Miller’s Minions

From the halls of Henry S. come more than 90 wheelers and dealers in real estate. Here’s a look at a few stars.

MIKE HOPKINS, the Hopkins of Hopkins-Shafer, had spent the morning at the construction site of the Village at Bachman Lake, the retail developer’s pet project. Hungry, he steered his Wagoneer through the drive-in window at the Jack in the Box across the street and ordered a hearty lunch. But when he reached the window, he realized he had left his wallet in the office. He had no money with him.

“I wanted to tell her I owned the shopping center across the street,” he says with a wan look. Since he knew she probably wouldn’t believe him, he drove off, hungry.

Despite Hopkins’ experience, building and leasing shopping centers in Dallas is a very, very good meal ticket. Especially the new strip centers that are sprouting like bluebonnets all over town. And more often than not, the developers with their names on the bank notes, the men with the leasing responsibility and growing personal fortunes have just formed their own companies, firms not in existence less than two years ago.

In a surprising number of cases, these new retail developers trained under the dean of Dallas retail. Herb Weitzman, at one of the city’s foremost training grounds, the commercial/retail division of the Henry S. Miller Co. Beginning in 1970, Weitzman assembled a retail team of youngsters fresh from the halls of higher learning. And beginning in early 1983, that first flock, almost to a bird, has flown the coop and is responsible for many of the cranes now hovering over the city’s friendly development skies. They’re having a big impact on the way Dallas shops.

“Our company had a program of encouraging young, creative superstars right out of college,” says Dave Donosky, president for the central southwest region of Grubb & Ellis, the San Francisco real estate company that merged with Miller last year. “The Miller name was a magnet. Herb created an environment in which they could learn to penetrate the retail markets and become highly successful,” he says.

The newcomers were shuffled into Weitz-man’s retail division, which, in the early Seventies, sat squarely at the bottom of the leasing hierarchy. “Retail was not in vogue in the early Seventies,” remembers Donos-ky. “Office and warehouse leasing had all the limelight.”

But Weitzman, who had trained under Henry S. Miller Jr., himself, sensed that North Dallas’ already ravenous buying power was about to take a quantum leap. With his small but fiercely competitive team, Weitzman set out to capture that market.

“When I started at the Miller company (in 1968) there were 18 people. Not 18 associates, 18 people,” says Ken Hughes. “That year, the company did $75 million in transactions. When I left 15 years later, I was doing more business annually than the entire company did during my initial year,” says the founder of Kenneth H. Hughes Interests. Today, Weitzman has 85 in his division.

In those days, the Miller company officed at One Main Place. Every Monday morning Weitzman assembled his associates for their weekly production meeting. “You came to work with your chinstrap strapped,” recalls Tom Brosseau, now president of Swearin-gen-Brosseau Development Co. “Herb went around the room quizzing us on our various assignments. On many occasions, you would be chewed out in front of the group. But the meetings were a great teaching experience.”

“We learned from other people’s mistakes as well as our own,” recalls Paul Whitman, now of Whitman Williams.

The competition was intense. “You could feel it in the room when we met. We weren’t worried about other brokers in the city because we had a monopoly on tenant representation in the marketplace. We fought each other for the good deals,” Brosseau says.

“Everybody competed with everyone else,” says John Evans, now a principal at Evans, Birmingham, Williamson. “Guys who were there 20 years were out in the market trying to do the same deals as the guy who was there one week.”

The new guys usually first learned the ropes of small-tenant leasing. Then they progressed to large-tenant, then project leasing. The experienced could graduate to development. The brokers earned their pay by standard commissions, while Weitzman earned an override percentage on each deal.

Over the years, Weitzman, who served as a financial partner with sometimes as many as 15 other brokers, built scores of prime strip-shopping centers. Today, one of the brokers, Whitman, owns interests in 80 different centers. Whenever a project sold (which was rare, since Weitzman’s game plan was build and keep), the partners would share in the equity gains. For the senior brokers that Weitzman cut into projects, the taste of the financial fruits of development was sweet, indeed.

