December 25, 2023 • 43 mins
Get ready for a comparison of California's busy streets and Montana's peaceful cattle farms, two very different landscapes that hold surprising connections in the real estate world. In this podcast episode, Colter chats with Matt Davis about California's real estate market.
Hear how even Californians sometimes miss out on great ranch properties in their state because they're focused on city living. Tune in now to learn more and make the most of your real estate opportunities!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
I'm Colter DeVries, owner of Ranch Investor Advisory
and Brokerage Services.
I'm an accredited landconsultant with the Realtor Land
Institute and proud member ofASFMRA.
Speaker 2 (00:13):
The Ranch Investor Podcast is the most downloaded
and informativeindustry-specific content that
intrigues while entertains.
Speaker 1 (00:21):
Tell me about Cushman Wakefield and Matt Davis.
What's your background?
How did you end up with CushmanWakefield?
What are consultants and whatdo they do?
Why does Steve Jobs hateconsultants?
Speaker 3 (00:38):
That's a question I probably can't answer, but I can
definitely hit the first ones.
Cushman Wakefield is a largecommercial real estate firm.
Global firm Went public a fewyears back.
I started with a small companycalled Burnham Real Estate back
in 06.
I'm doing more local streetbrokerage what I would call some
(01:00):
leases, some owner-user sales,some small private client
investment sales of commercialretail office product.
Then in 2010, I partnered witha guy who was later in his
career, had been a land brokerhis entire life.
A lot of greenfield developmentfor sprawling suburban
residential in the greater SanDiego and Southern California
(01:22):
region.
So partnered with him in 2010,and he retired just in end of 21
.
I had a great 10-plus year runwith him and was able to learn
from him.
I'd say he's one of the best,but been in the business 35-plus
years, cut his teeth in MidtownManhattan with IBM and sales
(01:43):
for them back in the day Just areally polished expert in the
space.
We recognized that in San Diegowe were out of land.
We got Camp Pendleton to thenorth Ocean to the west, mexico
to the south and Desert to theeast, mountains to the east
before the desert actually.
So there wasn't a lot of landthat was going to happen in San
(02:05):
Diego other than infill and wewanted to do bigger, larger,
more complex projects.
So we started looking outsideof San Diego for where our
business was going to go.
So over the last decade we kindof built a business that I'd
say has four general businesslines.
Today we do a ton of work inHawaii in partnership with some
folks there in Honolulu, but wework on all the major islands
(02:27):
there.
We do a lot of renewable energywork across the country.
So we work both with principalsand developers developing
renewable energy projectseverywhere from Hawaii to New
York.
We do a lot of farmland in thewest, so primarily California,
in the desert southwest, movingnow more into the Pacific
(02:47):
Northwest as well, as we see alot of demand for kind of
climate resilience and watersecurity.
So we do a lot of farmland.
We love the agriculturalbusiness I'd say that's probably
our fastest growing sector andthen we get involved in some
really unique assets.
So the kind of fourth is kindof all the other stuff that
doesn't really fit in anyone'swheelhouse 8,000 acres of timber
(03:10):
we sold earlier this year up inNorthwoods, new Hampshire.
We're selling a golf courseoutside of Princeton, new Jersey
, right now that is owned by theheirs to the Johnson and
Johnson family.
So we just get involved in alot of really unique, complex
assets that we can kind of comeinto, peel back the layers,
really understand the differentcomponents of value and how to
(03:33):
appropriately position it in themarket and get it sold.
Speaker 1 (03:35):
Those are the fun ones.
Speaker 3 (03:36):
Those are the fun ones.
Speaker 1 (03:37):
Those unique, complex , difficult.
Speaker 3 (03:40):
I tell people, if it was easy we wouldn't get the
phone call.
Speaker 1 (03:43):
Yeah, and that's I mean.
Probably part of the reason whypeople generally hate
consultants and brokers isbecause we have proprietary type
information.
We have a trade where that's aspecialty to be able to crack
those nuts, crack that shell onthose complex ones, and people
(04:06):
have to pay for that and theydon't like the idea of
outsourcing that.
A lot of people you know wantfull control.
That's private property rights.
It is all about control.
And when you have to pay someother professional to come in
and tell you how to do your job,that doesn't feel good.
