How developers are evolving into service providers
Centers must put forth tenants and events that are meaningful to locals. The formula is different in every location.
By Terry Montesi
Montesi: "We believe in the wisdom of crowds."
In the 1980s, much like today, inflation rates and interest rates rose dramatically. Homeowners’ mortgages tanked in value, causing the famed savings and loan crisis. Scads of properties became available for 10 or 20 cents on the dollar and it occurred to me to put some partnerships together to buy some of these properties. That’s when I stopped being a broker and became a developer.
In 1992, I founded Trademark Property Company. Real estate development is a business that’s all about transactions. But, having experienced the pain suffered by so many American families during the savings and loan crisis, I vowed that Trademark’s fortunes would not turn on transactions. We have survived and thrived for 30 years by listening to the needs and wants of communities and creating something for them that they will love.
That’s how we helped mold the plan for Market Street Woodlands in a master-planned community of more than 100,000 people north of Houston. The township wanted to take its Woodlands Town Center to the next level and hired us to get it done.
We did some interesting things there in the refresh we completed in 2019. No one at that time was mixing product types together. We may have been the first developer to put a specialty grocer like HEB together with specialty retail such as Chanel, Lululemon, and Warby Parker. The average sales per sq. ft. of $1,124 that Market Street Woodlands achieved in 2022 is precisely double what it was in 2017. Net operating income during the period rose 25% to $18.1 million.
Helping set the path for our renovation were town meetings with the community. We believe in the wisdom of crowds.
We tapped into the same intelligence source to help accomplish our $26 million remake of the Saddle Creek Center in Germantown, Tenn., just outside of my hometown of Memphis. We demolished 20,000 sq. ft. of space of Class C retail space and added 40,000 sq. ft. of Class A space.
Trademark performed the center-wide upgrade by leasing more than 100,000 sq. ft of space to 33 new tenants that included Kendra Scott, Michael Kors, and Sephora. We relocated Apple to a new and larger space. Three-quarters of Saddle Creek’s tenant mix is unique to the Memphis market, and it is now the metro’s No. 1 shopping destination.
More and more mixed-use projects will be developed in the United States in the decade ahead because multifamily housing is underserved in our country by about three million units. Many residential-focused mixed-use developers use a cookie-cutter approach, building the same center in Chicago that they do in San Diego. They don’t tap into the community to learn exactly what kinds of experiences are needed to make these developments great places to live. We have found that the formula is different in every location we’ve developed. You have to have tenants and events at each one that are meaningful and inspirational to the people who intend to live, work, and play there.
We are an organization that is all about elevating people and places. And Trademark remains committed to being extraordinary stewards, enhancing the communities we do business in, and enriching the lives of the people we serve. And looking ahead, we're excited to remain leaders in the property transformation business, helping outdated malls, offices and mixed-use centers get ready for their next act.
So when I look back 30 years to the time I stopped being a broker and became a developer, I realize that I’ve undergone a new occupational change. Trademark Property Company is now a service provider.
Terry Montesi is the founder and CEO of the Fort Worth-based Trademark Property Company.