By Christine Perez
In this month’s edition of 1-on-1, Project and Development Services expert Kyle Griffith talks with Agency Leasing veteran Trey Smith. The Texas natives discuss football, bucket lists, the Grateful Dead, and why current lease and TI rates just might be the new normal.
A Vice President on Cushman & Wakefield’s Project and Development Services (PDS) team, Kyle Griffith brings more than 10 years of construction and project management experience to his role. Since 2013, he has managed more than 2.6 million square feet of projects for both tenants and property owners. Earlier this year, he was named a finalist for the “Young Leader” award, presented by the Dallas chapter of CoreNet Global. A LEED Accredited Professional, Griffith graduated Magna Cum Laude with a Bachelor of Science in Construction Science from Texas A&M University.
Executive Managing Director Trey Smith helps lead Cushman & Wakefield’s Agency Leasing group in Dall. He plays an active role in the leasing and value-creation process and in developing marketing and leasing strategies for office and data center/mission-critical assets. Since getting into commercial real estate in 1995, he has completed more than 8 million square feet of leases in major markets throughout Dallas. He has been honored with numerous awards for his professional achievements, and earned a Bachelor of Business Administration degree from The University of Texas at Austin.
TREY SMITH: So, Kyle, where did you grow up?
KYLE GRIFFITH: I grew up in the Austin area, originally. And speaking of Austin, you’re a Longhorn, right?
SMITH: I am.
GRIFFITH: I’m an Aggie.
SMITH: Why did you pick A&M?
GRIFFITH: After 18 years in Austin, I needed to get a way for a little while. Plus, I figured I was going to go into design or construction or some sort …
SMITH: You knew that early?
GRIFFITH: I did. In high school, I thought I was going to be an architect or an urban planner. But after getting to college, I quickly realized I was more of a builder than a designer. After graduating, I moved back to Austin and went to work for DPR Construction. I did that for about three years and decided to get into the owner’s rep/project management work, so I joined JLL. I had interned for The Staubach Co. during college; that’s how I initially met Brad Blankenship, and I’ve just ridden his coattails ever since. We worked together at JLL for about three years, and I followed him to Cassidy Turley five-and-a-half years ago.
SMITH: Married? Kids?
GRIFFITH: Yes, on both counts. My wife and I have a 2-year-old daughter and are expecting a son in October.
SMITH: You going to call it quits after that?
GRIFFITH: I’d prefer to. My wife may have other plans. She’s in her final semester of grad school, and we just put an offer on a new house yesterday. With that and the baby on the way, we’re trying to make 2018 as hard as it possibly can be.
SMITH: [laughs] Where is the new home?
GRIFFITH: In Flower Mound. We’ve been looking in Richardson, East Dallas, Coppell, just all over. We need more space. My old little cracker-box bachelor pad in East Dallas isn’t cutting it any longer. … What about you? Married with children?
SMITH: Yes. My wife and I have two kids, a son who’s going to be a sophomore at Highland Park and a 12-year-old daughter who is at Providence Christian. She’ll probably end up at Highland Park, too.
GRIFFITH: Do they play sports?
SMITH: My son plays football, and my daughter is all in on soccer; she’s a goalie.
GRIFFITH: What position does your son play?
SMITH: He is offensive line. We’ll see if he stays there. He’s probably built more for defensive line.
GRIFFITH: And he’ll be a sophomore?
SMITH: Yes. He’s 15. We’ve been practicing driving, so stay out of the way. He’s run a couple of stop signs, with me screaming at him to stop. We’ve got to make it through about 40 hours of driving, and it’s getting better.
GRIFFITH: Does he take after his dad? Were you an athlete?
SMITH: I played a few sports growing up, soccer and football.
GRIFFITH: Where did you grow up?
SMITH: Here in Dallas. I graduated from Highland Park. Then went to The University of Texas.
GRIFFITH: You decided to stay fairly close to home.