Speaker 3 (04:23):
Well, I tell, I mean we deal with mostly landowners,
but I'd say 80% of our businessis probably working for sellers.
So the bulk of our business ishelping landowners figure out a
transition right and the driversof that transition are unique
client to client.
We ask the question what is aline consultant?
(04:44):
What do we do?
And I think some of the thingswe do really well and maybe not
unique to us as a team, but Ithink accredited land
consultants through RLI and theaccredited ad consultants
through ASFMRA, the AmericanSociety of Farm Managers and
Rural Appraisers do well is wetake that step back and we kind
of ask the client what are youactually solving for?
(05:05):
You called us because you wantto sell or you want to
understand your value orsomething you know.
Aside from that, what are theactual drivers of this
conversation?
And, if we can understand whattheir actual goals are, what are
they actually solving for?
Like, we just sold a large farmfor a guy who had a mother and
an aunt who are in their 90s andthey've had this large farming
(05:26):
asset in the family forgenerations and he wants to
diversify his investment tosecure the cash flow for them,
because the cash flow from thisasset from the tenant is what's
funding their living expenses,and so having it tied to one
asset was a little bitconcerning, especially with
things going on in the ColoradoRiver and droughts and things
(05:48):
like that.
He was concerned that that cashflow may be at risk and so we
started working with him andthen, through some health stuff
and things like that, we decidedto pull it off the market
because he just wasn't in aspace to transact at that time.
And then we started talkingwith him again about OK, the
market's down a little bit.
Drought on the Colorado israising concerns about the buyer
pool shrunk, economy shifting.
(06:09):
Maybe now is not the right time.
And we kind of felt like valueis probably down 10% to 20% and
from what we really felt thevalue was the asset, and so we
were kind of talking around, notselling and just holding in,
waiting for a couple of years.
And then, as we really dug inwith him and understood what he
(06:29):
was solving for, it's like waita minute, you're looking at
moving this money into net leastassets.
Diversifying across multipleassets.
The market has impacted thoseassets as well, so the return
expectations from investors havegone up, so you're actually
buying those assets at adiscount.
So, even though you're sellingat a discount, we can help you
(06:51):
buy at a discount and you'regoing to double your cash flow.
So you're going to double yourcash flow, diversify your
investments.
You're going to accomplish allyour goals.
And so, yeah, we're selling in alittle bit of a discount.
But is peak value actuallywhat's driving this decision?
And the answer was no, and sowe were able to accomplish all
of his goals and really, themoney he left on the table from
(07:11):
peak value, he's going to makeup in a couple of years from the
increased cash flow.
So it ended up being anabsolute win for him.
And I think that that's thekind of conversation we try to
have with our clients is toreally understand what we'll be
solving for, and if we reallycan get inside their head, then
we can come up with a strategyto actually accomplish that.
Speaker 1 (07:30):
So what would be the threshold to justify bringing a
consultant that you come withcosts?
Are we looking at a minimum 5million type project or?
Speaker 3 (07:43):
Yeah, it's case by case.
So we're primarily transactionbased, success fee based
commission.
We have some accounts that webill hourly, but for the most
part we're success fee based,and so we just really have to
look at what's the commitment weneed to make to help this
client accomplish our goals.
Is it a fit for us?
Is it a space where we want tobe?
(08:05):
What's the saying If you try tobe everything to everyone, you
end up being nothing to anyone,and so I think that's important,
because we do a lot, but we dohave to keep a focus on where
can we actually be most valuable?
So, yeah, generally 5 millionplus, but we do.
I mean, I've got a couplemillion dollar plus or minus
(08:26):
deals we're closing right now,just at the end of the year, and
they were kind of low hangingfruit.
They're in a market where we'retransacting, so it just makes
sense to try to get them done.
Speaker 1 (08:35):
Everything that everyone reminds me of a mailer,
and I shouldn't be so criticalof my own peers and my own
industry, but I received amailer from a local real estate
brokerage team husband and wifethat they said they specialize
in residential, farm and ranch,commercial and industrial.
(08:59):
And I was like, well, which oneis it you specialize in?
All of them?
Speaker 3 (09:05):
It's impressive.
