Duke Realty Corp. is known primarily as a developer-one that adds millions of square feet every year to its commercial real estate portfolio.

But Indianapolis-based Duke wears more than just its developer hat. It wears a hard hat, too, as a major player both locally and nationally in third-party construction.

Duke and others are finding that, when their own development activity is sparse, they can pick up the slack with outside construction work.

"We're steadily making it a bigger portion of our diet," said Gary Burk, president of Duke Construction.

Office building development may not be all the rage right now, as Duke and its competitors all but put the brakes on new projects in 2001 and 2002, but other sectorssuch as retail, industrial and medicalare still building. Duke's major construction clients include home improvement chain Lowe's, Holiday Inn Select, and St. Francis Hospitals and Health Services.

Lauth Property Group, another locally based developer, has been performing third-party construction work for more than a decade. Current projects include a 60,000-square-foot office building in Charlotte, N.C., 100,000-square-foot distribution center in Denver, and a 45,000-square-foot medical facility in Anderson.

"The fact is that third-party construction for us has been one of our primary businesses at the local and national level since the late '80s," Lauth Executive Vice President Michael Curless said. "Sometimes well over half of our annual volume has been in the form of thirdparty construction.

Only one of Lauth's eight ongoing projects is an office building; the rest are industrial or medical.

"As the office market has slowed both locally and nationally, a higher proportion of our projects are in the form of industrial [real estate]," Curless said.

Locally, both Duke and Lauth are among the top construction contractors. While heavyweights such as Hunt Construction Group and EA. Wilhelm Construction Co. Inc. lead IBJ's most recent list, Lauth comes in at seventh with $136 million in local 2001 billings, followed by Duke in the eighth spot with $127 million in billings.

But there is still a difference between traditional construction companies and development companies with construction divisions. Commercial real estate developers for the most part stick to their knitting, typically performing work that is similar to the type of projects they develop internally.

"Lauth and Duke aren't going to go out and bid on Conseco Fieldhouse or a parking garage," said Jeff Hagerman, vice president of Indianapolis projects for Foil Wayne-based Hagerman Construction Corp.

Still, Burk points out, Duke builds a variety of projects that are not found in its portfolio, including hotels and hospitals.

Both Duke and Lauth perform a significant amount of construction work for internal development projects, meaning Duke Realty would use Duke Construction to build a new office building. Usually, internal projects account for about two-thirds of the work Duke Construction procures, with the remaining third generated by outsiders. But Burk said, "this year it's going to be far closer to 50-50."

He said the shifting balance is due to both a decrease in internal development and an uptick in construction contracts.

Duke's general contracting revenue has fluctuated over the years going from $216 million in 1999 to $292 million in 2000 and $264 million last year. In its 2001 annual report, the company blamed the decline on a slower economy.

As a publicly traded real estate investment trust, Duke is under constant pressure to produce results for its shareholders. Burk hopes more of those who invest in the company will take notice of its work beyond the development arena.

"We've been trying over the years to tell investors the story ... that this is a diversified investment [company]," Burk said. "We have more than one way to create income."