But after more than a decade of working together, Weitzman’s superstars (the Miller company even set up a “Superstar” aptitude test in the old days) were impatient to try developing on their own. Starting in 1983, the mass exodus began.

The time was right. These brokers were in a clear position to know Dallas was temporarily mired in a retail slump, poised to explode. And explode it did. The ensuing bouyant market helped these men in their 30s go far, fast.

Since early 1983, shopping centers have been one of the darlings of Dallas/Fort Worth developers and lenders alike. Population and affluence was growing. Rapid growth in retail spending spurred existing merchants to expand and has drawn new merchants to the area, creating a burgeoning demand for retail space. Simultaneously, those with dollars to lend or invest were steering clear of offices and apartments because there were too many of them. To cap it off, novice developers were viewing shopping centers as relatively easy to produce.

And the time was right personally, too. These brokers were finally ready to call their own shots, to have their names in goldleaf over the lintel. Money, say most, was not a major motivator. “I already lived in Highland Park and drove a Mercedes,” says Hopkins. “I wanted to have control over my own company.” Adds Whitman, “If I made the same amount of money I made at the Miller company running my own company my way. I would have been happy.”

Although management headaches and office organization are new problems these deal-making brokers are now having to face, they seem to enjoy the giddy power and the prestige of signing their own names on huge loans and slapping their own corporate symbols on the construction site signs. Here are their stories.



HOPKINS-SHAFER

On a credenza outside the conference room of the bustling offices of Hopkins-Shafer sits a pair of custom-made cowboy boots, a gift from a satisfied tenant. Four interlocking squares are boldly imprinted on the leather.

These days, those squares seem ubiquitous. They are the proud symbol of the development partnership of Mike Hopkins and Steve Shafer, who in the spring of 1983 were the first to leave the Weitzman womb. Today, about 1.1 million square feet of retail space sports that symbol on the tile facades of the structures. Shafer, 36, estimates those projects “exceed $128 million in value” in today’s market.

The twosome specializes in specialty-store strip-shopping centers. They scout sites by cruising through neighborhoods, sizing up landscaping. They count the number of BMWs, too, because their developments are geared to upscale consumers: the shoppers who want quality merchandise and have the scratch to pay for it.

The company’s strength is in renovation. The partners have an uncanny knack of looking at rundown, even rowdy, inner-city shopping centers, and seeing high-fashion chic in their place. They are not afraid to be first because they know they can buy the land when the price is still right.

“People laughed when we first bought Lovers Lane and Inwood (southwest corner),” says Shafer. “The main tenant was a discount liquor store. Bums were sleeping in the street. Other developers told us people would steal the tile from our facade to put in their bathrooms. But we knew we could turn it around.”

Adds Hopkins, “We started buying land when the cost was $30 per square foot for a building. Today people are paying between $120 and $200 per square foot unrenovated.”

Although the twosome now have more than 30 new projects out of the ground, their two landmark deals are also inner-city renovations: the Village at Bachman Lake, a 255,000-square-foot giant now a messy construction site but already 80 percent leased; and Casa Linda Plaza Shopping Center, a redo of the 248,000-square-foot grande dame in East Dallas that is 95 percent leased.

“When we bought the Village our colleagues gave us a really hard time,” says Shafer. “There was a bar that catered to the Hell’s Angels and a wife-swapping club. But we were grinning like Cheshire cats when the deal came to us.”

The partners have already sold eight of their centers. “When we look at our projections and see we have large cash payments due six months out, we turn loose a property. We sell whenever we have to grow,” says Hopkins. Part of the deed restrictions, however, require the Hopkins-Shafer logo to remain on the project.

The partners do quite a few things differently from the Miller company as well as from their peers. They never take any development partners, choosing to own all their deals 100 percent. “We like to make our own decisions, win or lose,” says Hopkins. “And we don’t have to deal with a savings and loan, or a syndication group, or an oil partner. It’s a hassle answering to other people,” he says frankly.