Yeah, that's the thing I haveto remind myself is that
everything we do is land.
That's the saving grace withour crazy business plan, but the
diversification does allow us alot of stability.
I mean, I think where a yearlike this or the market volume
is down, transactions are down.
We're having the best yearwe've ever had, and the reason
(09:28):
is is because we were able topivot 16, 18 months ago.
We had some residentialdevelopment, some master plan
community stuff that was fallingapart because the market was
shifting.
Interest rates were going up,home builders were walking away.
We recognized that that trendwas likely to continue through
2023.
And so we kind of leaned awayfrom that business.
(09:49):
We still did some of it, butadvised a lot of our clients
hold don't.
Now is not the time to go tomarket.
Let's get through this.
Things will stabilize and wewere able to go focus on
renewable energy or things wherethere is transaction activity.
Renewals right now is insane.
It's like the Wild West andInflation Reduction Act had a
(10:09):
lot of tax credits and benefits.
That's driving a lot of that.
So affordable housing isanother one.
Still have affordable housingdeals going.
Where government money flows,deals happen.
So it's kind of being able tobob and weave within our
business plan year to year tomake sure we're moving where the
activity is.
Speaker 1 (10:30):
So when do you bring in a consultant?
Is it after the purchase?
I bought this land, or I havethe land.
Or hey, matt, I'm thinking, mywife and I, we have this five
year goal that we would like toget moved into the outskirts of
(10:51):
Boise, idaho, or Bend, oregon,and we've got this development
that we would like to live inpart of it and develop out the
rest of it, but that's fiveyears out.
Like when do we bring in aconsultant and say here's what
we're looking at.
Is it?
Boy, I've got the money rightnow.
We got to do something the next12 months.
(11:12):
I've got the land.
I'm chasing a market.
This thing's about to fold upon me.
Help me get out before I lose afew, a few thousand dollars in
market value.
What is it?
When do you come in and engage?
Speaker 3 (11:29):
So for me personally, sooner the better.
You know.
I'd love to hear from somebodywhen they're first thinking
about whatever it is they'rethinking about.
I mean, one of the examples Ican give is we've had many
clients where you know familyasset held in trust you know,
prior generation passes away.
Now it's time to liquidate theasset.
(11:51):
They step up in basis and theywant to dispose of the asset.
They call us and they say, hey,we got this land, it's prime
for development, let's sell it.
And we say, okay, you know it'sgoing to be a multi-year escrow
to allow the buyer time to getentitlements and complete the
approvals for the process.
So they know what they'rebuying.
That's driven by their equity.
It's driven by risk associatedwith entitlements.
(12:11):
It's driven by time, value ofmoney.
You know the cost to carry it.
If they were to buy it now andthey go no, no, no, we want to
liquidate it now, we go okay,well, that's like a 40% to 60%
discount based on all thosefactors.
And so really the right time toengage us was two or three years
ago, you know, or whenever,when you kind of had visibility
of this shift coming that wecould have gotten ahead of it,
(12:34):
and then we can help them kindof devise a strategy to maximize
value and a timeline that worksfor them.
So I feel like the best thingwe can know is what they're
solving for as soon as possible,and then we can help.
You know, either let's talk intwo years, or let's talk in a
year or let's get going rightnow.
You know that's a.
We just had a conversationyesterday with a lady that owns
(12:57):
a bunch of farmland and she'sgot solar interest and she wants
to do the deals and then sellthe farmland a couple of years
from now, and so we're helpingher kind of figure out how to
structure deals now so thatshe's in the best position to go
through an orderly liquidationover the next few years.
Speaker 1 (13:12):
So how do you?
How do you address thesechallenges?
You have clients that have alot of options.
Like you said, there'srenewables on the board today,
transitional real estate yousaid greenfield,
multi-multi-housing, affordablehousing and maybe at some point
(13:35):
housing becomes saturated andit's not as lucrative.
The margins aren't there.
How do you sit down and decideboy, I don't care what we do
with this land and I don't carethe timeline, just make me the
most money.
That's one of the.
Speaker 3 (13:55):
I think that's one of the unique aspects that we
bring to the table being landexperts.
As a land expert, especiallywhen you're dealing with
transitional land where it'smoving from one use to a higher
and better use as the marketshifts, and that could be, you
know, from agriculture torenewables.
