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Conversation With: Moody Younger and Lew Wood of Younger Partners

Wood recently joined Younger Partners and will be tasked with focusing on investment sales, specifically multifamily and office.
By Lily Corral |
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Commercial real estate veteran Lew Wood recently joined Younger Partners, where he will set his attention on investments, focusing on multifamily and office markets. Wood has closed more than $1 billion in sales over the course of his 38-year career, including more than 30,000 apartment units and 3 million square feet of office buildings. He’s also developed more than 1.5 million square feet of industrial space into loft projects. He made the move from Henry S. Miller, where he was for the last 10 years, and has been named a D CEO Power Broker for the past three years. One of his best-known deals was the closing of The Statler transaction in downtown Dallas. D CEO Real Estate recently sat down with Wood and Moody Younger, Younger Partners’ co-managing partner, to discuss the recent hire and the Dallas-Fort Worth market in general.

D CEO Real Estate: What was intriguing to you about moving to Younger Partners?

Wood: Well, there were a couple of things. One is I’ve known Moody probably for 20 years, at least. And Sam Kartalis, who used to be with me at Henry S. Miller, I’ve known for 30 years. The only reason I was at Miller was because of Sam Kartalis. He left a couple of years ago and I had some business going on and couldn’t really leave at that time. But a few months ago, I saw Moody with Kartalis and a couple of the other guys at one of my favorite restaurants in town, and I knew something was up. I didn’t know what it was, but I came to find out the fact that Younger had acquired Novus. That was the impetus to finally make my decision to move over to this platform. This is really exciting. I’m an investment guy. Probably 90 percent of my business over the years has been apartments, but I also have sold quite a few office buildings, and [Younger has] a great office leasing division—an area that Miller never really focused on. So I think that all those things combined to help me make the decision to move over.

D CEO Real Estate: What are some new goals or immediate goals you’ve set for yourself in your new position at Younger Partners?

Wood: The first thing I’m going to do is try and put together an apartment investment division as part of what we’re doing right now, and build a small team. They’ve got one senior guy here right now, Bob Helterbran, whom I’ve known from when I worked at Coldwell Banker many years ago, so we’re old friends. We’re interviewing some young people right now to add to that team. So I want to be focusing my activities on building the multifamily team, investment team, and an office building, almost the same thing. That’s kind of where I’m going to spend most of my time.

D CEO Real Estate: Moody, why did you see fit to bring Lew on at this time?

Younger: I’ve known Lew for a long time, like he said, and we really are trying to build out our platform and round it out. We started office leasing; we’re very good at office leasing. We got industrial leasing, with Sam Kartalis and Robert Grunnah and the Novus people, who gave us a huge land-brokerage presence. We’ve got some investment sales presence. We’ve got a young broker, Hahn Franklin-Mitchell, who does industrial. Bob Helterbran, as Lew alluded, does multifamily. Lew’s done multifamily forever and is one of the premier multifamily brokers in town, so it gives us the chance to kind of continue to build out our platform. We have a lot of clients with office buildings and warehouses, and from time to time they’ll want to sell them. So it gives us a full-service platform so that we can do that. And it helps us, honestly, to get our clients into buildings. We can help clients find assets to buy if we’re in this space, so it just kind of helps us continue to build out our platform—and with one of the best brokers in town. So we’re real excited.

D CEO Real Estate: What brought the two of you into a career in real estate to begin with?

Younger: Let me see if I can put all that into Cliffs Notes. I was a mechanical engineer working for Mobil Oil, doing project management work, building service stations. I lived out in California doing [that] and started working with developers. I developed an interest in real estate, and that’s kind of what got me into it. It took me awhile to get into it the way I really wanted to, but I came back here and went to business school at SMU. When I got out, I went to work at Trammell Crow Co., in their industrial group, leasing warehouses, and have been in it ever since.

Wood: I was working with Xerox Corp. for about four years in Washington, D.C. I had some good friends that were in the Dallas area, and two of them were telling me about interviewing with Coldwell Banker Commercial—before it became CBRE, it was Coldwell Banker Commercial—and I was kind of interested in it. I did not like living in Washington, D.C. I met my wife there; she was born there. One day I just said, “Hey look, let’s consider relocating. Where would you like to go?” She said, “How about Dallas?” It was so strange because I had these friends that were talking about Dallas. So I interviewed. I asked Xerox to move me to Dallas as a corporate move, and they said they couldn’t do that at the time. I came down here and I interviewed with the resident manager of Coldwell Banker at the time. When I walked in there were about 42 guys there, all mostly investment and leasing guys. And they were all ex-IBM or ex-Xerox guys and ex-military guys. I’m a former marine and an ex-Xerox guy, so I just fit right in. I took the test and I started. That was a long time ago. I did, almost exclusively, apartment sales for about eight years, and then I kind of moved over to start doing some office building sales. That’s how it started.

D CEO Real Estate: Over the years, what are some major shifts that you’ve seen happen in the DFW market?