Also, Hopkins-Shafer is a development company, period. It does no agency leasing for other developers. It does have leasing agents, but they only lease Hopkins-Shafer centers. The partners have established a firm dress code for their agents: white shirts, dark suits and shined shoes. The company has its own shoe shine man who comes in Monday and Thursday mornings to get the brogues polished.

So far the duo has only stubbed its toes once, developing in Fort Worth. “We bought property on Camp Bowie and envisioned it serving an area like University Park. But Fort Worth is not Dallas. We just couldn’t get the rents we get in Dallas in Fort Worth. They are dramatically less,” rues Hopkins. “We made a very big push in Fort Worth and came away very, very disappointed.”

Hopkins and Shafer have forged a business marriage made in heaven. Shafer is the idea man, the dreamer, a developer with seemingly boundless energy and enthusiasm. “Steve was also innovative,” recalls Miller’s Donosky. “He could translate an idea into a project.”

Hopkins is cool, calm and collected, the numbers man who imposes reality on Shafer’s countless schemes. He plays the devil’s advocate to keep the company fiscally responsible. “Mike used to be Herb’s nuts-and-bolts numbers guy,” says one ex-Miller broker. “Steve saw how Mike could make Herb’s deals happen.”



KENNETH H. HUGHES INTERESTS

Ken Hughes is elegant. He looks good in the French-cut suits that usually only flatter the models in Gentleman’s Quarterly. His satorial splendor mirrors his retailing expertise. Hughes is the broker who almost single-handedly brought the top European boutiques to an outpost called Dallas.

His love of high fashion and flair began in the Sixties, when the Texan who grew up in Pecos joined the Air National Guard and was stationed in Germany. There he was intrigued by the fact that Europe was still a continent of small shopkeepers, though America was wildly embracing the concept of the covered megamall.

In 1968, he came home to join the Miller company. The French franc was strong and Hughes sensed the French retailers were ready for the Dallas market (and vice versa). He hired a tutor who taught him business French twice a week and persuaded Miller to bankroll his overseas missionary tours. The company agreed to cover all his travel expenses, which were subtracted from his commissions when he finally closed a deal. “That was absolutely critical because of my economic status,” says Hughes now with a laugh. “But it also allowed me the necessary time to develop the business.”

Hughes got his chance when he became the project leasor for Old Town, at Lovers Lane and Greenville Avenue. The boutiques arrived at eyebrow-raising rent. “Ken won the hearts of developers leasing Old Town. He had some layout flaws to hold him back. But he made it work. Old Town was the first Dallas center oriented to the exclusive, boutique tenant,” points out Terry Darrow, another Miller ex.

Then came the retenanting of Highland Park Village and the leasing of the two Gal-lerias in both Houston and Dallas. A native Texan can hardly pronounce the names of many of the shops in those malls. “I feel comfortable with higher-rent properties. I know how to lease space in urban, high finish (translate: high rent) projects,” he says.

In the summer of 1983 Hughes left to start his own firm. “The Miller company had to be very careful that it did not conflict with the developers it served. I got a taste for developing big projects, and that was a business that Miller wasn’t in.” And he adds forthrightly, “I also wanted my name on the door.”

His first project was the Italianate 3311 Oak Lawn building, with Donosky as one of his partners. The European building, with its drive-through courtyard, majestic arches and continental panache stands in stark contrast to the retail/office mixes in the area. Even the striking Wesselman sculpture sprawled on the sidewalk turns heads.

With Luke Crossland and the 2M Company as his financial partners, Hughes purchased the Lobello block of Preston Center, which is the first block on the southwest corner. A greek-style, terraced building will house his half-office, half-retail project there. He is also redoing the Quadrangle with Berry Cox of the Cox family and John Donnally as financial partners. The project will ultimately have 550,000 square feet of office and retail space. Hughes also has planned projects in Bedford and Tulsa, where he’ll be the landlord for the first TGI Friday’s in Oklahoma.

