Stream Realty’s Decade of Big Deals

STREAM TEAM: Lee Belland (left) and Mike McVean (right) have reason to smile. photography by Adam Fish

It’s a cold, gray friday afternoon outside the domed windows of the penthouse in one of downtown Dallas’ trophy high-rises, the 55-story Chase Tower. The building is probably one of the most recognizable on the city’s skyline, and its address is home to established Dallas institutions, such as the Dallas Petroleum Club. By tradition or cliché, the top floors of such a space should be reserved for old gray men with old gray money in old gray suits—Mortimer and Randall right out of Trading Places.

But the arched glass rooftop hovers over an office with a youthful, dynamic vibe. These top two floors are now headquarters for one of the city’s major players in tenant rep, leasing, and management—Stream Realty Partners. The co-managing partners and founders, Mike McVean, 44, and Lee Belland, 43, both dressed in jeans and casual shirts, are sometimes as amazed as anyone that this perch is theirs. Only a decade ago, they were in an utterly forgettable one-story office strip center, for which “utilitarian” would be the kindest description.
“Those guys started at the bottom,” says Robert Deptula, a principal with Transwestern Commercial Services, a Dallas competitor. “And they’ve had an incredible ride.”
For McVean and Belland, the thrill of the ride is perhaps the best explanation for why it’s lasted so long and taken them so high.

In the fall of 1996, McVean and Belland graduated from the “University of Trammell Crow.” The two had been leasing agents at the venerable firm. They were competitors, actually, but they never felt that way. 

“That probably tells you something about our chemistry,” Belland says. “We found out early on we complement each other’s strengths and weaknesses, so there was no need to compete when we got so much more done when we worked together.”

McVean agrees, expanding on Belland’s practicality with a more philosophical bent. “It’s a yin and yang thing,” he says. “He’s the realist and I’m the optimist. I’m more big picture and he’s more the detail man. It’s a good marriage.” He points at Belland, “Business there, marketing here.”

Both men had one thing in common: the entrepreneurial streak. In September of that year they took the Great Leap together. Unlike most people in virtually every business who strike out on their own, the duo decided not take clients with them from their home company, Trammell Crow. “It didn’t seem right after all we’d learned from the firm,” Belland says.

So, no clients. And if you ask them now, no plan. The two claim they didn’t have anything forward-looking to rely on besides casual confidence. “I think we can do this,” McVean remembers saying. “It’s not rocket science.”

The two thirtysomethings needed a company name. They both liked fly-fishing, so “Stream Realty” seemed suitable. They also needed a home office, so they borrowed a glorified broom closet at Emerson Partners. (McVean was neighbors with Philip Williams, then and still head of Emerson.) With a front door and a name to put on it, Belland and McVean got to work.

They had no guiding principle or unique proposition, but they did have a good idea of how to get started. Belland says their short-term goal was to pursue acquisitions, which was well-timed, as the market was ripe for such activity. Their first deal was, indeed, a property acquisition. It was a modest one-story building at 1451 Empire Central that provided them space to work and space to lease. They bought the Spartan office space using money they borrowed from colleagues and fraternity brothers totaling about $300,000. It was barely a blip on the local commercial real estate radar.

Within a year the company had acquired its next property—1355 River Bend—which they leased to CompUSA and then flipped to Credit Suisse First Boston. Again, the deal hardly looked headline-worthy, but looks were deceiving. The transaction with Credit Suisse First started a relationship with a financial heavyweight, and that relationship got them their first infusion of serious capital—$26 million to acquire three Dallas buildings.

“I remember walking around Wall Street after that meeting and we kept saying to each other, ‘I can’t believe they’re really giving us $26 million,’” Belland says.

Stream’s wild ride had officially begun.