It could be row crop land to apermanent crop.
It could be, you know,greenfield or farmland to houses
(14:19):
.
You know, it could be anynumber of things.
Part of it is looking at itholistically and because we're
land experts and not industrialexperts or industrial,
commercial, residential, likeyour friends up there that are
experts in everything you knowwe compete a lot with.
Like we just pitched on anindustrial asset, a six and a
(14:39):
half acre site on the port, andwe were pitching against guys
that are purely industrial andthey're very good at what they
do.
But we came in and said, look,it could be industrial, could
also be renewables, could bethis, could be that.
And we're able to look at itfrom a higher level and think
about the different potentials,beyond kind of the myopic focus
of the guy who's trying to, youknow, sell to an industrial
(15:01):
developer so they can lease itup so that they can sell it, you
know, et cetera.
They've kind of had their theirlane that they're focused on.
So we try to take a bigger lookat it, further back, test a lot
of things you know we'll callrenewable energy groups.
Say what do you think of thissite?
Does it have any legs?
Yes, no, okay, we got somefeedback.
Now we can start to develop astrategy around that.
(15:22):
So we tend to be slower on thefront end.
When we're working on an asset,we don't just throw it up on the
MLS and let the phone ring.
You know, we're, we're lookingat it, we're making phone calls,
we're kind of strategicallyreaching out, gathering feedback
and Intel from the actual, youknow, potential potential buyer
pools, and then we can sit downwith a client and say, okay,
(15:43):
here now we have betterinformation because as much as
we're the expert, we're theexpert because we have access to
people that may have interestright, and so we can.
We can connect those dots andthen, once we understand where
that interest lies, we candevelop a strategy and a process
to to maximize their value,whether it be, you know, going
(16:04):
to a full blown marketingcampaign, sometimes it's just,
you know, making 20 phone callsbecause we we know who the
active buyers are.
We just talking with a guy whohas a geothermal lithium asset,
um out in the Salton Sea, youknow, and it's like, okay, well,
there's, there's five groups,you know the one.
I want to call them all and seeif there's any interest and and
solicit feedback, and then wekind of know the land and we can
(16:25):
figure out next steps fromthere.
Speaker 1 (16:27):
Yeah, and that's, I mean, that's really the biggest
piece of consulting, isn't it Isbeating the bush is, if you're
going to explore, you've gotthese paths path A, path B, path
C uh, you, you have to reallyexplore your options, that
decision tree within each ofthat, and that's, I mean, that's
(16:47):
why you outsource that task isthere's a lot of phone work that
goes into beating the bush andjust scratching and saying, hey,
I've got this 20 acres.
Uh, what do you think it'sworth?
What's the least value?
What could you do?
Um, that, that is for peoplewho appreciate their time.
I mean, that's that's why youpay a consultant is they are
(17:10):
going to bring an objectiveopinion that is not myopic, as
you mentioned.
So how does one get into this?
I mean, it seems like you kindof have to be a master of all or
a jack of all trades, master ofnone.
How does one become aconsultant, do you?
Is it just as simple as gettingan MBA?
Speaker 3 (17:30):
Um, no, I, I think it's, it's, uh, it's time on the
street, right, it's, it's, it'sdoing the legwork to really
learn it all, and and and, tosome extent also focusing on on
whatever specific niche you wantto focus on.
I mean we, as you know, we comea lot of across a lot of folks
at realtors, land Institute orASFM, ra that are maybe really
(17:51):
focused on agriculture andthat's what they do.
I'm working on a project inIllinois right now where I
called one you know, one of ourcolleagues from RLI and he said
cool, I'm not your guy.
You know, this is, this is myspace right here, regionally
product.
This doesn't fit in that.
You should call this other guy.
And I think that's um, knowingwhere you fit within this whole
(18:14):
business opportunity, that theentire spectrum that's out there
is important, and saying no isimportant because, again, we're
not one size fits all.
And um, and how do you becomean accredited land land
consultant or a consultant ingeneral?
Um, in the land space?
Um, it's, it's a, it's a laborof love, I would say.