“Ken has the high-quality retail tenants in his pocket. He can relate to those tenants like no one else has ever been able to do. Like Herb, he understands absolutely the end users of real estate,” observes Darrow. Adds another, “Ken is a charmer. He learned this from Herb. Herb is so basic. He charms tenants by talking about their drapes and carpets. Ken can do the same,” he says.

One of Hughes’ most important traits is patience. “I realized early on that Europeans have a slow gestation time. If you lose your patience, you will lose the deal. I saw Europeans did not understand Texas and that I faced a slow learning process,” he explains. For example, he first contacted Georgette Klinger in 1974. The store leased space in the Galleria in 1982.

Urban settings, European design. Highest market rents in mixed-use projects. Double-breasted suits. That’s Ken Hughes.



DUNNING DEVELOPMENT AND FIRST NEWPORT REALTY

Of the Weitzman coterie, David Dunning was always the character. “He was the only one with a moustache and long hair. He looked like he worked in California,” says Donosky with a chuckle. He was the one who married an exotic looking Kim Dawson model and the first to purchase a 450 SL.

Insiders say Dunning probably made more money than any of his peers in the Miller retail fraternity. “He and Herb were partners in a lot of shopping centers. He made enough money so he doesn’t have to work the rest of his life. He can afford to coast,” says a Miller ex. Dunning responds with a smile: “You haven’t seen my notes.”

“David is a genius. He never wrote anything down on paper. He kept all the numbers in his head. But he would know if you bought land at $10 per square foot just how high a return you would make on your money when the project was leased,” says Donosky.

Dunning and the Miller company brokerage manager Sam Kartalis were the third set to leave, in November 1983. Dunning had started in 1970 fresh from the University of Texas “green and broke.” The twosome formed Dunning Development. Dunning focuses on the product Weitzman honed down to a science: the neighborhood strip-shopping center with a grocery store or major soft-goods retailer at the helm. Currently, the company has almost 30 of these projects in its portfolio.

But Dunning and Kartalis were unhappy with all the brokerage opportunities the company was missing because it was solely a developer. So, unlike Hopkins-Shafer, the twosome formed a second, separate company for agency leasing called First Newport Realty. “We wanted a vehicle to lease other developers’ projects that did not conflict with our own,” says Kartalis, who heads the firm. “That keeps us in the marketplace in segments where our development company is not represented.”

1985 has been a good year for both companies. Dunning Development won the coveted partnership with Triland International Inc. to build all the neighborhood centers in Triland’s two newest neighborhoods: The Villages of Bear Creek and Valley Ranch, the new home of the Dallas Cowboys. Dunning is particularly happy about having the retail monopoly in these elephantine projects. “By keeping the competition out, we don’t have to give away a lot of concessions,” he says happily.

Both projects are a joint venture with Tri-land. Unlike Hopkins-Shafer’s avoidance of partnerships, Dunning Development eagerly reaches out for a handshake. “We like partners,” says Kartalis. “Ninety percent of our deals are with partners. They help spread the risk and allow us to do more deals.”

First Newport’s big coup was landing the exclusive leasing job for Vantage’s new 400,000-square-foot retail development across from Town East Mall in Mesquite. Many of the city’s top brokers vied for that lucrative opportunity. Winning meant First Newport was a force to be reckoned with in retail leasing.

Despite Dunning’s Ferrari-paced lifestyle and his flash and dash, he has ironically made his money doing “bread and butter deals with no pizzazz,” as Kartalis puts it. One of the company’s biggest hits was to purchase the failing Homer’s stores when the large chain couldn’t cut it in the do-it-yourself home-repair business. The company then snagged the Ross lease, putting the clothing outlets in all of the Homer’s locations. “The real estate is worth more than the leases,” says Kartalis with a smile. “The closing took three days.”

Dunning says his formula for success is a philosophy he learned watching his mentor, Weitzman. at work. “Anyone can build bricks and mortar. Leasing and marketing is the real key. That’s the secret of the Miller company. Herb had the largest leasing staff in the Southwest. When you have an army of leasing agents, your projects are going to be filled before your competitors’,” he says.



