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October 26, 2015

Local developers plan for the future, when others will be running the show

Journal Staff Reporter

Some of this region's most active development companies will soon be handed over to a new generation.

Douglas Howe and Kemper Freeman, who have done major projects in Seattle in Bellevue, will retire someday. As developers they have to think long term when planning projects, and that is exactly what these two are doing with their companies.

Freeman built on the legacy his father created with Bellevue Square. At a NAIOP meeting on succession planning last week, Freeman said he said believes in setting up the next generation for success. Of the 207 people who work at Kemper Development Co., five of them are in his family.




But family businesses can be tricky. Freeman recommended making sure that things like estate plans are done early, and said that family members must be judged on their skills.

“One of the reasons family businesses don't work,” he said, “is that you've got all the emotional stuff that goes with any corporation, and then you have all the emotional stuff that goes with any family, and then you put them together and on top of each other. At the end, you can have a real emotional mess.”

Howe, one of the founders of Touchstone, also stressed the importance of planning ahead. Urban Renaissance Group acquired his firm last year, and some of the younger Touchstone employees were given greater roles. Howe and fellow partners Jim O'Hanlon and Shawn Parry are still invested in Touchstone's development portfolio and will continue to work for several years.

Howe said he has been thinking about Touchstone's future for years. During the recession, he said, he hired the smartest people he could find to help run the company with the goal of making it viable after the founders were gone. The partners began contemplating a merger, or “recapitalization,” Howe said.

Touchstone found itself with six well-qualified suitors. Howe said URG was a good match because it was strong financially and experienced in property management and acquisitions, rounding out Touchstone's development expertise.

Touchstone had agreements in place with URG by late 2013, but it took almost a year for the deal to close. Touchstone had to keep investors, lenders and other partners in the loop without letting any information leak to the public.

One Touchstone project, a hotel with housing at First and Stewart in Seattle that's under construction, was kept out of the merger with URG because of its complexity. The partners are working on that project.

“Shawn and I are down at the project management level again and having a great time,” Howe said.

Mark Hoyt now runs the Seattle office of Trammell Crow Residential by himself, but is looking to put together a team.

Trammell Crow Residential has built more than 13,000 units in the Pacific Northwest over the years but got out of the market when the recession hit. The firm came back to Seattle earlier this year and is working on a couple of projects.

Hoyt said he enjoys being a one-man shop. He has one weekly meeting on Monday mornings, but otherwise Hoyt said he is free to focus on “unabated capitalism.”

With a couple of deals in the works, Hoyt wants to hire a few people in the next couple of years.

Hoyt said he had been looking for a young person in his or her 20s, who's good with financial models and who could have a smart conversation with a capital partner. But with more activity on the horizon, Hoyt said now he wants people with more experience.

Hoyt said he wants people who will do whatever it takes to help the company succeed — whether its closing a big deal or fixing the printer.

“When it's time to make copies, and it's the most important thing to do, you got to do it,” he said. “That's just the nature of the world we live in.”

The three men all emphasized the importance of developing relationships, both inside the office and with other firms.

Freeman said most of his employees have worked at Kemper Development for many years. Over its 70-year history, Kemper has worked with just three architects and four general contractors on its major projects. Freeman said he wants to empower other people in the firm to make decisions and solve problems because someday someone else will run the show.

“It's nice to have all of this ground work laid so it's not just us living to be 300 years old trying to drive the ship when we shouldn't be driving anymore,” Freeman said.

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