(18:36):
I mean, I laugh and I tellpeople that one of the beauties
that I see in my business planwith our team here is we really
don't have that much competitionwe, there aren't that many
people doing what we do, withthe way we do it, the scale we
do it.
There are very capable localbrokers, um, but we can step
into a market a lot of times anddisrupt that Um.
(18:58):
But because the, the, the leadtime of what we do, you know,
again, it's not transactionallyvery active.
We don't.
We're not listing a housethrown in on the MLS.
30 days later it's an escrowboom.
We get paid, we're onto thenext one, um, the, the about the
fastest we see revenue from thefirst time we engage with a
(19:19):
client is 12 months.
So it, you know you got to havea bank account to start out,
you know, or you got to stepinto a team that's got an
existing book of business and um, or you got to just grind it
out and and find revenuewherever you can find it or have
some other means.
So it's a really I think it's areally challenging space to
enter into Um.
(19:40):
It's one of the things I likeabout it is the, the you know I
think the barriers to entry arepretty substantial and it takes
a long time.
I mean it, uh, you know again,started in the business in 06
started in land in 2010.
I originally thought I wasgoing to be a developer, so my
background was a real estatedegree planning.
You know, focus.
Um, I'd worked with a city tolearn planning and land use and
(20:03):
the entitlement process fromtheir side while I was finishing
college.
So I I had a good background inland and development but, um,
it kind of took a few years inmy career to get back to where I
was really putting that to use.
But I, I mean, starting 2010, Istill, I mean, I'm still
learning stuff today.
You know, I I definitely don'tfeel like I really had to get a
handle on it for at least, youknow, until at least 2015.
(20:27):
That was basically nine 10years in the business.
Speaker 1 (20:29):
At that point, Well, let's talk about some.
These are going to be one-offtangents and somewhat technical,
somewhat not evergreen.
This episode might get datedreally quick.
But let's talk about this trendof billionaires and, like the
(20:51):
tech titans, creating cities.
What's going on with that?
What is the deal with?
They're going to create these,these utopian societies.
One of them is in the desert.
You know someone's got one inthe desert and then you got the
group that includes what I thinkis one of America's greatest
(21:12):
thought leaders, that techinvestor out of San Francisco.
Speaker 3 (21:19):
Flannery Associates one outside the military base.
Speaker 1 (21:22):
Yes, yes, flannery Associates.
Yeah, and that is gosh dang it,the ball guy.
What's his name?
I don't recall, it's out of myhead, but yeah, I can't remember
either.
But what's the deal with thesenew cities trying to pop up?
Why not just fix what's already, what's broken?
Speaker 3 (21:42):
Oh, I'm sure there's some value to starting with a
blank canvas.
I imagine and this is purespeculation on my part but I
imagine with with a certainamount of wealth and freedom
comes kind of some altruisticgoals right of putting that
capital to use in a way that youfeel is going to you know
(22:02):
better society.
But I mean you can go back andthis has been a trend that's
played out forever that I canthink of.
I mean, disney was trying tobuild, you know, cities of the
future.
I think Ford yeah did some stuffas well, and so I mean, there's
always been whether it'sindustrialists or just high net
worth individuals from oneindustry or another trying to
(22:23):
think about how to do it better.
And if you think about it,that's probably how they got to
where they're at right is theyfigured out how to do it better
in one space and they generatedimmense wealth through that and
and now they're looking toreplicate that or to enjoy it
and something that is a passionproject or or or other other
driver.
You know again, kind of comingfrom the planning background
(22:46):
originally, and how I approachedreal estate and development.
Planning is important.
I heard once that you know,planners had their heyday in the
industrial revolution when theyseparated coal driven
industries and you know heavypolluters from residential and
they've been trying to relivethat glory ever since by
(23:09):
separating everything fromeverything.
And and with that comes youknow the commute that I enjoy
every day and and everythingelse.
And now we're looking at infilland we're looking at mixed use
and we're looking at kind ofbringing these uses back
together.
And so you know the pendulumswings right.
We're just we're, we're, we'retrying to, you know create a
(23:31):
better better system at thispoint, but we're probably just
recycling some of the old ideasthat we used to have.
