land development INTERVIEW
Path of Progress in North Texas Continues Northward Written by Janis Arnold Charlie Adams, a Dallas land broker with The Stratford Group, has been brokering land in the North Dallas areas since 1977. Brokering land related to master-planned communities constitutes the mainstay of what he’s done for the past 20 years with Republic Property Group in Dallas, one of his largest clients. Frequently, Charlie remains involved throughout the development process, eventually selling land or residential loans to home builders. Throughout the course of his career, Charlie has seen several cycles, the worst of which was the mid to late ‘80s. That downturn caused the greatest devastation; however, this last downturn was also severe. The main difference between the two business cycles is that during the most recent downturn, CRE business essentially stopped, but the Dallas market didn’t see all that many foreclosures. A significant aspect of the difference in this downturn versus the one back in the ‘80s is that banks took the attitude of ‘extend and pretend’ in the recent recession which somewhat protected the taxpayer, but wasn’t good for those individuals who were in the CRE market. Essentially no transactions occurred; however, in the recent downturn, it is apparent that overall values were maintained. The majority of growth in the Dallas area has been due north of Preston Road for the past 80 years. This growth pattern will continue for as long as the toll roads keep extending. Shopping and other amenities to support that forward movement continue to be appealing to today’s buyer and developer. Dallas has created some MUDs, but not to the extent seen in Houston, because in Dallas more land has been incorporated into the cities. Citizens in Dallas don’t want to create extra labor tax, so MUD Districts are rare as land has been annexed by the city. There are, of course, some significant exceptions. The Bright family has developed Castle Hills, a development that Charlie represents. That project created a fresh water supply district and a public improvement district which was successful. This was possible because the land was in the extraterritorial jurisdiction of a couple of cities and hadn’t been annexed yet. But there is no doubt that MUDs are harder to develop in Dallas than they are in Houston. Dallas area planned communities are generally smaller in scope and typically require less build-out time than the larger master plans seen in the Houston area. The typical deal in Dallas is finished in closer to 5 years rather than the 10 to 30 year time frame that it takes for the larger MPCs in the Houston area. Charlie notes that it’s really critical for the larger master plans to have districts, and in the Dallas area they have been successful going forward when the districts are in place, but in the case where there’s no district in place, the developers still are very aware that they have to have a plan to get in and out before the next downturn.
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Charlie, like many of the CRE professionals redNEWS spoke with for this month’s issue, agrees with the statement that land prices have gone up so dramatically that it is likely the market will see a plateau in the near future, particularly when it comes to the prices of residential lots. Single family lots are at twice the price they were during the last peak, which is unheard of. When asked what advice he had for youngsters wanting to enter the CRE market; Charlie said,“Find a firm where someone will mentor you on a daily basis. That’s number one. The second piece of advice is that the new CRE professional should focus on an area and avoid getting distracted by activity that’s extraneous to that area. He/she needs to become the most knowledgeable person on the planet for his or her particular area of expertise in that one area, whether it’s land or income property, retail, office, whatever. There are lots of people who are only pretty good at a lot of things. New people need to strive to be the best at one thing!” Regarding the person interested in getting into development, Charlie’s advice is: “Find the right partner and have very little debt, and buy land in the best locations possible at a price that works. It’s pretty simple, really.” One key fact that many relatively new land brokers have to be aware of: Land development is more competitive today because home builders have become competitors of developers. So the person who wants to develop in today’s market has to be much more knowledgeable, knowing that the competition is out there.