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Creating Desirable Places through Property Assemblage with Chris Powers, Jr. – Ep. 034
About the Guest
I am extremely honored to share this next conversation with all of you. Chris Powers, Jr. is the Founder and CEO of Fort Capital, a real estate company focused on investment, acquisition, asset management, and property management in Fort Worth, Texas. Chris currently oversees the vision for the company, Fort’s largest real estate deals, capital relationships, executive level recruiting, strategic partnerships, and chairs the investment committee among many other responsibilities as Fort’s CEO. Creating meaningful relationships and building a team around a vision and Fort’s goals are the most important qualities that make Chris perfect for the job.
Chris is a serial entrepreneur with over 14 years of real estate development and investment experience and has raised more than $110 million in equity financing through a multitude of high net worth and family office partners. To date, Fort has invested and developed over $504 million in multifamily, student housing, commercial/industrial, and residential & land development projects throughout Fort Worth and the state of Texas. Chris has been touted as a visionary with a demonstrated talent in looking ahead at what could be and understanding what must be done today to get there. His ability to conceptualize, raise capital, and execute are only a minor part of what Chris brings to the table.
In this episode, we are going to discuss how to get everyone on the same page when assembling properties, how to structure contracts that are win/win for buyer/seller, and how to get a city on board with zoning, early, to make the area attractive for developers. There is tons of great information in this episode and I greatly appreciated Chris for taking the time out of his busy schedule to discuss this topic of property assemblage.
Main Take-Away’s From This Show
This was a particularly enjoyable show for me to host! I really enjoyed the candid discussion that was had with Chris as we discussed the difficulties encountered while assembling properties to create one of the most exciting districts in Fort Worth in recent history. I also enjoyed the periods of reflection that Chris shared as he discussed lessons learned from this larger assemblage project. There were several great anecdotes that he shared throughout the discussion, so it is hard to just pick three for my main take-away’s this week. The following main topics of the show come from a deep understanding in the process of property assemblage and the inherent value there is in understanding marketing in your future real estate development endeavors.
- Buying un-entitled land for property assemblage can be a fairly secure investment with the possibility of providing large returns if done well.
- Timing is extremely crucial when executing a property assemblage.
- Barbells are not just for lifting. Utilizing the “Barbell Theory” to find your next project.
As always, I will dig into each of these “take-away’s” every week on the blog. So, without further a due, here we go!
Buying un-entitled land for property assemblage can be a fairly secure investment with the possibility of providing large returns if done well.
Most people would say that what Chris and his team did when assembling the various properties was risky. There’s no guarantee that they will obtain all of the necessary entitlements to make the development work, right? Why would any body take such a risk in assembling properties of various zoning classifications in the hopes that they could somehow entitle these random, infill parcels into some cohesive district?
They could do this because the risk was calculated. His team understood how much they could sell the individual parcels for if the development for some reason could not be entitled. This understanding guided their offerings to purchase the various parcels within their boundary. Obviously some properties would go for a higher price than others but they understood what the average cost-basis for each lot was way before they began the campaign to acquire properties.
With this understanding, they were able to be fairly certain that they could, at a minimum, return their investors money if the development would not succeed. But if the development did succeed, the payout would be far greater than if they were trying to purchase a much safer investment. As General George Patton stated, “Take calculated risks. That is quite different from being rash.”
Timing is extremely crucial when executing a property assemblage.
“Timing is everything.” This saying could not be more true when the team at Fort Capital was preparing to assemble the various properties that make up their largest assemblage. The River District compromises over 270-acres in west Fort Worth. In order to assemble so many properties for this overall infill development, time was of the essence.
In order to pull off this project, Chris and his team worked feverishly for 180+ days preparing and structuring fair deals for the property owners within the district boundary. As mentioned, as soon as the word got out, many of the property owners within the district would believe in a perceived higher value for their property that would far exceed the fair-market-value of the respective property.
As Chris alluded to in our discussion, when word gets out that someone is interested in buying your property, your perceived value of your property also increases. This makes assembling a project of this magnitude extremely difficult. In an age of social connectivity and networks, it has become increasingly difficult to pull of this feat. The introduction of Facebook Groups and NextDoor Apps are making it even easier for neighbors to connect and spread the word. While this can be beneficial for public safety and social connectivity, it makes the task of property assemblage much more difficult.
Barbells are not just for lifting. Utilizing the “Barbell Theory” to find your next project.
This last take-away is one that really caught my attention during our discussion. My mind started racing on ways to utilize this theory going forward. As Chris mentioned, it is almost too simplistic but is so insightful that it bears repeating. The “Barbell Theory” he learned twelve years ago can be utilized to locate the next emerging market to target for your next project.
In a nutshell, the “Barbell Theory” is as follows; each end of the barbell represents a center for demand. The area between the two “heads” of the barbell represents areas of high traffic. When looking at the barbell, you would focus on the bar portion of the barbell in-between the two ends as this area already has traffic generated from the two demand centers (i.e. the ends of the barbell).
As Chris mentioned, this barbell could be as big or as small as you would like it to be. The larger example Chris provided was of the areas along the I-35 corridor in Texas between DFW and Austin. With DFW and Austin being the two ends of the barbell and cities like Waco and Round Rock benefiting from the traffic demand generated from the two ends. However, this theory could be utilized more at a micro-scale within a city, individual districts, or even neighborhoods.
The traffic generation is already there along the barbell, your goal is just to give the traffic a reason to stop. This theory is so rudimentary to the way we do business, but rarely is it identified so clearly. Honestly, this theory could be attributed to other sectors of business as well. It is much easier to get traffic to your service, development, or business when you are already positioned in an area of high traffic. In your next endeavor, look to position your development within an area of high traffic, and be sure to give that traffic a reason to stop.
As you can see from the take-aways above, this podcast episode was full of amazing information on the topic of assembling properties that create desirable spaces and absolutely provides actionable steps you can take on your next real estate development project. As always, if you have enjoyed the content and the show, please subscribe to the show below and share with your friends! We’ll have many more great discussions on the shows to come.
To Learn More About Chris Powers, Jr. and Fort Capital, Check out the Following Websites:
Resources Mentioned:
For more on locating your next development or property valuations, check out Episode 31 with Dillon Cook to give you a perspective on finding your next real estate development project.
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