Speaker 1 (23:37):
Yeah, I mean, I was going to say it seems like the
new trend because I watched alot of those YouTube videos
about planning, zoning and howto, how to optimize and maximize
brown fields and gray zones,and mixed use is definitely one
of them, and I can speak fromexperience that when you submit
(24:00):
an application to your city foran ADU, it gets personal.
People lose their minds, yourneighbors, you find out what
their true colors are and itgets super heated.
Do you ever, in your job, inyour position, do you ever have
to show up to some of those citymeetings, those city councils,
(24:20):
and, oh my gosh those arehorrible.
Speaker 3 (24:24):
Not only do I show up to them, sometimes I have to
speak at them, or sometimes Ihave to call council members in
advance and, you know, plead thecase and try to make the
argument where, say, if it's aboard of five, you got to count
to three.
Right, you got to get your freevotes to get a project through.
So a lot of times, yeah, weabsolutely do that.
Yeah, I mean pitchforks andtorches, right, I mean that's
(24:47):
one thing Zoom has been good for.
Is it separated some of thatfrom the physical sense.
But community opposition, youknow, is we as a society.
Many regions have looked atstopping or limiting sprawling
development.
Right, california is a goodexample of that and I think,
(25:08):
yeah, specifically, which iswhere I live and so I know it
well as a regulatory body theybasically stripped all the
density from the rural areas anddumped it back in on the urban
areas.
So great, we need lesssprawling infrastructure.
So now we just need to maintainand set a developed new
infrastructure and we're goingto intensify our existing
communities and we're going tofocus it on nodes and villages
(25:31):
and things like that Makes a lotof sense.
The biggest challenge with thatis, instead of sprawling
development where you'reimpacting some rural landowners,
farmers, whatever ranchers, whoare sparsely populated and few
in numbers.
Now you're, by design, puttingintense new development into an
existing community that, againby design, is going to change
(25:53):
the character of that community,and we have to accept that.
That is a reality of theregulatory environment we've
chosen as the preferred pathforward.
And with that is going to comeintense community opposition
from folks who like thecommunity the way it is today,
(26:14):
and that's an unfortunatereality of the regulatory path
we've chosen.
And with regulatory actionthere's always winners and
losers, and most of the timethere's winners and losers.
And so I think the folks thatwant the community to stay
exactly as it is today are goingto be the ones feeling like
they're the losers when a newbig development comes into that
(26:38):
vacant lot or underdeveloped lotin their existing community.
I take a perspective of citiesare living, breathing things.
They're either growing orthey're dying, and so while
change is hard, rooftops, peoplebring services and services
bring an exciting, very diversecommunity and town center or
(27:04):
whatever it is.
And then so I mean the littlecity I live in.
I've seen it change immenselyover the last 10 years, and it's
because of new housing beingdeveloped.
So we've got new restaurants,new shops, new things that are
catering to this new demographicof people and more people that
are coming in, and so I thinkit's a positive.
Doesn't mean it's not hard,doesn't mean it doesn't
(27:26):
negatively impact some peopleTraffic, there's always noise
from construction, there's allkinds of real impacts.
Speaker 1 (27:33):
Well, and this is more of a philosophical, I mean,
this is what we get into, whatwe see from all perspectives
being presented at a communitymeeting is so it's Mark Andre
and who's leading that buyergroup for this new utopian city
outside of San Francisco?
And Mark Andre, I think he'sone of the thought leaders of
(27:53):
our generation.
I think he's he is the HenryFord.
He's right up there with ElonMusk.
He's he's insanely ahead of histime of what he understands
with, with the world.
But what I see, some of some ofthat city he wants to create is
California Elk habitat and Idon't know California that well.
(28:19):
I would imagine Elk habitatspretty rare and I would.
I would imagine that it'sspecial and this is just
subjective, but I would thinkthat something that's going to
come up is is a Starbucks more?
You know, is that better thanan Elk habitat is?
Are these, are these nice newmillennial mom family homes?
(28:44):
Are they?
Is that?
Does that create a better lifethan than the natural ecology?
Is that really what we shouldbe striving for and managing for
?
And this is just completelyphilosophical and subjective map
.
But you see and you know, thisgets into sprawl and I think our
generation is.
We are critical of sprawl andwe are looking for a better way.
