna Kirkwood, vice president, manages more than 300,000 square feet of space.

Steve Wieser, senior vice president, handles asset management and key brokerage accounts. He holds a Certified Property Management designation.

Mark Rezac specializes in retail leasing and Paul Schmanke charged with colllection and organization of property information and getting more active in the industrial market.

Kathy VanDonge is the office administrator who "orchestrates chaos" with a smile, Schmanke said. The company recently added father- son team Leonard and Jacque Duchesneau as maintenance technicians.

Morse said property management provides a steady stream of revenue for the company.

Schmanke said Ed Eller was a welcome addition to the company because he took the burden of handling marketing and information systems.

"He allows us to specialize in our strengths," Schmanke said.

One of the recent projects Eller and Paul Schmanke coordinated was a comprehensive commercial real estate market survey of 2,280 properties. KS Commercial examined occupancy and pricing levels in three classes of property in retail, industrial and office buildings in seven geographic sectors in Topeka.

The weakest occupancy rates were in southeast Topeka at around 87 percent, depending on the type of property.

Schmanke said that nationally, the commercial real estate market is seeing a slowdown. Because Topeka is a capital city, the market here doesn't decline as quickly as other markets, but it also doesn't increase as fast as other markets in good times. Generally, Topeka's commercial real estate market is steady, Schmanke said.

Schmanke and Morse complement each other. Schmanke doesn't worry about spending money to grow the company and meet clients' demands. Morse is a little more conservative, but he realizes it takes money to make money.

"You can't grow a company by managing cost. You have to manage growth," Schmanke said.