David Wolff On Staying In the Black And Future Growth Opportunities In Houston
Houston has been David Wolff’s playground for more than 50 years. In that time, he’s seen plenty of economic downturns and hard times, but has still managed to keep his firm, Wolff Cos., in the black.
“We're very careful when we buy land. We believe due diligence is something that you cannot overemphasize,” Wolff said during a Bisnow webinar May 6.
Wolff Cos. is a developer of large master-planned, mixed-use business environments in the Houston area. Some of the company’s legacy projects include Brookhollow Business Park, Park 10 Regional Business Center, Beltway Business Park and Westway Park.
Wolff Cos. operates without debt. One of the ways the company has managed that is by outsourcing a lot of its overhead costs for job functions like legal, engineering and public relations.
“The benefit of that is, at times when you should not really be doing anything, you don't have the pressure that comes from carrying a large staff, a large management group with a large overhead burden, and this is something intentional that we've done,” Wolff said.
Wolff favors land parcels along freeways, because in his experience, they present the most opportunities. A well-chosen tract of land should also have multiple exit strategies, where a developer can pivot to different types of assets built on that land if market conditions suddenly change.
That is partially why the company chose the location of its Beacon Hill project, a 521-acre tract of land in Waller directly on the north side of Highway 290, between FM 362 and James Muse Parkway. Wolff said his company was fortunate enough to work with the city of Waller to tie-in with its utility systems in place.
Another major factor that influences Wolff’s choice in buying land is the quality of local school districts. Wolff pointed to areas such as Cy-Fair and Katy, which both have several high-performing schools. Wolff said he thinks some of the rising independent school districts, such as Fort Bend and Waller, as well as Plano outside of Dallas, represent areas of significant future growth.
“People want to live in a good school district where they can be sure that their children are getting a good education,” Wolff said.
When it comes to future opportunities in the Houston area, Wolff said the coronavirus pandemic may underscore the need to reduce supply chain risk. As a result, some manufacturers may choose to relocate their operations to the U.S.
“I think you could see more manufacturing in the United States,” Wolff said. "I think that one thing that will happen with this pandemic is companies realizing how vulnerable they are, sourcing from areas that might not be reliable.”
Wolff pointed to Daikin Technology Park, which has 4.1M SF of industrial space near its Beacon Hill project. The plant is the second-largest manufacturing building in the U.S., behind the Boeing factory in Everett, just outside of Seattle. Daikin is the largest manufacturer of heating, cooling and ventilation equipment in the world.
Daikin came to Houston because it wanted a large tract of land, with the possibility of expansion over time, Wolff said. Affordable, plentiful land and a pro-business environment made the move attractive to the company, and with any luck, others might follow.
Houston still lags behind Austin in the tech sector, an area that Wolff hopes will grow further to bring more opportunities to the city.
“We're going to have to retrofit Houston for a new reality, because I don't think fossil fuels are going to be what they were, for maybe the entire future,” Wolff said.