SMITH: I had a chance to play football at Davidson, which had about 1,200 students, or close the size of my high school. I didn’t like football enough to play for a D3 school.
GRIFFITH: That’s Steph Curry’s alma mater. He put them on the map.
SMITH: That’s right … What is your wife studying?
GRIFFITH: She’s wrapping up her Masters of Nursing right now. She wants to be a family nurse practitioner. She’s not sure if she’ll go into pediatric, dermatology, or family health yet.
SMITH: That’s awesome.
GRIFFITH: So, you were one of the original few at Cassidy Turley, or Capstar, before that, along with Johnny Johnson, Chris Taylor, Bret Bunnett, and John Patterson.
SMITH: I was. After UT I worked for a mutual fund company in Philadelphia. I did that for a year and realized it wasn’t something I wanted to do, and nor did I want to live in Philadelphia. My wife was getting her MBA at TCU. She and I had graduated from Texas at the same time. I wanted to get back to Dallas, and I wanted to do something in sales. I had grown up watching all of the buildings go up here and the tangible nature of real estate really appealed to me. I started interviewing for jobs in the industry, and Bret hired me as an analyst in 1995. I did that for about 18 months then rolled into leasing.
GRIFFITH: What was your first property?
SMITH: Toll Hill Office Park, which CarrAmerica owned. It was awesome, because I was basically leasing it by myself. It was about 240,000 square feet and had about 110 tenants. Compaq Computer had 50,000 square feet, but the rest was a bunch of tiny tenants. That first year, I think I started in March, I did something like 40 deals. It gave me a chance to pretty much see everything. It was a tremendous learning experience, and things just ramped up from there.
GRIFFITH: That was at LaSalle Partners at the time?
SMITH: Yes. In March of 2000, Bret, Johnny, Chris, and John left LaSalle to start Capstar, and Jay Bailey and I were there first two employees.
GRIFFITH: Was it a hard decision to get involved in a startup?
SMITH: Not at all. They were the reason we had done so well and grown the business in Dallas for LaSalle.
GRIFFITH: What was it like starting out?
SMITH: It was fun. We were in an executive suite at Lakeside Square. It was cramped and it was crazy, but it was fun. We had to do all of the marketing—everything. We did that for about six months, and then we got the listing for Centura, and we ended up moving over there. We were there for about six years, then moved to 3500 Maple. After we were acquired by Cassidy Turley, we moved to Sherry Lane Place. I’ve been with the same people for 22 years, just under a few different firm names.
GRIFFITH: Things have changed a lot since your early days at Capstar.
SMITH: They have.
GRIFFITH: Especially in the last couple of years, with the merger of DTZ and Cushman & Wakefield.
SMITH: We were slammed together as two different firms. At some point, even people within the organization were wondering how it was going to work out. But it seems like it has all come together surprisingly well.
GRIFFITH: It’s one of those things that’s easy to say but hard to do.
SMITH: Right. If we’re known as a cohesive team that’s all rowing in the same direction, that just helps us.
GRIFFITH: I like the mantra of excellence in every seat. Some firms aspire to be bigger rather than being better. I think having the aspiration focus on better makes a lot more sense, especially when you’re trying to advise other clients and win new work and have a particular reputation in the market.
SMITH: We aren’t hiring people just to hire people. We want to people to feel as though they are lucky to work here.
GRIFFITH: Exactly. … It seems like you got into commercial real estate at a good time.
SMITH: I did. There hadn’t been a lot of people of my generation who went into the business, because the market had crashed so hard in the late 1980s, and that weeded a lot of people out. There’s a 10-year gap between me and most of the people who are ahead of me in seniority.
GRIFFITH: When I got out of school in 2007, the market was as hot as it is now. Then a year later, things changed. The construction market in Austin dried up pretty quickly. 2008 and 2009 were lean times; fortunately, I always had a project, so I stayed employed. But when you’re 23 or 24 years old and see a lot of people get laid off, that can be a little unsettling. Ever since then, though, the market has been great. Hopefully, it never ends.
