Jack Matthews: Formidable Developer
Don’t let his quiet, down-to-earth demeanor fool you. He's behind some of North America's most impressive projects.
Dallas Mavericks President Donnie Nelson remembers the first time he met developer Jack Matthews. He was standing on the roof of the old Sears building on Lamar Street, filming a video to promote South Dallas. “Two Canadian guys came walking over and, at the time, we still had Steve Nash, so I was giving them the Steve Nash-hoser-Canadian speak, busting their chops,” Nelson says. “The woman shooting the commercial asked to have a word with me and pulled me aside. ‘Do you know who that is?’ she asked me. ‘That’s Jack Matthews. He is redeveloping this entire area.’ She let me know that he was the big cheese.”
After that rooftop meeting, Nelson continued to hear more about the work Matthews was doing in South Dallas. The developer had transformed the historic Sears building into SouthSide on Lamar, a bustling residential and retail complex. He had donated land to the city for a new police headquarters. And now he was bringing in Gilley’s. Nelson, a self-described country music fanatic, asked for a meeting with Matthews so he could try to get in on the deal.
“We did absolutely everything wrong you can do in the honky-tonk business,” Nelson says. “We overcharged for parking, overcharged for drinks. Finally we turned the keys over to a professional, and we’ve been killing it ever since. But when you’re in the foxhole with someone and going through hard times, that’s when the best and worst comes out. With Jack, there was no worst. I saw nothing but integrity.”
The second deal they partnered on was the acquisition of the old Alford Refrigerated Warehouses, a 60-acre site on Cadiz Street near SouthSide on Lamar. “I wrote what to me was a significant check, and this was in the midst of us not doing so well with Gilley’s,” Nelson says. “But I just felt so good about Jack’s vision and his desire to do something good for the area. And as it turned out, our little investment quickly generated a five-time multiple.”
After that Nelson went all in, taking a 10 percent stake in the developer’s company, Matthews Southwest. “I’ve been in business with some of the big boys, the biggest real estate names in Dallas; Jack was my dark horse,” Nelson says. “But it’s the dark horse who’s lapping everyone else. In terms of business, he’s the best thing that has ever happened to me.”
A Career Epiphany
You’d never know from his quiet demeanor—or his no-frills office in a nondescript building off Stemmons Freeway in Lewisville (midway between downtown Dallas and his home in Argyle)—that Jack Matthews is the developer behind some of North America’s most impressive projects.
His latest play in Dallas is the highly anticipated Omni Dallas Convention Center Hotel. The $500 million, 23-story, 1,000-room property is set to open ahead of schedule on Nov. 11.
Another stunner is The Bow, a 58-story, 2.2 million-square-foot headquarters for Encana Corp. in Calgary, Alberta. When it opens next spring, the crescent-shaped tower will be the tallest building in Canada outside of Toronto. (Check it out at www.the-bow.com.)
Matthews grew up in London, Ontario, a city of about 300,000 people, the fifth of sixth children and the only boy in the family. In high school he played football and hockey, of course; he also ran cross country and wrestled. At 16 he began working for his father’s construction company, then attended the University of Western Ontario, where he earned an undergrad degree in economics and an MBA. While still taking classes, Matthews was called home to help with the family business. Interest rates in Canada had shot from 6 percent to 20 percent; his father was over-leveraged on his construction equipment and in trouble.
Matthews tried to sell some land assets to help cover costs, but found few buyers in the down economy, so he went about developing them himself. The experience led to a career epiphany. “The light came on—I’m not going to be a construction guy; I think more like a developer,” says Matthews, his Canadian accent still intact. “People see them as almost the same guy, but the decisions and disciplines are very different.”
He started with small projects, learning along the way. “It was a matter of understanding the numbers, understanding the risks,” says Matthews. “In this business, a guy who is not too smart can make a lot of money. But a guy who’s smart will keep it longer.”
