A Developing Story of Success : Gilbert Blends Foresight and Opportunity Into a Profit at TOLD
Sixteen years ago, Jack Gilbert was bored. Since 1952, he had built Zero Corp., a New York Stock Exchange company, into a highly successful firm whose sales grew for 18 years at an average rate of 25% a year. Zero’s steady growth came from making aluminum boxes for electronic gadgetry and a line of aluminum luggage popular with photographers.
But the company had grown so big that, surveying it from the president’s office, Gilbert felt as if he’d kicked himself upstairs.
“I didn’t like that,” Gilbert said. “I enjoy building things, taking an idea, and seeing it grow.”
So while remaining chairman at Zero, Gilbert handed over the operating reins and tried his hand at a new adventure: developing commercial real estate. Gilbert had a weekend hideaway in Ventura County and while driving there he had noticed that the sleepy county west of the San Fernando Valley was showing signs of waking up.
So he headed for the open spaces of Ventura County, and started Thousand Oaks Land & Development, since renamed TOLD and now based in Oxnard.
With $250,000 from the fortune he’d amassed at Zero, and with the help of an executive he brought with him who had supervised the building of Zero’s far-flung manufacturing plants, Gilbert was determined to buy in early and cheap in Ventura County. That he did. Subdivided land in Thousand Oaks that Gilbert said would now cost him up to $20 per square foot was then readily available for $1.50 per square foot. Gilbert’s new company looked for opportunities other developers hadn’t exploited.
Gilbert bought some used furniture at an auction in Hayward, and brought it back in a rented truck to start up an office. Then he made a down payment on 40 acres in Newbury Park and eventually put up 46 commercial and industrial buildings on the site.
The company kept growing. Now TOLD does about $50 million a year in sales, has roughly 30 buildings under construction and the company is rated as one of the 100 biggest commercial real estate developers in the nation by National Real Estate Investor, an Atlanta trade magazine.
TOLD’s method has been simple but effective. “They’ve typically gone in and purchased large blocks of land . . . in an area that has not experienced growth,” said Russell Goodman, the Ventura County regional president of the Sammis Company, a nationwide commercial and industrial developer based in Irvine. “So they buy it very cheaply.”
“We go out and see what is out a little further,” said Pat Hall, 35, TOLD’s president who took over day-to-day operations of the company from Gilbert in March, 1988. In fact the company has begun to outgrow Ventura County and is looking for new open spaces to develop, this time in the Midwest.
Along the way TOLD claims to have built more industrial and commercial space in Ventura County between 1982 and 1987 than all other developers in the county combined. Their claim was challenged in 1987 by the Sammis Company, which said it was “the largest land-holding developer” in the county.
Veteran real estate industry observers, who asked not to be quoted on the subject, said it’s hard to know who is the biggest developer in the county. Despite TOLD’s recent building rush, the experts said the Sammis Company might own more developable land in Ventura, while longtime Ventura County developer Martin V. Smith & Associates might own more commercial property. TOLD, however, probably leads in space developed each year, the experts said.
At any rate, the controversy over who’s biggest seems to have quieted. Sammis’s Goodman refused to discuss the topic and Martin Smith, 67, who has been developing in Ventura County since the 1940s said: “I would call TOLD the number one developer in the area” adding, “they’ve got a lot of guts.”
TOLD’s strategy of going where other developers have not dared to go forces the company to convince prospective tenants that the next wave of development really will be coming their way. When TOLD announced, for instance, in 1985, that it would build a 225-acre industrial and office complex in Oxnard, about two miles from the Ventura Freeway in the middle of what then were celery, broccoli and bean fields, observers were skeptical that businesses could be lured from the bustling corridor along that freeway.
But Hall and Gilbert believed they could draw tenants west along the Pacific Coast Highway from L. A. and Santa Monica, as well as south from the more developed areas of Ventura County. And in fact, seven of the first 11 tenants in the park moved there from the West Side.
TOLD now is looking for open spaces out of state. Believing that years of development neglect might have created opportunities in the rust belt, TOLD has opened offices in Minneapolis and in Milwaukee, and the company has built suburban office parks near each city.
TOLD’s latest Midwest venture is with the owner of the Pick ‘n Save grocery chain. The chain has identified more than a dozen small towns in Ohio that do not have supermarkets. TOLD has signed an agreement to build small shopping centers--anchored by Pick ‘n Saves--in an unspecified number of those towns.
Although it has propelled the company into the Midwest, TOLD’s emphasis on finding new, undeveloped areas in which to grow doesn’t always work according to plan. In 1987, the company proposed a 922-unit housing development on 922 acres of agriculture-zoned land it bought in a remote area north of Camarillo. The idea was to concentrate the housing on 463 acres of the parcel and leave the rest of the area open, said Dick Fausset, TOLD’s point man on the project.
The plan would have created a community with urban, half-acre-per-home density where the existing zoning called for 20-acre parcels. The county Board of Supervisors declined even to give TOLD’s proposal a full hearing, citing a policy of limiting urban development to urban areas.
“Maybe we got too smart for ourselves,” Fausset said.
TOLD has now sold off most of the land in 20 acre-plus “ranches,” a project Fausset said has been simpler, but less lucrative, than the company’s original proposal.
Despite such setbacks, most of Gilbert’s career has been marked by vision and steady successes.
A striver who dropped out of high school during the Depression to work as a carpenter after his father passed away, Gilbert mortgaged his house and borrowed $300,000 from Zero’s previous owner to buy the company in 1952. Then called Zierold, the firm had annual sales of $300,000 making aluminum air frame parts.
Gilbert got his start in manufacturing during World War II, when he worked at a Douglas aircraft plant that produced A-20 bombers. Gilbert was responsible for making sure the plant always had enough supplies and workers to run at full capacity.
The job taught Gilbert a thing or two about homing in on small opportunities fast. It’s a lesson he put to work when he bought Zero, turning its production to exploit the coming electronics boom.
“It was a simple idea,” Gilbert said. “Every single thing in electronics has to be housed in something.”
Gilbert decided to build the “something”: deep drawn aluminum boxes. (Deep drawn means that the boxes are seamless, pressed with hundreds of tons of pressure out of single sheets of aluminum.)
Expanding its repertoire to aluminum luggage and carrying cases, Zero has kept growing, posting a $16 million profit on sales of $171 million in the fiscal year that ended March 31.
In recent years at TOLD, Gilbert has cut back his work load. When Gilbert hired him, Hall was a real estate broker selling and leasing, among other properties, commercial buildings that TOLD had built. In fact, Gilbert had been Hall’s best client for several years.
Hall took a 50% pay cut to join TOLD in 1982 as vice president of marketing, when the firm was about to enter its most important period of growth. Recruiting Hall was part of Gilbert’s plan to reconfigure the company to grow faster. Since 1982, the company has expanded its sales from approximately $7 million to about $50 million a year.
Hall, who got started in real estate as a journeyman carpenter, now runs TOLD’s day-to-day operations. But to keep the company growing, Hall plans to follow Gilbert’s stratagem: keep looking for the wide open spaces.