Wood: I’ve been here for almost 40 years. When I moved to DFW there were 2.3 million people in the area, and there’s around 7.5 million now. There’s been a tremendous explosive growth over that many years. I think that there have been periods, over that 38- to 40-year period, where we’ve seen some significant downturns in our market, as most markets do see. But currently, we’ve had probably the longest uptick market that I’ve ever seen. I’ve never seen a market that’s six years and rising. We’re in that right now. It makes me a little nervous because I’ve seen the downturns and they can get ugly.

Younger: I started in an ugly one. Of course, the market’s grown. I think it’s become much more sophisticated, too. Dallas, after the mid-’80s, was so overbuilt that it became kind of red-lined by the institutions. There just weren’t many institutional buyers for Dallas real estate for 20 years—I mean through the ’90s. Really, this last cycle is the first time that institutional money has come back into Dallas in a big way. I think that’s probably one of the biggest changes I’ve seen over the last 10 years. But then there’s more hub locations, so you’ve got Legacy now, you’ve got Uptown, you’ve got what’s happening out in Las Colinas. You’ve always had submarkets, but those little micro-markets are much more relevant now than they used to be. The walkability of office space; being able to kind of live-work-play. I know that’s a cliché, but that’s become very important for office users—a lot of office users, not all, but a lot. On the industrial side, Dallas has always been a great distribution market. But the sizes of warehouses when I started were 150,000 to 200,000 square foot—that was really big—and now they’re 1 million square feet, they’re just huge. So, that market has really evolved. Dallas is one of the premier industrial markets in the country, and one of the premier corporate headquarter locations in the country. I think it has just continued to grow and evolve, and it’ll be interesting to see what continues to happen. But it all seems positive.

D CEO Real Estate: We’re well into Q2 now. How do you see the rest of the year playing out?

Younger: If you don’t live here, and you read the papers about all the relocations and all the positive things happening you think, “Man, the market is white-hot.” If you do live here, and you are in it, it’s still hot in pockets, but it’s not hot everywhere and it feels like we’re seeing a little bit of a plateau. I don’t know if that’s a plateau that’s going to catch its breath, move forward, and continue to expand; or if it’s going to be a plateau that dips a little bit. I think Dallas, now, is very much tied to the national economy. There is uncertainty and I think it slows down decision-making, and that’s what we’re seeing. Once some of that uncertainty is removed from the market, and people have a little more confidence in what the rules are, you’ll see things start going again. I think we’re in good shape from the standpoint of I don’t think things are overbuilt or anything like that, but I do think just the overall economy is at a little bit of a plateau. And then, some external factor could negatively impact us. But hopefully nothing like that will happen.

Wood: Looking at multifamily, you’re looking at a market that’s about 95 percent occupied, and it’s been that way probably for three to four years. We’re seeing 3-5 percent rental increases, still. We were seeing bigger increases than that for the last few years. We have 50,000 apartment units being delivered to the market. Those are all A units, spread all over this market. I think we’re going to see a little softening in that A market, and that’ll trickle down. When they finally start lowering their rents a little bit, I think we’re going to see some of that. Not bad, but there’s going to be some adjustments. I think another thing we have to be very careful of is something that I read in an article in the Wall Street Journal, talking about the Texas market. It said that real estate prices over the last 10 years have increased 74 percent, across the board—that’s residential and commercial, it was kind of blended. But, incomes have only gone up 4 percent over that same period. That’s troubling when you think about the implications of that. I think the correction is going to be that we’re going to see rising incomes to help people afford to live here. That’s why they’re leaving California and coming here. Housing was the No. 1 thing. If you talk to the chairman of Toyota, his No. 1 reason to relocate to Dallas was that his people could afford to buy houses. So I think there’s going to be kind of a correction—housing, commercial, across the board.

D CEO Real Estate: Where are some of the bigger opportunities as far as multifamily goes, moving forward?

Wood: If you look at our growth, it’s up north. I did real estate development for 10 years and I was working in the urban core. At that time there were 200 people living in downtown Dallas; that was it. That was like in 1997, and now there’s 45,000 people living in the core. There’s been a huge impact of new growth in every area. We’ve got big buildings going up everywhere. We’re starting to see, for the first time, high-rises being built out in Legacy. That’s something we’ve never seen—a high-rise being built outside of the core. I think we’re seeing growth across the market. All the areas are going to be strong—Fort Worth, North Fort Worth, exploding. It’s kinda the same thing we’re seeing.

D CEO Real Estate:What are the submarkets or projects that have your attention?

Younger: Where I think there’s some opportunities, for office, is along the LBJ corridor and in Stemmons. Everything else has been priced pretty high. I still think there are good value opportunities along LBJ and in Stemmons, so we’re paying close attention to those markets. There’s several assets that we are watching, because I do feel like when you are coming out of a market that’s been as good as this one, people sometimes don’t pay as much attention as they need to. You can develop bad habits if things are really good. I think that’s probably going to create some opportunities, whether that’s from a buying standpoint or a servicing standpoint. That’s kind of overall what I’m looking at. Also, from a platform standpoint, trying to build out the rest of our platform and really paying attention to that. And then, there are several other initiatives that I think over the course of this year that we’ll get started with.

This interview has been edited and condensed for clarity.

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