Weekend Interview: CRG’s Shawn Clark On Growing Up In CRE, Being A Contrarian And Raising Millions For A Rare Disease
This series goes deep with some of the most compelling figures in commercial real estate: the deal-makers, the game-changers, the city-shapers and the larger-than-life personalities who keep CRE interesting.
The CRG CEO started his real estate career sweeping up and managing tools at project sites and did stints as an estimator and the owner of a homebuilding company before stepping into the top job at CRG.
In his time at the company, Clark has tripled its size, expanding it from a subsidiary of parent company Clayco into a standalone business with eight regional offices across the country and annual developments valued at over $2B.
Clark said he’s gotten more comfortable with a contrarian mindset over his tenure, which includes more than six years at Clayco and six at CRG.
“One of the things that I've learned from getting to go through a couple cycles now is there's a risk in herd mentality,” Clark said.
Clark spoke to Bisnow about his process for constructing new deals, the opportunities other investors are overlooking and his efforts to raise nearly $8M to research the rare disease that took his mother’s life.
This interview has been edited for length and clarity.
Bisnow: Tell us a little bit about how you got involved in real estate and why.
Clark: For those who are unfamiliar with our story, CRG is a national real estate development and investment firm based in Chicago and it's kind of the real estate arm of the Clayco enterprise. My father started Clayco, which is a design-build construction firm in St. Louis, in 1984. I grew up going to job sites and watching buildings go up.
Ultimately, when I got my driver's license, I got my first job working in the shop and sweeping the floors and cleaning goose poop off the parking lot and managing all the equipment and tools that we sent to the job sites. As I progressed in my career, I became an estimator for construction projects.
Then, I eventually started a homebuilding company in Colorado. What I really loved about that was putting the deals together. I loved understanding the design, understanding what the client needed, putting out the proposal and winning the work.
Eventually, I learned the real estate finance side of the business or how projects are really capitalized, how there's a whole investment side of the built environment. That became a huge passion for me because it was a tangible way to participate in the broader macroeconomic environment. It was just really fun. A lot of that had to do with people. We work with really great people, both in our own company and with our clients. And that whole part about participating in the economy, when I read the news now, it actually matters, and it just makes me feel like I'm really participating and makes me feel alive.
Bisnow: What does your process look like for constructing deals?
Clark: Our process really starts at high-level strategy. One of the first things we did back in 2015 was just look at the overall opportunity set and look at our strengths.
Being part of Clayco, we are one of the largest industrial construction companies in the country. We have our own architecture firm. We work with a lot of the Fortune 500 clients, and we were seeing a real trend in what was happening in e-commerce and the nuances of the modern logistics building versus the older building stock. For us, it actually started as a strong macro theme of modern industrial facilities in core markets that were lacking what we knew was necessary as consumers continue to buy more stuff online.
That approach led us to building partnerships in the markets we really believed in, and that's really step one to them finding land that actually met the criteria for the overall broader strategy. Today, when we identify a site, we can relatively quickly do a site plan and understand what we can build there. We can relatively quickly do a construction estimate and understand the cost. We have a pretty strong grasp on market fundamentals, where is supply and demand, where is the most recent rent comps versus the most recent sales comps? Then we go to a variety of our different capital partners, including our own funds, to capitalize the deals.
Bisnow: What are you working on right now?
Clark: Once a year or more we really try to step back and look at where the big picture opportunity is. We're growing our student housing platform, and that includes some multifamily at this stage in the cycle. Acquisitions are more attractive than they used to be when development was sort of the clear way to add the most value. So we're studying that across sectors where we continue to have long-term conviction — industrial, student housing, multifamily data centers. We've raised some capital around doing industrial acquisitions specifically.
Bisnow: When you reflect on your career up to this point what would you say the most impactful thing that you've worked on has been?
Clark: The most impactful thing that I've been involved with is creating the real estate platform that is CRG. When you really think about it, to do real estate you have to have deals, and to do deals you have to have capital.
That was a really difficult chicken and the egg for us when we were getting started. We were out looking for deals but we hadn't raised any money yet, and we were out raising money but we didn't have any deals yet. That was a real pressure cooker in 2016 and 2017 for us to be able to string together enough deals with enough capital to build a track record and get some momentum.
Fast forward to today where we have seven offices around the country that produce the exact type of deals that we're looking for with a variety of different capital partners, mostly institutional, and our own funds of private capital to capitalize these deals.
Bisnow: Can you describe what it was like to try and navigate that tightrope, along with any advice you might have for somebody in a similar spot?
