Real Estate Lessons from Trammell Crow
Just released by the Urban Land Institute, William Bragg Ewald's biography of a legendary real estate guru offers some fascinating—and highly relevant—insights on success in business and in life.
When you hear the term "America's real estate magnate," who comes to mind? Donald Trump, of course. But don't believe everything you see on TV. There's a real estate developer whose empire . . . well . . . trumps that of "The Donald." And because he shuns the spotlight instead of seeking it out, the average person has never heard of him. (If you're a resident of Texas, a real estate developer, or a student of business, you can exclude yourself from that list.) But chances are good that this man has left his mark somewhere you have lived, worked, shopped, stayed, or visited.
His name is Trammell Crow, and he's the real estate mind behind such landmarks as the Dallas Market Center, Atlanta's Peachtree Center, San Francisco's Embarcadero Center, and monuments across the nation and the world from Brussels to Hong Kong. He's had his tireless hands in apartments, office buildings, hotels, retail stores, and developments of every stripe. And because his legacy is so deep and broad--and his life and personality are so colorful--his story is well worth reading.
William Bragg Ewald, author of the new biography Trammell Crow: A Legacy of Real Estate Innovation (Urban Land Institute, 2005, ISBN: 0-8742093-5-8, $34.95), follows Crow from his humble birth in a tiny frame house at 1318 Fitzhugh Street in Dallas to his rise to wealth and power in the real estate world to the bitter years of financial woe, reorganization, and bare-knuckled litigation--and makes the reader come to truly know this compelling man.
Trammell Crow: A Legacy of Real Estate Innovation is filled with valuable insights on the Crow business formula, his unorthodox partnership-based plan, the changes in government, policies, and society that impacted his company, and the nature of the man himself. Here are a few excerpts from the book:
The origins of Crow's work ethic:
He took all kinds of jobs. From the age of ten he had mowed lawns, caddied, pumped gas, even jerked sodas on Sunday until his father put a stop to it. Years later he passed a filling station with journalist A.C. Greene, pointed to it and said, "That's where I got my start."
By 1932, as the Depression deepened, he was plucking chickens and cleaning old bricks for reuse in new houses. He worked on a construction site for 15 cents an hour, clerked in grocery stores, helped unload Clabber Girl baking power and Spreckles sugar from railroad boxcars, wheeled them into the warehouse, and stacked them up. For a dollar or two he would drive a new car from the Dallas Ford plant over to Fort Worth. From his earnings he gave his mother half to run the house and paid off his father's $600 grocery bill.
All of this did not leave him embittered. "The whole attitude of the world today toward poverty, particularly that of socialists and writers who have never been there, is out of sync with reality," Crow wrote. "We didn't suffer any personal, emotional, or educational injury from our circumstances. We also learned things that many people never know. We learned desire. We learned the benefits of unity. We learned that you can do without. We learned that you can aspire and work and achieve without being fed from the outside. We learned not to feel sorry for ourselves. That might be the biggest lesson of all."
The birth of the speculative warehouse:
The building John McFadden built to fill the 135 Cole Street plot measured exactly 11,250 square feet. And in that measurement can be found another significant Trammell Crow feature--speculation. Ray-O-Vac needed only 6,750 square feet. That left 4,500. "Taking chances already," Crow said as he looked for a second tenant for the empty space and found Decca Records. Before the building was finished, they had signed up for the remaining 4,500 square feet, and Trammell Crow had become, in his own words, a "confirmed gambler, a speculative builder."
He was leaving behind an old world in which a developer found a tenant, built a warehouse to meet only his specifications, and gave him a 20-year lease, in that order. "Who ever heard of calling a Ford or a Buick a speculative car?" a big developer asked. "But that's what they are: cars manufactured for Ford or GM that have no buyers signed up. Well, Trammell Crow invented the speculative warehouse--a general-purpose building that he could offer to a prospective tenant not next month or next year, but now." And it all began with those 4,500 square feet he leased to Decca.
