December 11, 2003
David A. Sabey
By JANET PARKER
Firm: Sabey Corporation
Position: President and CEO
Ask David Sabey to recount how he built his $400 million company, and you might be surprised by his answer. Rather than an elaborate touting of his entrepreneurial prowess, the 56-year-old president and CEO of Sabey Corp. quips, “It's very simple ... I worked my way up through the ranks.”
The Seattle-based company was founded in 1972 on an opportunity that arose when Sabey's then employer was bought by a larger entity. At the time, Sabey was running an arm of U.S. Plywood specializing in the design and installation of structural wood roof systems. The affable Sabey explains that the buyer, Champion Papers, was motivated to cull that operation to avoid risks associated with construction.
“So, I bought the division and just continued doing what I was already doing,” Sabey says. “As a subcontractor in the Western U.S., I had the opportunity to cut my teeth working with the foremost California developers of the times, like Don Cole and W.E. Hahn. In a single year I might be involved with 20 major developers and 30 general contractors, so I learned the business from both sides.”
While it was a period of exponential growth in Sabey's career, the entrepreneur was faced with the cyclical nature of his niche. “So, I began investing in real estate, going through the permitting process when the market lulled, and developing my own buildings.”
Since then, Sabey Corp. has racked up some impressive numbers, including the development and construction of 27 million square feet for itself and third-party owners, current management of more than 3 million square feet of its own properties, and a venture funding arm responsible for founding start-up companies.
Turning to a more somber note, Sabey views Puget Sound's salad days of development as a thing of the past — at least for the time being. “There's a big development hangover to work off, and I see a flat, bathtub-shape at the bottom of this cycle.
“I think the effective vacancy rate in this market is higher than publicized because there are spaces running under the radar — those with rents being paid while they are vacant. In reality, Puget Sound is likely running a 37 percent rate — contrasted to a normal factor of 5 percent to 10 percent.”
From that, Sabey says the future is a matter of simple economics. “With GDP running around 4 percent, it will take several years to consume the excess.
“There is no single, steeply up-and-coming industry on the horizon of this economy to give the kind of push it would take to shake Puget Sound out of the doldrums,” Sabey says. “In the past, we could look to Boeing for that kind of influence. But, whether or not the 7E7 project stays in this state, Boeing's layoffs and rehires simply don't have the impact they used to.”
Taking the edge off the gloom, Sabey offers, “It's not as bad now as when I started in '72. Then we were heading for bunkers and putting out signs reading, ‘Will the last person leaving Seattle turn out the lights.' “ Now, he says, “This is what we're calling the ‘muddle-through economy,' and — with the exception of a few, specific categories — I think we've got about six more years of muddling.Â”
And what of those specific categories of light in the long, dark tunnel? “We're looking to specialty service industries,” says Sabey. “With the baby-boomer demographic aging and poised to consume momentous amounts of health care, we see medical-related services and research — including biotech — as long-term growth industries.”
Although somewhat of a surprise, Sabey says he is high on Internet server farms, offering by way of explanation, “It's an industry that has gone through a huge depression the past two to three years, but it is nevertheless very important in our business culture.” So much so that Sabey sees it moving toward the status of a utility — one with “extremely long legs and huge barriers to entry.”
With his wife, Sandra, Sabey has three sons. John, 34, is a graduate of Notre Dame and Kellogg School of Management at Northwestern University, and is also a fixture at Sabey Corp. The youngest, Joe, 23, is now finishing up at Notre Dame and will be join the family business on graduation. The only stray from the family business is Jim, 29, a Georgetown graduate and international sales manager for Columbia Records.
With the exception of two years at the U.S. Air Force Academy, Sabey built his career, family and life in the Seattle area. However, these days he commutes weekly to and from his and Sandra's 88 acres in Big Fork, Mont.
There, Sandra raises quarter horses to show in cutting competitions around the country, and Sabey likes to throw a line into their trout pond. “I don't think you could really call that fishing,” Sabey says, “but, we've got some nice fish, and I enjoy it. However, you'd have to say what I love are my work and my family — and that's really about it.”
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