SMITH: It will never end!
GRIFFITH: [laughs] We can’t screw this up.
SMITH: What do you love most about what you do?
GRIFFITH: I find it to be very fulfilling. The nature of our work lets us take some thought or preconceived idea of a project and, with the involvement of a lot of other people, take it through occupancy. You get to see the full fruits of your labor realized. If it’s done well, you see people energized and see companies excelling because, in part, of the space they’re in. We also have the opportunity to get closely involved in our clients’ business. We learn about how their companies tick and operate. We’re involved with HR and finance and technology and certainly the leadership. In the course of a year, working on eight or 10 different projects, you get exposed to all different types of industries, which is fascinating. And it’s not just 40 hours a week sitting in front of a computer. You get to go out and stomp around in the dirt.
SMITH: And wear a hard hat.
SMITH: Has the industry changed much since you got into it?
GRIFFITH: I’m a millennial by one or two years, and I’m still considered somewhat of a newbie, but there’s no doubt the workplace is changing.
SMITH: Why pay for 60,000 square feet when you can pay for 40,000? You’re going to love the open environment, and we’re going to get to know each other really well.
GRIFFITH: [laughs] Exactly. … So, in your line of work, is there a particular project or client that stands out?
SMITH: All of my clients are my favorites.
GRIFFITH: [laughs] Good answer. But is there a particular project you fought hard for and won?
SMITH: One of the clients I’ve really enjoyed working with over the years is KBS. They had always been locked down with Transwestern and CBRE and PM Realty. It took a long time to get in the door. KBS has such a great reputation within the brokerage community, with their ability to make deals and the kinds of buildings they were buying. We pursued them hard for a few years, and I put a lot of time and effort into opening up that relationship. It was very rewarding when it came together. Since then it has blossomed and it’s everything I hoped it would be. From a client perspective, that was a fun win.
GRIFFITH: That’s great.
SMITH: One of the best things about this line of the business is every client and every building has different nuances. They’re all unique in different ways. One of the most fun projects I ever worked on was Convergence up in Lewisville, a larger former TI facility that Brookfield Properties acquired in 2006. It was 15 percent leased at the time, so there was a lot of heavy lifting to do. Back then, the improvements to State Highway 121 still weren’t done. The world didn’t really recognize Lewisville as an office market. It was a bold move by Brookfield in an off market. Johnny and I leased over a million square feet in five years. On top of that, it was the peak of the oil boom, and Brookfield sold drilling rights on the site. It was 183 acres and they found gas on this project. Everything just worked so well. Wes Combs [on the PDS team] was intimately involved.
GRIFFITH: I’ve heard Wes Combs tell stories about that one.
SMITH: It was a huge transformation. A major renovation and repositioning. We had to give it a name, tear down buildings, and do everything from landscaping to interiors. It was amazing. A few years later, Brookfield bought the Citigroup campus, in 2012. The market was in a bad place at that time. Citigroup had built a campus out in Freeport, and they only needed 200,000 square feet of the 600,000 square feet. I think Johnny and I marketed it for six months before Brookfield had even finalized the acquisition. We ended up finding State Farm, and negotiated a 400,000-square-foot, 11-year lease that closed within 30 years of Brookfield buying the building. It was awesome, and couldn’t have worked out any better.
GRIFFITH: Are the big, juicy deals like that starting to taper off at this point in the cycle? From our perspective in PDS, we’re seeing a dip in the very large deals. But those smaller and midsize deals are churning as fast as ever. They’re coming in the door weekly, if not daily.
SMITH: That’s what we’re seeing as well. The velocity on the small deals is finally there. For a long time, it was a big-deal type of market. Quite frankly, we missed out on a lot of that, as the big-big deals were doing their own buildings and driving build-to-suit activity. That, in turn, created quite a bit of vacancy in existing space. Leasing is never easy, and it’s getting even more challenging because of the amenities arms race that’s going on with owners and buildings. If you are on some old A or B asset and you don’t have something special to offer, it’s tremendously difficult to convince tenants to lease space in your building.