He worked at Matthews Group for about six years before taking the helm in 1985—at the ripe old age of 27. “I was a bit frustrated that I wasn’t made president a couple of years before,” he recalls.
Under his leadership, the company grew from $69 million in annual revenue to $500 million. It also acquired several other businesses and established Matthews Southwest to break into the American market.
In 1991, Matthews left the family business to lead Paxport International, a group he had assembled to bid on a $4 billion contract to privatize Pearson International Airport in Toronto. “There’s still an argument over whether I decided to leave or was asked to leave,” he says with a smile. “My dad and I both remember it differently.”
Paxport won the bid, but by 1994, changes in the government led to a cancellation of the project. “I had every dime I had in the world invested in that deal, and I had seven different investors,” Matthews says. “I had the choice to stay and fight the government or do something new and different.”
He decided to move to Texas.
South Dallas Pioneer
Matthews had first opened the North Texas outpost, Matthews Southwest, in 1988. “I was given the task of finding a place to invest about half of the company’s assets,” he says. “The Canadian political scene was looking like it was headed in a socialist direction, and it was scaring people. So I was asked to find a market that spoke the same language, had pretty much the same business ethics, and was a direct flight away. I chose Dallas.”
At the time, the North Texas market was experiencing its own troubles. As an investor with money to spend, Matthews was welcomed by the real estate community with open arms.
The office had remained open while he worked at Paxport, but things really began to heat up after Matthews returned to Texas. One project, in particular, got people’s attention: SouthSide on Lamar. The opportunity to buy the historic Sears building on Lamar Street was compelling from the start, Matthews says. And redeveloping it as a residential and retail complex was an obvious play. But other Dallas real estate pros didn’t see it that way.
“Normally if a developer does something stupid, people talk about him but they generally don’t talk to him,” Matthews says. “On this one, people were so sure I had done something stupid, they would tell me to my face—over and over again. I also learned what it was like to live and work in South Dallas, because the banking community was completely nervous about doing something there. I told a friend, ‘I have to succeed in South Dallas, because otherwise, people won’t believe in South Dallas.’”
SouthSide on Lamar remains one of Matthews’ favorite projects; not only did it generate “higher-than-average” returns, it also helped transform the area and sparked other developer interest in South Dallas. “If we’re not making money, I can’t keep getting investors to back us,” he says. “But I definitely don’t want to go through the world and have it only be about making money.”
Matthews bought up other land and properties in the area, including the Alford site, where he had to deal with “60,000 frozen chickens that had been thawed out for about a year; it was awful.” That property was later sold to JPI for residential development.
Last month, Matthews Southwest began work on a building at South Lamar and Belleview, which is being transformed into a 76-room boutique hotel. Slated to open late next summer, NYLO Dallas SouthSide Hotel will also feature a rooftop bar and pool.
To the north, the company continues to develop The Tribute. The spectacular 1,500-acre masterplanned community on the shores of Lake Lewisville is home to a Scottish links-style golf course designed by Tripp Davis and The Old American Golf Club, designed by Davis and Justin Leonard.
Matthews Southwest also has industrial developments in Mexico along the California-Arizona border and is the one of the largest landowners in Vancouver. And last year it got into the gas pipeline development business, with a project south of Waco and others in the works.
The company isn’t locked into any particular product type. Development decisions are based on the highest and best use for the land.
And so it was with the convention center hotel in downtown Dallas. “The funny thing is, we worked on that deal 10 years earlier, believing
that a convention center hotel should go on that site or one close by,” Matthews says. “We really felt it was important for the city to have it there; we just weren’t able to put it together.”
When the city put the project up for bid in 2008, however, Matthews Southwest prevailed.
It’s that kind of patience that’s required for success in the development business, Matthews says. “I’m a long-thinking person. If you were impatient trying to do what I do, you would not have a lot of fun,” he says. “This business is not for everyone. You have to have vision and be patient. Sometimes the visionary part of me is expensive, but eventually, I’m going to be right.”