SWEARINGEN-BROSSEAU DEVELOPMENT CO.

In 1973, Dunning hired a hulking football player just out of Texas Tech to do site selection for the retail group’s development group. His name was Tom Brosseau. Standing six-foot-five and looking regal in his uniform of monogrammed white shirts, Brosseau now runs the retail development arm of the Swearingen Co.

“My grandmother used to tell us my older brother Chuck was going to grow up to be a doctor and my younger brother Phil was going to be an electrical engineer. She thought I would become a preacher. But I wanted to drink whiskey and smoke cigars like my uncle who was a wildcatter. So I ended up in real estate,” says the developer with ersatz irreverence.

Brousseau went to Tech on scholarship, working construction jobs to pay for his books and his rent. Unlike the other senior brokers, who had one goal-to work for the Henry S. Miller company-when they graduated from college, Brosseau almost went to work for Proctor & Gamble. “But when they made me see a film about their toilet bowl products, I knew P&G wasn’t for me,” he says with a ready laugh.

The developer says he decided to go into real estate because “all the people driving Cadillacs were there. I decided that was for me.” So he learned to scout for sites for convenience-strip centers, getting his sea legs with Weitzman serving as the financial partner and Hopkins, Shafer, Dunning and Whitman as the development partners.

Once the exodus started in 1983, Brosseau decided it was his time, too. His brother Phil, one of the Swearingen Co.’s top land brokers, told Wayne Swearingen his older brother was about to go it on his own. “I needed a retail capability within our company,” recalls Swearingen. “I suggested a partnership because that way The Swearingen Co. could be money partners and own equities in retail properties without becoming experts in retail.”

So the deal was cut: Brosseau would go to work for Swearingen heading his retail leasing and brokerage division. And he would own 50 percent of the retail development company, which not only develops for its own account, but also for a fee on properties it does not own.

Swearingen-Brosseau has 855,000 square feet under development. The company is not afraid to step up to the plate and pay high prices for land when it believes it can still make a nice profit on rents when the construction crew clears out. “We are opportunists,” says Brosseau. “We paid more for our corner of Lovers Lane (Northeast corner at Inwood) than any one had ever heard of. The same is true of our site at Parker and Central Expressway. We have more money in that dirt than anyone else,” he says, unconcerned.

And Brosseau adds with characteristic confidence, “Sometimes we pay the price even if the rents can’t justify it in today’s market. We find new ways to set new rental limits. On Lovers Lane, we were the first to obtain $30 per square foot. Before, rents were in the low 20s.”

The developer took the same tack in a specialty-strip center in Piano. ’We built the most expensive strip center in Piano at that time. No one could justify the $12-per-square foot rents. But none of our predecessors used tile and neon. You don’t have to be a rocket scientist to see there was no place for an upscale retailer to go that wasn’t in the malls. We identified a niche.”

Brosseau says if he has made one mistake during the current retail boom, it was being too conservative. But he started during the bitter recessionary days of 1973 and 1974 and he saw early on the sad effects of overexten-sion. “I can see now we passed up some good deals. From hindsight we could have done more. But our conservative nature will provide us longevity when times get tough,” he believes.

The young developer-at 33 he’s one of the youngest of the bunch-cherishes his warm feelings for Dunning, who gave him his first taste of development. “I remember right after David hired me, I went home and told my parents I was going to own strip-shopping centers. They asked me, ’Are you sure you heard him right?’ ” He sure did.



WHITMAN WILLIAMS

It was July 1984 before another member of the Weitzman old guard left. After 14 years Paul Whitman decided he, too, wanted to pick up his toys and play his way.

Although his company will eventually build projects, including retail, Whitman Williams zeroes in on investment possibilities. The firm’s major tasks are acquiring raw land ripe for development, then putting in streets and utilities so other developers can be ready to dig. Whitman Williams will then sell off some sites, while retaining others to develop for its own account. “We will do many things, not just retail,” Whitman explains.

