By Lorna Pappas

Dennis Oklak’s first job out of high school as a mail clerk in a major manufacturing company instilled his career-long appreciation for the basic elements that make large corporations effective. His experience interacting with different divisions and individuals throughout the company, from senior management, to sales, to hourly factory employees, infused him with a core understanding of corporate diversity. The experience also instituted a lesson to treat everyone respectfully, and taught him the link between strong departmental interaction and overall corporate success.

“I believe that experience helped me significantly throughout my career,” says Oklak, CEO and chairman of Duke Realty Corporation (NYSE: DRE).

Duke Realty is the largest publicly traded office and industrial real estate firm in the United States, with $8 billion in total market capitalization. The company’s portfolio includes more than 142 million square feet of properties in 24 cities, in addition to 7,700 acres of land to support 113 million square feet of future development.

Portfolio sat down with Oklak to discuss how he has differentiated the company, his approach to industry challenges and where he has made the greatest impact on Duke Realty.

CLOSE UP

AGE: 54 EDUCATION: B.S. in accounting from Ball State University. FAMILY: Wife of 30 years and two children HOBBIES: Traveling and relaxing FAVORITE SPORTS TEAM: Notre Dame football FAVORITE VACATION SPOTS: The Caribbean and Europe FAVORITE MOVIE: “Lord of the Rings: The Fellowship of the Ring” COMMUNITY/PROFESSIONAL ACTIVITIES: Serves on NAREIT’s board of governors; member of the board of directors of the Central Indiana Corporate Partnership and Monaco Coach Corporation; member of dean’s advisory board of Ball State University’s Miller College of Business.

Portfolio: What sets Duke Realty apart from other developers in this industry?

Oklak: The company’s primary strengths are our full-service development model, the focus on four specific product types—warehouses and light industrial centers, suburban offices, retail and health care—and our strong local presence within a national operating platform.

Duke Realty has 36 years of experience in property development, starting in Indianapolis in 1972 and expanding one city at a time to 24 today. We are experts in ground-up and build-to-suit development in each of these markets, with in-house associates skilled at site selection, development, financing, contracting, construction, leasing and property management services. This full-service model creates value for our stakeholders. In general, we look for a 20 percent to 25 percent value creation on our developments, whether we sell them or hold them on our balance sheets.

Portfolio: Most U.S. REITs focus on only one sector of commercial real estate. Why does Duke Realty focus on four specific product types?

Oklak: Our product type diversity gives added opportunity to create shareholder value. Warehouses and light industrial centers as well as suburban offices represent most of our portfolio today. We have the infrastructure in place in 24 cities to develop any of these products with the same local personnel, garnering three to four times the opportunity we would have if we specialized in just one product. We can generate a greater percent of business in a given city as well as better serve our local and national customers under the Duke umbrella.

Diversification also spreads risk. For example, bulk industrial properties tend to stay highly occupied, have good tenant retention and occupancy, as well as low capital expenditures. However, there’s limited rent growth. Suburban offices and retail, on the other hand, have more occupancy risk as economic conditions fluctuate, but have greater opportunity for higher rent growth, which offsets the industrial cycles. Health care is very stable right now, giving added diversity to cover the risk of economic cycles.

Portfolio: Most REITs are facing challenges related to capital, interest rates and an uncertain economy. How is Duke Realty best responding to these trials?

Oklak: No question that these are challenges. One approach is to continue looking for outside sources of capital through new and expanding joint ventures. We have in place today a number of joint ventures that we have formed over the years. Those partners include J.P. Morgan, Eaton Vance Managed Investments and The Stockbridge Group.

Portfolio: Several of your current projects are located at seaports. What’s your strategy here?

Oklak: About three years ago, we noted significant growth in logistics at U.S. ports and have focused development efforts there. We acquired a significant portfolio in the Port of Savannah, where today we are a large distribution owner. Additionally, two years ago we acquired and redeveloped an old General Motors plant in the Port of Baltimore and also have a presence in the Port of Houston.

In addition, we are pursuing an intermodal strategy by investing in inland ports adjacent to sophisticated railroad operations. Today, we have a presence in Columbus, Dallas and Linden, N.J., where last year we acquired a second abandoned General Motors plant through a capital joint venture.

Portfolio: What was your career evolution from mail clerk to CEO of Duke Realty?

Oklak: I moved from mail clerk to printing press operator, then decided to move on to college. I entered Ball State University and graduated in 1977 with a degree in accounting. I then worked for nine years at an accounting firm, where several of my clients were involved in real estate, an area that really interested me.

In 1986, I joined Duke Realty and served in various roles, including vice president and treasurer, chief administrative officer, and executive vice president. In 2003, I was named president and chief operating officer. In 2004, I became CEO and in 2005 was named chairman.