Openness as a business philosophy:
Another component of the Crow method was his belief in open partnerships. Openness--a combination of trust, generosity, sharing, and optimism--permeated all of his activity.
It permeated his conduct with lenders. He didn't go after the last dollar in every deal. He wanted his counterpart to walk away feeling he had made the best bargain ever.
It permeated his conduct with builders. A colleague once dropped by a construction site and asked the foreman to see the blueprint for the new building. "Blueprint? Hell, Mr. Crow says put a stake in the ground, go 200 feet west, then turn north." Johnny McFadden and Edgar Miller were Trammell Crow's good friends, the colleague reflected, "and he just turned them loose."
Openness permeated his conduct with his brokers, on whom he depended to find lenders and tenants. "Other owners," one former broker has declared, "tried to exclude or circumvent the brokers." Or hammer them down on price. Trammell Crow didn't. So brokers would bring prospects to him first. And as he left on a trip, he could sign a blank loan contract, leave it with a trusted broker, and tell him to go ahead and make the deal.
Most landlords try to avoid tenants, afraid they might ask for something. Not Trammell Crow. He aggressively pursued tenants' problems. What did they need? He wanted to know. And he delivered more than he promised.
The Crow management style:
By 1970, Crow had branched out into one avenue after another, of varying promise. Recognizing that real estate demands local knowledge and expertise at its core, he had for the first time in history assembled a nationwide organization--an organization that would lead people in the future to express surprise that the Trammell Crow Company was headquartered in Dallas rather than in their own neighborhoods. He had assembled a bright and energetic team. He used no headhunters, no batteries of psychological tests. Most--Shutt, Simmons, Shafer, Mack Pogue--were very young. He hired many of them right out of school. And as one of his older associates said, "I trained them--how to read blueprints, how to go about leasing--and in three months they'd be telling us what to do." He trusted them. "To get off Trammell's team," one associate said, "you either had to steal from him or quit." If he wanted to reprimand a partner, he would begin by congratulating him.
He gave with great generosity, made his partners millionaires and multimillionaires, working the 50/50 magic. "Over the years," he reflected later, "I probably was more giving than I needed to be. But on the whole I wouldn't change." He had built the greatest organization in this field in America by giving leadership to the man on the site. The more you give, the more you get back--a conviction he calls "generous pragmatism." He always believed real estate on a nonpartnership corporate organization would be doomed to fail. Through "selfish generosity" he believed his partners would make money, and he would make money.
From this formula what resulted? First, a brain trust, a far-flung organization of diverse people around the country capable of supplying their leader with varied creative ideas. Second, diversification--of location and of product, from specialists who knew every nook and cranny of every local market; who knew every type of building they were putting up. And third, an organization national in scope, with geographic diversity that permitted economies of scale in borrowing and in construction . . . This diversity protects the national organization from cyclical downswings in individual economic areas and individual products.
His eccentricities . . . and his genius:
As ever, he had small peculiarities displayed. He once climbed an eight-foot fence in a black overcoat and derby hat. Riding in his car, dictating and eating cookies at the same time, he could leave the dictation tape an indecipherable jumble. Becoming too hot in the midst of his guests at an upscale restaurant, he removed his jacket and cut off his shirtsleeves. While his secretaries tried to tell a particularly objectionable visitor that Crow was out of the office, he walked by shielding his face with a sheaf of papers, pretending to be invisible.
All to intelligent purpose. He could do economic feasibility studies in five minutes on the back of a placemat. He could summarize complicated presentations on a single sheet of paper. Taking dictation, Barbara Collins has remembered, "You can't predict the end of the sentence with Mr. Crow." He can, Bill Cooper observes, see through the details of a project to the bottom line; can walk into a town like a homing pigeon and say, "Here's the project site." "Exxon would take a hundred professional people to plan its building in New York City," Cloyce Box observed; "Trammell Crow would do the same thing all by himself."