The company is a marriage of the development expertise belonging to Whitman, who was consistently one of Miller’s top retail producers, and Max Williams, chairman of the board of U.S. Companies, an oil and gas operation. The two men were personal friends before pooling their financial futures.

The company currently owns three tracks -in northwest Piano, south Arlington and east Fort Worth-and has no partners in these investments. Whitman Williams is also serving as the financial partner for the Bridgepoint project in Austin, four five-story office buildings under construction. The Randy Heady Co. is the development partner there.

Whitman, a golf enthusiast who once shot a hole in one at Bent Tree, is careful to point out that his firm will never serve as a broker in any of its deals. “We want people to think of us first as their best buyer,” he says. The company also plans to do a passle of business with Miller brokers. “Since we don’t compete, they are happy to see me,” he says with a smile.

The fact that Whitman Williams is an investment firm first and foremost is evident from the minute a visitor walks in the office. The furniture is stately, elegant. The hustle and bustle of brokers rushing in and out is missing; instead Whitman works with a single secretary in the calm quiet befitting a college library.

Unlike others who sold their interests in Miller shopping centers for seed capital, Whitman, having his own financial partner, could afford to retain his interests. To date, he is still involved in about 80 Miller deals. “Whitman is a class act,” says Donosky. “He will make both Max and himself a lot of money.”



EVANS, BIRMINGHAM, WILLIAMSON

Talk about new guys on the block. This new full-service brokerage firm opened its luxurious doors in Preston Center on February 1, 1984, and just 30 days later shipped $25 million in brokered land deals to the title company.

Talk about overhead. The firm occupies almost a half a floor. Exquisite furnishings in tony mauves and grays don’t come cheap. The place is a flurry of activity as brokers scurry about. The place looks and feels like.. .the Henry S. Miller Co.

The threesome, whose cubbyholes at the Miller company were back to back, have divided their business so that no one steps on the other’s toes. Evans, a marathon runner, who at 37 still qualifies yearly for the Boston race, spearheads the firm’s retail brokerage business. Alan Birmingham, a broker whose mind works at mach speed and who talks so fast you can’t understand him, cooks up development opportunities. And quiet, steely Steve Williamson is a master at land deals.

The trio decided to use their last names as their firm’s moniker because they wanted to capitalize on the years they invested at Henry S. Miller getting people to know who they were, capitalizing on the buyers and sellers used to seeing their names on six-foot-tall signs on development sites. “Nothing for us has really changed,” says Birmingham, of starting the new company. “All we did was change offices. Our client base is the same.”

As one of the last to leave, they say they saw a hole left in the marketplace by other Miller exes. “Most of the guys who left were not interested in being a true full-service real estate firm,” says Evans, who this year serves as the chairman of the Greater Dallas Board of Realtors Commercial and Investment Division. “Many who have left are seeing the benefits of dealing with us,” he say.

On the development side, Birmingham says the firm is not locked into retail projects. “We don’t want to be known as a specialty center developer,” he says. “We will do office showroom/office warehouse. We may even do a mini warehouse if we come across a great site.”

Even though being out on their own is still quite new, the brokers are enjoying the thrill of entrepreneurship. Birmingham sums up the experience: “You can make a lot of money at the Miller company. But for once I wanted to call all the shots.”



IT’S THAT SAME quality that lands a broker a position at Henry S. Miller in the first place that often causes the firm’s top-notch salesmen to decide to brave the real estate business on their own.

“From what I’ve seen, our brokers usually leave for one of three reasons,” says Miller V.P. Ruth Bramley, who has been recruiting and training new blood for 13 years.

“Some of them just don’t make it; it’s tough to work only on a commission. About 50 percent of all the people we hire can’t make it. For others, the company is just too large and they feel lost. Yet, others, mostly the salesmen in the top 20-percent bracket, have a real ego-they want to have a business with their own name on it.

“I feel bad when people leave,” she says.”And, to be honest, it hurts when you get tothe bottom line. Yet, our company is stillgrowing.”

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