Flush with capital, Belland and McVean sought out  investment opportunities and leasing and management assignments outside the mainstream, looking at properties and markets that others might have neglected or overlooked. When bigger firms were concentrating in Las Colinas and Far North Dallas, Stream was on the hunt for B buildings downtown, or in East Dallas. They did the grunt work of rehabbing call centers—not sexy, but profitable.

photography by Scott Womack

All of that, they say now, was not at the exclusion of bigger deals and trophy buildings, but in preparation for them. By late 1997, they were competing in the beauty pageants for leasing and management assignments against national heavyweights and sometimes to their own surprise, they won. A turning point was securing the contract for the Pyramids at Park Lane, a 300,000-square-foot office project just north of NorthPark Center mall.

As Stream’s portfolio grew, so too did its payroll. If they didn’t have a long-range plan, they did have a core maxim: Hire smart. Identifying and recruiting talent, McVean says, is a talent in itself, and it’s not really a skill that can be taught. But it’s key in growing an organization as quickly as they were fortunate enough to.

“For what we needed, it was as broad a skill set as possible—people who, even if they didn’t have experience in leasing, brokering, and management, people we knew could learn,” Belland says. “And knowing a person is right is just not something you can explain.”

By the end of 1999, they had some 3 million square feet of leasing and management assignments in their portfolio. With the right people on staff, Stream also embarked on its own development projects, the first being a build-to-suit in Las Colinas. These were heady times, and the hits just kept coming. In 2000, they won the 2 million-square-foot Macfarlan/Morgan Stanley account, a portfolio which included such trophy properties as downtown’s Thanksgiving Tower. Stream opened an office in San Antonio as their net profits grew from $1.8 million to $8 million in just 12 months. The Stream roster—including properties Stream owned as well as those it managed for third parties—topped 9.4 million square feet.

Which is not to say Stream’s ride was without ripples. But despite the real estate market’s downtown starting in 2000 and the general economic slowdown post-9/11, Stream continued flowing. They did so, they say, by always maintaining the right balance between service and investment.

“Investments can go bad, and the economy can tank. This business is cyclical—there will be bad times. But even then, people are going to need a management company or tenant rep that focuses on service. That’s how we rode out the down cycle in the market—by keeping that balance. We didn’t make any major investment deals in 2001, 2002, and 2003,” Belland says.

But there’s more to it than just cautious investment strategy.

Stream’s revenue breakdown reflects a philosophy of staying true to their service roots. The bulk of the firm’s revenues come not from investment sales but from commissions and property services. Just one-fifth of the gross is from investment activities. The biggest percentage is from landlord commissions—about 40 percent—and the balance from tenant rep commissions and management services.

It’s no accident.

“Management and leasing properties is a service business, and it’s hard work. It’s fee-based and the margins are low. It’s not sexy. It’s about cleaning toilets, cutting grass, and signing leases,” Belland says. “The investment side is exciting. It’s wildly profitable, and there’s a lot involved that you can love. A lot of people in our business try to work toward doing investments exclusively, and it’s easy to see the appeal.”

But, McVean says, that’s how you lose your investing touch.

“Because we’re in the market doing the leasing and management, we have a better feel for what’s really happening. That’s where we get our intelligence and our inside information,” McVean says. “It’s how we always know of any deal out there over 1,000 square feet. It’s why we’re not going to change that balance much.”

Today, the company is rated one of the 10 largest brokerages in the city, according to the Dallas Business Journal. They lease or manage more than 26 million square feet of commercial and residential buildings in  Dallas, Fort Worth, and San Antonio, as well as Austin and Houston, where Stream opened offices last year. For Belland and McVean, their roles have changed dramatically. They’ve gone in a few years from maverick agents to employers, from being a guerrilla firm responsible only for themselves to managers of managers.

And trying to pin down the secret to their success is like pulling teeth. Sure they’ve had their challenges, but ultimately they credit most of their success to luck and the kind of good karma that comes from treating everyone—employees, clients, and competitors—nice. That’s even on their mission statement.

“Like I said, it’s not rocket science,” McVean says and still believes. “What we do a lot of people do. But when you treat your people with respect, and people genuinely know you’re nice even when you have nothing to gain, they’re going to remember you. All things being equal, that can make a difference.”