(29:09):
But then you, like I, drivedown the road here in Montana
and there's a brand new ministorage out next to Rock Creek.
And they did that in the countybecause there's no zoning and
regulation and I'm a bigadvocate of free markets.
And no regulation and no zoning, like well you've got to.
(29:30):
You have to accept both sidesof that sword.
If you want, if you want freemarkets, you can't drive past
the mini storage and cuss it.
Speaker 3 (29:41):
You can.
You know that's your call.
Yeah, I mean, I think, is itbetter?
I mean that's all a matter ofperspective, right to the folks
live in there using thatStarbucks.
I'm sure they think it's better.
So, those of us that enjoyedthe El Cabotette and like hiking
out there or whatever it is, no, it's the worst thing that's
ever happened to us, right, Imean?
(30:02):
So again, that sword cuts bothways and I think it's really
just depends on which side ofthe aisle you're on, is it?
As it relates to thatdevelopment, I always joke that
that mastermind communities anddevelopments like take the name
of whatever it is that theyreplace.
So it'll be like, oh, glenn,you know, or whatever, and it's
like that's the beautiful thingthat used to be there that they
bulldozed to put in, you know.
(30:24):
So whatever meadows or, youknow, elk meadows or whatever.
It's probably all this thing.
But, yeah, is it better?
I think that's a matter ofperspective.
I think the we need housing.
You know we have to house ourpopulation and we need a variety
(30:45):
of housing products, and Idon't know that there's any one
silver bullet on how we solvethat, but we do need to build
and it probably means some levelof sprawling development and
some level of infill development.
And as someone who you know,like you I try to spend at least
(31:05):
10 days backpacking the Sierraevery year.
You know I like to get out andenjoy the natural environment
and get out of this that wespend our lives in, you know,
most days, and so I like to seethat protected.
And you know, for better orworse, we've got California
environmental quality act which,as part of the development
(31:25):
process, will require mitigating, you know, adverse
environmental impacts and soyou'll see, you know they'll
look at habitat, they'll look atthings like that as part of a
development, and you knowthey'll determine that this many
acres of whatever criticalhabitat are being impacted by
this project and they'll have togo offset that somewhere else.
(31:46):
So put something else intoconservation to protect it into
perpetuity, and so you do getkind of a balancing effect.
Again, you're still losingsomething, but you're also
protecting something else.
Speaker 2 (31:59):
That won't be lost later.
Speaker 3 (32:02):
So there's some level of balance in the system, but
it's an imperfect system.
Speaker 1 (32:11):
I'm going to continue philosophizing with you.
Let's do it.
But to me that sounds moredystopian.
If you're going to take, let'sjust say, 10,000 acres near the
coast and you're going todevelop it for a master plan
city community and then you'regoing to offset that with per
(32:33):
into perpetuity, a conservationeasement in the hinterlands, for
hours from the coast, andyou're going to do that with,
you know, 30,000, 50,000 acres,whatever the equivalence is,
you're creating a more dichotomybetween the hinterlands and
that dense area they're.
(32:54):
They are becoming further andfurther culturally from each
other Because you have justcreated these economic
conditions that separated themeven more.
I think it's becomingdichotomous.
Speaker 3 (33:09):
Yeah, I think to some extent there's a requirement
that the offsets be mitigated orthe impacts be mitigated with
similar habitat in the region.
So there is a nexus or aproximity obligation there, but
to your point you know,mitigation being just one piece
(33:30):
of it.
Yeah, there's absolutely adichotomy that there's a
divergence right between oururban areas and our rural
communities, and we're seeingthat play out across the country
.
We're seeing it play out inCalifornia.
I mean, I've had pictures outon ranches in California that I
show my friends or I post onsocial media or something and
people go, wow, where is that?
You know it's CentralCalifornia.
(33:51):
And they go wait, really that'sin this state.
But you know they live in LA orsomething, and so all they see
is like this dense urbanenvironment.
They don't even realize thatthere's 30,000 acre ranches in
California, you know, but theyexist and it looks like another
state to them because theyhaven't gotten out of their
little myopic urban bubble.
Speaker 1 (34:10):
Echocamber of, yeah, culturally, and economically
where that divide is becomingwider, even though
geographically it's, you knowit's the same distance.