The trying years (the 1980s):
Even in its glory years, the company had an abundance of go-getters. But now, more than ever, it was becoming a company of mercenaries. These were not the young men of varied backgrounds who joined in the days of the roll-top desk and foolscap financial summaries and found themselves in an organization "intimate, small, and fun." Crow had grown big and become streamlined, rife with young MBAs with signature rights. One of Crow's oldest partners, Tom Simmons, summed up the change in a striking metaphor: the old company was a tattered old goose that had laid golden eggs; the new company was a streamlined goose that didn't. Traveling around the country, Mack Pogue would from time to time find himself appalled at the young MBAs lacking experience and left in charge of the local turf. A couple of blocks away, from their office at 2001 Bryan, old-timers Tom Shutt and Bart Brown watched this change with sadness. They had built for the market, not to pile up volumes. The company they knew in the old days responded to genuine customer needs, not to a get-rich-quick formula.
The legacy (circa 1994):
With the roll-ups shifting assets from the partners to the family, its chief, Harlan Crow, now sat atop an empire that, in 1993, had a gross value, before debt, of some $7 billion, including some $4 billion in the Trammell Crow Commercial Company. Equity in this empire came to about $1 billion, including the equity of the Crow family, $370 million. Outside partners--principally insurance companies and smaller investors like Ehrenkranz--had equity totaling $844 million. All these enterprises together produced annual revenues of about $2 billion and employed more than 5,500 people. The commercial company, the biggest component, managed more square footage than anyone else in the United States--some 240 million square feet, half of it owned, half of it managed for other owners. Harlan would soon remarry. He and his new bride would have his first child, a boy. They would undertake the purchase of the palatial Adirondacks home of the former Ms. Meriwether Post near Lake George. And like Prince Hal, Harlan looked forward to following honorably, effectively, and humbly in the footsteps of a distinguished and delighted father.
The big lesson from Trammell Crow is that action--undertaken with unflagging energy and unyielding determination--is a magic elixir for both triumph and disaster. Crow is a living example of that truth. That's reason enough to pick up Ewald's book. And if that's not enough, well, the story of Trammell Crow is just darn good reading.
"Why write about him?" queries Ewald in the preface. "Because as a one-of-a-kind individual--in his character, personality, surprises, speed of mind, convictions, compulsive optimism, shortcomings, energy, and, above all, his singular ethics--he far out-fascinates most billionaires, most CEOs, indeed most people. Because he rose farther in his business--real estate development--than anyone else ever has, and because he therefore had farther to fall. Because his features as an individual mesh inexorably with the driving buoyancy and the treacherous economic follies of our time.
"This is therefore a story of dramatic tensions: between the forces within a man and his country that powered an egregious business ascent and the undertow forces within a man and his country that propelled him earthward," he continues. "It is a morality play about transcendence--about what remains when both a business and a society founder. This is a story that recounts how a man, though the heavens may seem to fall, can sometimes still come through triumphant."
An accomplished author, William Bragg Ewald, Jr. has written eight books, including a biography of former President Eisenhower. He served as a member of the White House staff during the Eisenhower administration and assisted the President in writing his two volumes of White House memoirs. Dr. Ewald received his doctorate from Harvard University. He is also the author of two books on eighteenth-century English literature.
Trammell Crow: A Legacy of Real Estate Innovation (Urban Land Institute, 2005, ISBN: 0-8742093-5-8, $34.95) is available at bookstores nationwide and major online booksellers or direct from the publisher at uli.org.
The Urban Land Institute (uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide responsible leadership in the use of land in order to enhance the total environment. Each year, the Institute honors a land use visionary through the Urban Land Institute J.C. Nichols Prize for Visionary Urban Development. Established in 1936, the Institute has more than 25,000 members representing all aspects of land use and development disciplines.
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