Rockwell rejoices, celebrates 20th year
THE 15.5-HECTARE Rockwell Center in Makati City is the flagship development of Rockwell Land Corp.
Nestor J. Padilla knows all about rising from the near-dead.
Padilla can still vividly recall how he used to look at Rockwell Drive from his condominium unit in Rizal Tower and wonder if he will keep his job as head of Rockwell Land Corp. for much longer.
There were hardly any cars and at the same time, his company was wobbling under the weight of a huge debt problem brought on by the 1997 Asian currency crisis.
He and the rest of the team were scrambling for effective solutions that will keep the fledgling property company’s head above water, long enough for it to ride on the inevitable upswing of the real estate market.
With a mix of brave decisions and a generous dose of luck, Rockwell managed to take the right steps and work its way out of a grave situation where interest rates shot to 27 percent a year, anticipated sales practically disappeared and selling prices dropped—the perfect storm that brought down weaker real estate companies.
Thus, it is with a great sense of satisfaction that more than 20 years after the Lopez-led company was founded, the 61-year-old CEO can look out of the spanking new offices at 8 Rockwell and see the busy streets, with Rockwell Power Plant alone enjoying a foot traffic of 20,000 on weekdays and 30,000 on weekends.
And Padilla feels that the best is yet to come, with the continuing expansion of the Rockwell Power Plant and the ongoing construction of new office and residential condominium units at Rockwell Center, as well as entry into new segments and territories in Metro Manila and urban centers outside the capital.
But while the publicly listed company has adopted a more aggressive expansion stance, Padilla tells the Inquirer in an interview at 8 Rockwell that the company remains firmly guided by the hard lessons learned during the “dark years” in the late 1990s when the company came close to taking desperate steps that would have prevented Rockwell from unleashing its full potential.
The time to make hard decisions came early in its corporate life that began in 1995.
The company, whose main asset was a piece of property in Makati City where an oil-fired power plant used to sit on, had just launched its newest development at the West Block when it noticed significantly weaker sales, brought on by the sudden depreciation of the peso against the US dollar and, more importantly, the “painful” spike in lending rates.
At first, Rockwell thought that the market would recover in five years. The agony, however, dragged on for about seven.
“I would dream every day of a white knight coming to Rockwell,” shares the Business Management graduate of the Ateneo de Manila University.
Nestor J. Padilla
And during the bleakest moments, the group thought about subdividing the property, to sell some parts to make good on debt payments. But the plan was scrapped after realizing that even if it did do that, it would still have substantial debts.
Then it also came close to selling part of the property to someone who wanted to put up a gas station. That, too, was scrapped.
It could afford to because during those days when credit was tight, the group was given a lifeline by Metrobank.
It also won the support of tenants such as Rustan’s Supermarket, which helped establish the credibility of the Power Plant Mall as a destination, even if the property was at that time thought to be too far away from the central business district with limited access.
The idea also came up in 2001 to go to the United States to find buyers there.
At that time, no other real estate company had conducted a serious effort to woo the US-based Filipinos looking to invest in a piece of home.
At first, it went to the Beverly Wilshire Hotel in Los Angeles, thinking it was the place to be since Rockwell was being positioned to cater to the high-end market. But hardly anyone came.
It took one of the few visitors there—who eventually bought a one-bedroom unit at the Manansala development—to point Padilla and the group in the right direction.
“He told me that we were in the wrong place, that most Filipino-Americans will not be comfortable going to Beverly Wilshire. So he brought me to the Hilton in Glendale,” says Padilla.
The Rockwell group made a big sales pitch and road show at the Hilton Glendale and Filipinos came in droves, to the point that Padilla had to go back and forth to the popular Porto bakery to feed the numerous visitors as well as the excited Rockwell sales team.
“The Hilton became our place. From just one sale, we were selling 30 units at a time. While people were selling, I was doing all the cleaning up. I even got a tip,” Padilla says with a laugh, “And that was how we discovered the United States.”
Fortunes quickly turned after that and visitors who come to Rockwell today will have no idea of what the company went through to reach this point.
That Rockwell was able to get its market Padilla attributes to the group’s dogged determination to keep to the brand promise—that of bringing to the market a high-end development that is self-contained and have more of a resort feel rather than a glass, steel and concrete jungle.
“It was all about gaining the right momentum, of getting the right crowd. During the crisis, we got that momentum overseas,” says Padilla, “You just have to stay true to what you believe in. Had we changed, had we cut it up and maybe put up the gasoline station, it would have been a sorry ending for a nice development. We would not have been able to recover.”
Padilla says it was not easy fighting for the brand, especially during the time when sales were drying up and debt payments were piling up.
“Everybody was feeling depressed and I even got sick. I was hospitalized. I was supposed to present to the board the next day but I could not do it. I told the team to just believe that we were creating a brand, even if we were losing money. The Rockwell brand must stand for something, that anything we do has to be the best,” says Padilla, “Sticking to the brand promise was what got us through.”
“When you grow, you’ve got to go through some pain. It is when you go through pain that you get better,” Padilla adds.
And better Rockwell became, with the group expanding from the flagship Rockwell Center in Makati to The Grove by Rockwell in Pasig in 2008, and then to the office sector in 2009 with the Rockwell Business Center. It also established subsidiaries including Rockwell Primaries Development Corp. to handle the broader market brand Primaries; Stonewell Development Corp. Inc. to handle socialized housing and Rockwell Hotels & Leisure Management Corp. to manage hotels, resorts, clubs, recreational centers, apartments and other allied businesses.
As of September last year, Rockwell recorded a net income of P1.08 billion, up 10 percent from the previous year’s P986.1 million, driven by commercial real estate developments.
Padilla says that as is expected in the real estate market, sales have started to slow down again in 2012. It is not so much about asset prices growing too fast, but a case of perhaps too many units coming up too soon. External risk factors—such as falling oil prices and the tepid economic activity in developed countries—have also made Filipinos turn more cautious.
He says, however, that the situation today is far different from the years following the Asian crisis as the banks are liquid. Filipinos have a higher spending power and the macroeconomy is in a much better shape with inflation down and interest rates steady.
Thus, he welcomes the slight slowdown as a time for companies like Rockwell to stretch a bit and relax after going through such a frenzied pace of expansion.
That said, Padilla says Rockwell will continue to grow its income at a healthy pace, while laying the foundation for the next stage of expansion, one that will see Rockwell getting its income from both outright sales and rent, through retail and office developments.
It hopes to accomplish these feats through the help of the young people whom Rockwell continues to hire to execute its vision of “quality living” for those who live in a Rockwell development. They are fearless, he says, and hungry for more.
But all these would not have been possible, Padilla stresses, without the fortitude of the people as well as its partners, who dared see the company through the dark days.
For those who find themselves going through difficulties, Padilla advises them to “stick to the vision.”
“No matter how challenging the situation you find yourself in, you just have to stick to the high ground. Do not compromise,” says Padilla.
