Value Added: Creating a conveyor belt for renovation
One of my favorite intellectual exercises, often with the help of others, is examining a business through a different lens.
McDonald's or Starbucks are real estate companies as much as food and beverage stops. Disney On Ice's ideal customer isn't a 10-year-old; it is a parent who wants to be a hero to her kid. And General Electric's biggest strength is management, not light bulbs.
Washington developer, technology entrepreneur, restaurateur and nightclub owner Anthony Lanier prompted me to look at real estate differently when he explained the business discipline that built a Georgetown barony that occupies 60 buildings and enough square footage to fill eight football fields.
"We built a conveyor belt for renovation," said Lanier (pronounced lon-YAY), 59, explaining the methodology that turned dilapidated townhouses into profitable stores and offices.
Lanier's assembly line was made up of engineers, architects, historical preservation specialists, zoning lawyers and construction firms that could pump out renovated buildings one after another.
The first purchase in the mid-1990s was a townhouse at 3060 M St. NW. Price: $540,000. It's now worth about $2 million, Lanier said. Next was a townhouse down the street. Cost: About $1 million. He bought 3067 M St. NW for $600,000. Then he bought 3210 M St. NW out of foreclosure.
Buy, renovate, lease. Repeat.
Through that process, Lanier built profit margins and credibility with city authorities. "That aside, the 'salami approach' served as an excellent risk diversification, as no project and therefore, mistake, in itself was big enough for it to make a significant impact," he said.
It took 10 years, increasing property values and retail demand, but Lanier's bets are paying off. His Georgetown tenants include Brooks Brothers, Crate & Barrel's CB2 chain, MAC Cosmetics and Madewell. His property portfolio is worth several hundred million.
The successes have not come without controversy. He is embroiled in a very public, five-year court case with developer Herb Miller over the rights to purchase Georgetown Park mall.
The Lanier empire includes more than 200 employees across several companies, including the real estate management and development company EastBanc Inc., EastBanc Technologies, Kafe Leopold restaurant and L2 Lounge, his trendy nightclub where celebrities such as Dallas Mavericks owner Mark Cuban and comic Kathy Griffin were hanging out recently.
Lanier is as interesting and eclectic an entrepreneur as I have ever met. He isn't thumpingly rich like the Lerners (real estate, baseball) and Rales brothers (Danaher Corp.). But's he's got money. Probably tens of millions.