I Have a Real Estate Hero

Some of you may have heard of him; his name is
Trammell Crow. Trammell was a Texan, born in 1914.
He put himself through night school at SMU and
became the youngest CPA in Texas. Three years later,
he joined the Navy. After WWII, he returned to the
business world working for a moving company and in
wholesale grain merchandising. That introduced him
to the business of warehousing.

At the age of 33, he built his first warehouse for
Ray-O-Vac. He used undeveloped land on the
property to build a speculative warehouse and soon
leased it to Decca Records. That extra land changed his
life forever by giving birth to the idea of a
“speculative-builder” in commercial real estate.

Before this light bulb moment, developers would only
develop a building for a specific tenant. Crow saw the
value in developing warehouse inventory pre-tenant
and his company quickly became Dallas’ largest
warehouse developer. You could say he “disrupted”
the real estate industry, long before that word would
be used.

In the ’60s Crow got into parking garages, office
buildings and multi-family. Trammell went on to build
an empire and to become known as the preeminent
CRE developer of the 20th century in the US with a
network of regional partners scattered around the

In his biography, Trammell Crow- A Legacy of Real
Estate Business Innovation, author William Ewald, Jr.

He gave with great generosity, made his partners
multimillionaires, working his 50/50 magic. “Over the
years,” he later reflected, “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 local
man on the site. The more you give, the more you get
back-a conviction he calls “generous pragmatism.”
Through “selfish generosity,” he believed his partners
would make money and he would make money.

But, the life of a real estate developer is never smooth.
We all have to interact with the real estate cycle in
some way. In the late ’80s, the network Trammell
created went through its toughest crises in the
Southwest. On average, one out of three office
buildings in Dallas and Houston were empty. Other
areas were hit even harder.

On the backside of the crash, Gary Shafer, the
managing partner, circulated a memo to 19 of the
regional partners. It asked a very basic question: what
lessons did we learn going through this most brutal
real estate crash?

The responses from the regional partners are real
estate gold. If you’d like to read the entire 90-page
report containing all the responses, you can read it here.

I recently re-read the memos with an eye towards
advice they offered for the developer at “peak of the
market” portion of the cycle from the perspective
of the “bottom of the market.” Here are some of my

• Don’t believe that just because rents have
gone up at 5% per year for five years, that they
can’t or won’t drop 25% in one year.

• Stay lean even if you can afford to get fat. It is
much easier to hire someone than it is to lay
someone off. Postpone hiring someone until
you absolutely must.

• Mistreating the brokerage community — you
may win the battle, but you can lose the war.

• When the office, retail and industrial
absorption softens, and rental rates decline,
the land values decline at an even greater

• When the market is hot, sell some of your
interest along the way up; when it starts
heading down, there are no buyers. One way
to stay financially healthy is to “sell too soon.”

• Don’t sell your best real estate as it holds its
value and springs back faster.

• Without question, our perceived need to keep
busy (working, deals, leases etc.) caused us
to spend and commit unnecessarily. We would
have been far better off to have played golf on
some days rather than developing another

Living through multiple cycles, we at Shannon Waltchack
have learned valuable lessons — sometimes the hard way.
Because the real estate cycle takes such a long time to play
out, we all need to remember these lessons to keep us
safe. I hope you find in Trammell Crow’s history some
nuggets of truth that inform your current business

Be sure to checkout the whole memo. If you want to survive the real estate cycles, it’s a must read.