GRIFFITH: You can’t be complacent in this market. It seems like you have to have a wonderful location or a building that’s less than five years old. The third position is to very creatively reposition your asset, in order to compete.
SMITH: I would agree, but we are being pleasantly surprised by the organic growth of existing tenants. I think these companies held off as long as they could—they were so gun shy after the last recession and did everything possible to avoid taking more space. But now, there’s no way around it. We’re all in relative disbelief about where the rental rates have gone in the last several years. That’s another thing that has caused tenants to wait. They want to see if the market is going to crash again, but they’re figuring out that this is the new normal. They’re deciding to focus on their business and not worry about having to pay an extra 20 percent in real estate costs. It’s not insignificant, but …
GRIFFITH: And construction costs go right along with that.
SMITH: And that’s why we’re having to push the rates. We’re having to spend so much more in tenant improvements than what we were spending just five years ago. It has gone up at least 40 to 50 percent, in terms of what we’re having to spend on the landlord side.
GRIFFITH: It’s the same thing on the tenant side. We get a TI allowance that’s typically nice and adequate, but in this day and age, tenants have to go out of pocket just to get a competitive finish out. Costs have shot up. You can get to $50, $60, $70 a foot without problem.
SMITH: What’s driving that? Is it a desire by companies to help recruit and retain?
GRIFFITH: It’s the arms race that companies find themselves in right now for talent, but it’s also material and labor costs. It’s as simple as supply and demand. Electricians and drywallers and millworkers are in high demand, and materials are harder to get and take longer to make. Fabricators produce things more slowly because there’s a drain on their shops. And now everyone is suspicious of the tariffs and how that’s going to affect things like steel and aluminum and lumber. It’s already having a substantial impact on construction costs. I don’t see TI costs going back to $40 per foot; those days are over.
SMITH: So, when you’re not working, what do you like to do for fun?
GRIFFITH: With a toddler at home and a wife who’s doing double-duty in school and we’re trying to get a house ready to sell, it means I have no hobbies. Right now, it’s all about sleeping and working. I used to have a golf game, but I’ve mostly given that up in the last couple of years. I’m a sports junkie, so I love to watch sports and get out and run or get on the lake and kayak or ride a bike. It’s hard to come by the time, but I love getting out and being active. … How about you?
SMITH: I like golf, when I have the time to do it. I wish golf was 12 holes.
GRIFFITH: [laughs] That’s well said. Usually about hole 11 or 12 I’m ready to call it quits.
SMITH: Other than that, I like working outdoors, working in the yard and messing around and fixing things and trying to act like I know what I’m doing around the house. I like to cook on the weekends.
GRIFFITH: Barbecue or smoke?
SMITH: I’m still a barbecuer, and a salad maker.
GRIFFITH: What’s your specialty on the grill?
SMITH: I’m pretty good with salmon; that’s hard to mess up. My Central Market fajitas are good. Go to the meat section, and they have them all pre-marinated. The habanero honey is just out of the world, both the flank steak and the chicken. Add the tortillas and you can have your own Mexican fiesta. I just need to get someone how to teach me to make a good margarita.
GRIFFITH: My next purchase is a big smoker for the backyard, and I’m going to teach myself to smoke brisket and other things. … Are you guys big travelers? Any favorite destinations?
SMITH: I’m a big fan of the panhandle in Florida. We’ve been going to seaside since my daughter was 1; I think we’ve gone probably 15 times in the last 12 years. I also love to ski. If you haven’t done so already, get your guy trip in the books and make it an annual rite of passage. I’ve started taking my kids skiing, too, which is a lot of tun. The other place we like to go is the West Coast.
