General Motors Corp. needed a real estate company that could keep its mouth shut.
American Telephone & Telegraph Co. wanted to get the best price and location for its new corporate headquarters.
Managers of a European pension fund, awash in money, wanted to invest millions of dollars in property in Washington, D.C.
They all came here, to a company jokingly referred to by some as "the Secret Service" of the nation's real estate consultant business -- Landauer Associates Inc.
Situated on the 18th floor of the Bank of America building, Landauer's is a decidedly low-profile presence. No fancy logo, no swank offices. Just a collection of rooms filled with files, computers and people who have helped boost Landauer to preeminence in its field.
But until late last July, few people outside of the real estate industry knew of Landauer -- "a company where confidences are maintained and discretion is fully observed," according to one of its top officials.
GM brought Landauer notoriety, but only after the two companies had collaborated on one of the most successfully kept secrets in the auto maker's 77-year history -- the location of GM's Saturn Corp. car manufacturing complex.
Landauer was the lead outside organization doing the groundwork that led GM to select Spring Hill, Tenn., as the site for its $3.5 billion Saturn development, the largest single industrial investment in U.S. history.
For seven months this year -- throughout all of the Saturn-related clamor and ballyhoo, topped by a parade of governors to GM's headquarters in Detroit -- Landauer employes nationwide were busy visiting potential plant sites.
The Landauer investigators examined local tax structures and school systems, talked to local ministers about everything ranging from a particular community's race relations to the quality of its alcohol treatment programs, visited local parks and spent long days in libraries poring over back editions of local newspapers.
"We get a great deal of information about the nature of a community, its business environment, its problems and how it solves its problems, all from reading those newspapers," said James L. Mooney, a Landauer managing director.
Mooney said that Landauer staffers working on the Saturn project used their own names, but otherwise maintained silence on the nature of their real mission.
"Our cover on Saturn was that we were doing general market research to be used broadly for national real estate market forecasting and related analytical purposes," Mooney said. The cover was not totally deceptive.
Since its founding in 1946 by the late James D. Landauer, the namesake company has built a reputation for doing thorough research before giving real estate investment advice to clients. Much of that research involves sending staff specialists, such as historians and economists, to potential locations for plants or office buildings. The on-the-ground work is backed by computer analyses and other detailed reviews.
Landauer clients pay for that research, whether or not they actually use it. Sometimes, the outcome of the probing is a recommendation to scrap a deal, to kill a project. The clients still pay.
It is an unusual arrangement in the real estate industry, where compensation traditionally comes in the form of commissions and "wholly contingent fees" -- those awarded upon the successful completion of a deal.
"The wholly-contingent-fee system has a bias," Mooney said. "It says that you get paid to do a deal. But, sometimes, the best service you can do for a client is to tell him not to do a deal."
However, some Landauer critics say privately that Mooney's comments on compensation smack of hypocrisy. Landauer receives a "performance bonus," in addition to its other fees, if a client makes a successful real estate investment -- for example, buying an "ideal" plant or office site, or selling property at favorable prices.
The "performance bonus" is no different from commissions, critics say.
Mooney and Landauer's supporters in the real estate industry disagree. By charging clients for specific research projects and by putting staff members on salary, thereby eliminating intra-staff competition for deals, Landauer has eliminated conflicts of interest from its operations, Mooney said.
Justin Hinders, a well-known Washington commercial real estate adviser, supports Mooney's assessment. Landauer "works strictly as a consultant," which is different from real estate brokerage houses and other so-called real estate consultants "who take contingency fees, sometimes from both sides" involved in a transaction, Hinders said.
"Landauer maintains a certain amount of integrity in its operations. They are the top real estate consulting firm in the country," Hinders said.
But being on top as a real estate consultant does not mean being at the top of the earnings heap in the real estate industry. Real estate brokers -- the companies that actually buy, sell and manage property -- make the most money.
Landauer, a privately held international business, had $500,000 in sales in 1963. It is expected to have $20 million in revenue this year. That is substantial growth. But it is minuscule when compared with the $825.7 million in annual gross revenue taken in last year by the nation's largest real estate brokerage operation, Los Angeles-based Coldwell-Banker Real Estate Services Group.
"Landauer's $20 million in revenues wouldn't even put it in the top 25 real estate brokerage firms in the country," said Lon Carlston, senior editor of a newsletter published by San Francisco-based Stephen Roulac Inc., which monitors corporate performance in the real estate industry.
Mooney said that Landauer "does not want to become a Coldwell-Banker." What Landauer has now is a lucrative niche in the real estate business, and the company intends to protect it, Mooney said.
"We are going to stick to the three businesses we know best," Mooney said. Those businesses involve research and analysis of prospective plant and commercial locations, trouble-shooting in complicated real estate deals and advising pension funds and other fiduciary bodies on real estate investments, he added.
Mooney said that a key ingredient in the formula is silence.
Landauer officials, for example, turn aside questions on how they persuaded "holdouts" to part with buildings that stood in the way of what is now AT&T's new Madison Avenue headquarters building here. They refuse to identify their Europen clients who own the sprawling 2000 L Street office building in Washington. And they nimbly dodge questions that could yield specific answers about GM's decision to put Saturn in Tennessee.
Landauer's demonstrated ability to keep a closed mouth and its previous work for GM on a $500 million transaction that allowed the auto maker to hold on to its New York office building were enough to convince GM's top executives that the real estate company could handle the Saturn project, some GM sources said.
"They are regarded as the best in their business," one GM official said of Landauer. "I don't think it was a difficult choice."