Clark: It was extremely challenging. I think often about new people trying to do it, and I definitely think about the lack of diversity in the real estate space and how challenging it is for someone without the kind of backing that I had to get into the space. One of the key things that it requires is pursuit money. You need to spend real money on design, you have to spend real money to tie up great sites, you have to spend real money on due diligence.
As it relates to building that track record, you have to reach for the biggest deal that you think you can do. Because if you get stuck building small deals forever, that's what you're going to do. And you're not going to necessarily be able to go out and do a $200M deal on your first project. Continue to reach for where you want to go. Really understand how finance works. There are people who wake up every day looking for opportunities to invest with people who are creating great deals. Building a relationship with someone like that while you hone your craft, there's a way for you to make them money and create success for yourself along the way.
Bisnow: CRG has a program designed to help developers from diverse backgrounds. Can you explain a little bit about how it works?
Clark: There's a variety of ways that we actually help developers and it often comes down to what resources they are lacking. We're not doing it because it's a charity, we're doing it because it's good business. These deals are often proprietary and being able to source them is where a lot of value is created. There are some great developers who have that kind of deal flow and that sort of insight into what the opportunities are. What they need is access to capital to fund things like deposits on the land to have control, design expertise and money to fund early-stage design.
At the same time, it's very difficult, especially in this environment, to get a loan without providing some guarantees, like construction completion guarantees, and having a certain net worth or balance sheet to be able to do that. We can provide a mix of those, and based on that, we participate as well in the deal, depending on how much is needed from us.
It really should look like, and does look like, an informal extension of our regional office strategy where there's partners. And these are exactly the same kind of resources we provide to people on our platform. It comes back to that same platform that we've already built and how to leverage it to do projects that should be getting done with developers who should be doing these kinds of projects.
Bisnow: What is Illumination and how has it grown since its inception?
Clark: Illumination is a rare event for a rare disease.
Unfortunately, we lost my mom, Ellen Clark, to [retinal vasculopathy with cerebral leukoencephalopathy] in 2010 when she was 50 years old. While she was sick, we actually discovered the gene mutation that she had, and as we learned more, we realized how rare the disease was: Under 50 people in the world have it. There really wasn't any meaningful research for this particular rare disease happening. I felt, as someone who's been really lucky, somewhat responsible to be the person who led the fundraising and put together the team of researchers to drive our understanding of the mechanism of the disease as well as therapies and cures for patients.
Illumination [is] a really special, unique environment created by artists with a Halloween party where people can shed the weight of their everyday realities and go have a fun time with their friends while all of the proceeds go to this rare disease research.
We've done seven of those events since 2016. And we're already locking in our space for our eighth event here in 2024. We’ve had amazing support from a lot of the other developers in our community, amazing support from the subcontractors that we work with on the construction side. It's a lot of our friends. It's a lot of the people we work with. People really love the event and it has done exactly what I wanted and served as a shiny object that got people to pay attention to our rare disease.
Bisnow: What are the opportunities right now that you feel like others might be overlooking?
Clark: We take a look at where we have long-term conviction. We maintain our long-term conviction in industrial, multifamily and student housing. The data center space is probably just beginning as you start to really understand the computing power necessary for AI and the nuances of AI versus cloud storage and its flexibility of where it can really go.
One of the things that I’ve learned from getting to go through a couple cycles now is there’s a risk in herd mentality. Right now, we’re obviously working through a little bit of extra supply in certain markets where everybody went to after the pandemic or certain asset classes that everybody focused on after the pandemic. We’re staying steady on where we have long-term conviction, but also being more comfortable with a contrarian approach.
Bisnow: Give us your bold prediction for the rest of the year.
Clark: You can't be a real estate developer and investor without being somewhat optimistic. If I had to make a prediction for this year, I would predict that we don't fall into the feared recession that everybody was worried about from 2023 and that inflation continues to remain under control. I do think that confidence will be restored with some of our major clients and investors. More transactions both on the leasing side and on the disposition and acquisition side will ramp up over the second half of the year.
What I've been telling my team optimistically is, even though we're still sort of crawling out of 2023 like the rest of the real estate industry, we’ll be crawling in the first quarter, walking in the second quarter, running in the third quarter and sprinting in the fourth quarter.
Bisnow: What is your weekend routine or favorite weekend activity?
Clark: My routine starts Monday morning and ends Friday night. I have a 3-year-old boy and another boy due in a couple of weeks. My weekend really revolves around my wife and family and there is no routine to it, but I do love getting some quality family time and we go to our favorite breakfast spot every weekend. That's probably the only thing that's relatively consistent.