GRIFFITH: It’s hard to beat it out there. I spent six months in California; I took a semester off during college and did an internship in Newport Beach, California.. It’s so expensive, though. Twelve years ago, my one-bedroom apartment with no air-conditioning cost $2,000 a month. When the company offered me to come back after graduation, I decided it would be smarter to be someplace where I could actually afford to live.
SMITH: Do you get to travel much now?
GRIFFITH: Not much lately, but the last big trip we did was about three years ago. My wife and I went to Italy for 12 days. It was awesome. We spent four days on the Amalfi Coast, four days in Tuscany, and four days up north. Those people have it right. They don’t work very hard, they quit work early and sleep in. It’s a different vibe. … Do you have any places on your bucket list?
SMITH: I’ve never been to Europe, and there are a few places I’d love to go explore there. I did get to scuba the Great Barrier Reef.
GRIFFITH: That’s actually one of my bucket-list items.
SMITH: I got to see it while it was still alive.
GRIFFITH: You didn’t have a hand in killing it, did you?
SMITH: [laughs] I sure hope not. But at this point it’s Italy and France and Portugal, spending some time over there. I’d also like to do heli-skiing at some point.
GRIFFITH: I have a buddy who does that. He goes to Alaska every year and gets dropped off on the top of a mountain with about 10 other crazy people. It’s roughing it, but he’s addicted to it. … Any concerts on your bucket list?
SMITH: I love concerts. It’s no secret I’m a big Grateful Dead fan. I’ve seen them 16 times. Last winter I saw the reconstituted version and it was absolutely fabulous. I’d go see them a few more times for sure. It’s the greatest show on earth.
GRIFFITH: Bruce Springsteen is on my list. I’ve heard his shows are legendary.
SMITH: All music is good experienced live, especially when you’re in a smaller venue.
GRIFFITH: Where do you like to go?
SMITH: I like the House of Blues.
GRIFFITH: Have you been out to Toyota Music Factory yet?
SMITH: I have not.
GRIFFITH: It’s a great venue. When you get to our age, it’s no longer about getting into the mosh pit or partying like crazy. It’s nice to go out and sit down and actually enjoy the music and not have people spill beer on you.
SMITH: [laughs] What about sports? How’s A&M going to do this year?
GRIFFITH: Well, we have a new coach, so hope springs eternal. There’s always a transition, but I’m excited. We’re one year behind Texas, which has a new coach as well.
SMITH: We’ll see. At least we made it to a bowl last year. It’s all about progress. We will have to find a quarterback.
GRIFFITH: It’s not as fun with the Longhorns and Aggies no longer playing on Thanksgiving.
SMITH: That was a fantastic rivalry.
GRIFFITH: And one that really needs to come back.
SMITH: Did you play sports in high school?
GRIFFITH: I played football and baseball.
SMITH: Which did you like better?
GRIFFITH: Football. I played quarterback, but I was always injured, so my NFL dreams were never realized.
SMITH: What high school?
GRIFFITH: Georgetown. It’s like the Frisco of Austin. When I grew up there it was a tiny little dot on the map. It’s unrecognizable today.
SMITH: Things have really changed.
GRIFFITH: In Dallas, too. This market is exciting and the mentality here, the business-friendly environment we have, the droves of people and companies moving here to be a part of it. The momentum just seems to be snowballing.
SMITH: The booming economy here is amazing. And what’s exciting to me is there are areas of Dallas that haven’t even come into their own yet. That gets me intrigued. When is South Dallas going to take off, and what submarkets are going to emerge, and what’s going to be the driver that makes those things happen? There’s so much opportunity.
GRIFFITH: And even the resurgence of existing markets. Look at what’s happening between downtown Dallas and Deep Ellum.
SMITH: The Epic is going up; just having that building there is going to pull a lot of activity to the east side. I think that’s what is most intriguing to me about the future: what are the new markets we don’t know about yet?
GRIFFITH: If we can figure that out, we’ll all be doing very well.