Properties 2018 vol 2 citylands

CITYLANDS: The Urban Core Curriculum

by Ed Nawotka Ed Nawotka has been a writer and editor for more than 20 years. His work has appeared in the New York Times, Texas Monthly, the Houston Chronicle, Houston CityBook, and has been syndicated by Bloomberg News.

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hat works in the commercial real estate business shifts with the times. Being agile and fluid is essential to winning strong returns for your investors. Here in Houston, which has seen several boom-bust cycles over the past few decades, knowing how to work across numerous asset classes can give you an advantage over a more specialized firm. “For example, there are a lot of people currently focusing on multi-family housing at the moment, and what happens is you wind up with a lot people chasing the same sort of deals,” says Todd Konkel, partner at CityLands, a commercial real estate investment firm based here in Houston.

CityLands, which has conducted more than $3 billion in commercial real estate transactions, is different. “What differentiates us from other firms is that we are not narrowly-focused. Instead, we work in multiple asset classes to pursue the best investment, be it in industrial office retail, ground-up construction, or multi-family,” says Konkel, who believes that with millennials coming into the market, and pushing for a revival of the urban cores, “there is a lot of opportunity.”

“We love idea of taking something ho hum & creating something unique and interesting.”

The firm’s most visible project is East Village in EaDo, a $35 million dollar mixed-use development that spans four city blocks.

So far, the district has incorporated the openings of gastro-lounge Chapman & Kirby, in addition to restaurants Truck Yard, Seaside Poke, and Rodeo Goat.

Method Architecture boasts substantial, cutting-edge office space within East Village. Furthermore, concepts are on the horizon, including Sorek, a barbershop and menswear store, as well as three new Agricole Hospitality concepts. Konkel notes that the tenants at East Village have invested nearly $15 million of their own capital to improve the space, which signals their own long-term commitment.

“Real estate deals are rarely a sure thing, so to marginalize the speculative element, we try and get actual commitments from people before we jump in,” explains Konkel. “Of course, this requires having vision and the

ability to look and see what might become of something in the future.”

He points to several of the firm’s ongoing projects, including 2723 Yale, White Oak Retail Center in the Heights, and Louetta Business Park in The Woodlands as examples of this vision in action.

For investors looking to get into real estate for the first time, Konkel advises they need to be careful about who they trust. “A lot of investment firms are very fee–heavy and put their investors behind the eight ball from the start,” says Konkel. CityLands, on the other hand, charges just a 1% management fee, and investors receive all investment capital back, plus a 7% preferred return before the management team receives any profit.

Any profits above 7% are split between the investors and the management team 70-30.

“It’s all right out there in the open,” says

Konkel, who says that “being transparent with investors and putting them first” is the only way to build strong relationships.

Now, for the first time, CityLands has opened up a new investment fund that will focus not only on Houston, but Los Angeles and Kansas City as well. CityLands is looking to raise $10 million from individual investors willing to make a minimum investment of $100,000. “We thought about doing a bigger fund, certainly, but we are a very hands–on firm and this way, by keeping the pool smaller, we can bring in partners and investors who are aligned with our core values.”

Konkel says that, ultimately, what drives him and his partners at CityLands is not merely wealth creation, but building excitement. “We love the idea of taking something ho–hum and creating something unique and interesting.”