Part Two Q&A Interview: California’s Bill Halford Brings Bixby Touch to NW
By Dennis Kaiser
This is the second part of an in-depth interview with Bixby Land Company’s Bill Halford. The Newport Beach, CA-based company recently completed a three-building, $44.2 million assemblage in downtown Portland, OR, and is underway with The Crossing at First, an innovative office campus redesign that will transform the project into a vibrant work environment.
The Crossing at First will feature distinctive pixilated window glass patterns and brightly colored walkways that immediately establish an independence of design thought. Connect Media asked Halford to share how the redesign came together, including a centerpiece of the redevelopment, called the Bixby Retreat – an expansive, activated courtyard area synonymous with Bixby Land Company projects. You can read the first part of the Q&A with Halford here.
Q: Bixby tends to add a special something to each of its projects. How do you decide what’s right for each environment?
A: It is a soulful thing. Most developers, 100 percent of the time, focus on making a lot of money. Clearly, we have profit goals, but ironically many developers who are focused primarily on making money have, in many cases, no sense of what creates the value proposition for the tenant. They are not place makers. We live for design. It is in our DNA. The notion of architecture, how the building is experienced by the tenant that may not study architecture or design, makes all the difference. You may not be able to explain it, but when you see it, you know it. We are very mindful of cost, and where to spend money on the margin to get paid for it.
We prefer to use different architects to avoid the trap of sameness or cookie cutter designs. Many developers always use the same architect because it is efficient, but it is not a better product. We like to collaborate with different architects. Our input is more valuable and the end product is better if each project is designed from a separate viewpoint. It requires input from both us and the architect. Typically, we let the architect do two to three design passes, and see the ideas change without input from us because we don’t want to unduly influence what they design. We then decide how much on point they are and make our own adjustments.
Q: What tends to drive success in the projects Bixby touches?
A: One of the 30 projects we’ve done was a building we bought in 2011 that was owned by a big defense company in El Segundo. Everything was wrong with the property, low ceilings, under-parked, not a very attractive building, and on top of that it was in a market that was 23% vacant. That was when creative space was coming into vogue. People said you couldn’t do more than two stories of creative space. The first thing we did was hire an architect I read about that had done a house for a friend. We met at their cool offices, they were hip kids working in Culver City. They showed us some pretty cool projects, like how they repositioned a bowling alley. They were hipsters. We engaged them and let them know we may buy this office building, and asked them to help us reposition it and really go against the norm.
The first thing we did was put a bar right in the middle of the lobby, with concrete floors and exposed HVAC. The second thing was we encouraged people to bring their dogs to work and we marketed it as such, a dog park. We also added an indoor/outdoor restaurant space.
There wasn’t much creative space in the market when we started the project, but we thought there was demand for it. I’ve just never been associated with such a fast lease-up. We started testing the market with rents at $2.25 and within 18 months rents were $3.65, a huge jump. We sold it in two years, and it remains one of our most successful projects. It went from no hope to something the market couldn’t get enough of.
Q: It seems there is an interesting yield play with The Crossing at First in Portland. What intrigued Bixby to go out of market and to structure a deal that involved a more complicated property assembly? How will creating a single campus transform an undervalued site into real value?
A: Portland has similar growth prospects as Los Angeles and Silicon Valley, but without the excessive building of new office product. We think there’s strong demand for great product. Because institutional capital drives deals, Portland was smaller it was not on their list, especially for this kind of product. You can buy reasonably affordably, and exit to make a profit with numbers we’re comfortable with. That’s how we got to Portland.
The targeted returns are lower than 2009, but we like the value proposition and we thought the property offered an opportunity to do what we do on a scale big enough to be successful.
A critical piece of the recipe where we do well is where there’s inherent demand for premium product. There’s not a lot of high end rent payers in some markets, so you’ve got to be in markets where people rent space that are not just out for the lowest price, but are willing to pay for the best space. That tends to be tech companies who are buying for employees. They are selling the work environment of how they treat employees to get the best people. We tend to be in markets with good demand drivers. Portland is seeing great employment growth, and that is intriguing.
For comments, questions or concerns, please contact Dennis Kaiser
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