But I would say culturally,economically, and I have no data
to support this map.
This is completely Allanecdotal.
Speaker 3 (34:31):
Yes, Look, we see it in Even in our industry.
So I'm heavily involved inRealtors Land Institute on a
national level in the governmentaffairs committee, which I
chaired this year.
I'm heavily involved in theCalifornia Association Realtors
and our local association,specifically because their
impactful lobbying andgovernment relations bodies that
(34:56):
matter to our clients or focuson issues that matter to our
clients, and in one of those iswater, and so I'm like the lone
voice many times talking aboutour rural communities, land,
agriculture and the impacts ofwater.
And it's so interesting to hearpeople that are primarily
(35:18):
focused on residential realestate that talk about like well
, we should just get the waterfrom the farmers so we can build
more houses.
And then, you know, it's like myhand goes up and they get
totally tired of hearing from meand I'm like hey, remember, we
focus primarily on privateproperty rights and protecting
those as an overarching kind ofdriver of how we interact with
(35:39):
these types of regulatorychanges and they're like, oh,
yeah, but water is really theissue at the Farm Bureau and I'm
like water is part of thebundle of rights, right, do you
remember your real estateclasses?
Like water is absolutely whatwe do and in protecting those
rights for the landowner,regardless of what we think the
greater beneficial use of thatasset may be like, we should be
(36:02):
protecting those rights and thatlandowner should get to make
the decision on what they thinkthey want to do with that asset.
And it's an important piece ofwhat we do and, as we deal with
scarcity and natural resources,it's going to be a greater piece
of, I think, what we have todeal with on a regular basis in
(36:22):
our business.
Speaker 1 (36:24):
Absolutely Well.
I have one more, one moretechnical subject issue to cover
with you, just to hear whatyou're seeing.
It seems like with the increasein borrowing rates, yet cap
rates have not adjusted toreflect the increase in the cost
(36:48):
of leverage, and I don't knowwhy.
Supply and demand if you mightbe able to get into that but so
you have an increase in capital,cost of capital, you have an
increase in the cost ofmaterials, land, labor,
resources, so you have adecrease in margins, profit
(37:09):
margins, and it seems like Idon't know if you're seeing this
and if you are consulting withyour clients to financialize
some of these tangible hardassets and turn them into paper,
turn them into owner financing,contract for deed, lease
purchase options, mezzaninecapital, mezzanine financing is.
(37:30):
Are you starting to see a shift, a wave of mezzanine kind of
come up and start replacing someof these projects that just
couldn't get done because themargins weren't there, the cap
rate, the leverage, cash flowmargin isn't there.
Are we starting to see in yourbusiness a financialization and
(37:52):
people moving to paper ratherthan tangible real assets?
Speaker 3 (38:00):
I think you hit a lot of factors there.
I think, starting with the lastone, I'll hit it from the
perspective of when we talkabout cost of capital and maybe
owner financing or some othercreative structure, lease to own
something that provides somelevel of benefit or incentive to
(38:23):
a buyer, that's coming at acost to the seller.
The reason they're doing thatis to get a higher value.
But if they're providing debt,it's got to be at a lower cost
than what's available on themarket or there's zero incentive
to the buyer In the exceptionof debts in some cases just
(38:46):
generally not available.
When we're talking aboutavailability of debt, then that
would be a plus, I think, for aseller.
They've got a way.
Is taking this loan and therisk that comes with that better
than liquidating at a lowervalue and rolling that into
another asset that's seeing somelevel of increased return or
(39:07):
similar decrease in value?
Or do I pay my taxes and go bytreasuries and a pretty high
risk free rate of return rightnow and keep it liquid?
I think that's a reality ofwhere we're at right now is
there are assets out there thatgenerate a healthy return, that
(39:29):
provide flexibility in the nearterm?
That's a long way of saying,yeah, we're seeing some of it.
I don't know that it's aprimary driver.
I think this is a time anytimewe see a shifting market
creativity becomes moreimportant, Whether it's lease to
own, whether it's multi-yearescrows to give buyers time to
(39:52):
work through a process wherethey think they're going to get
through this uncertain shiftingperiod where debt's going to
stabilize and we're going tocome back to a more reasonable
market, or there's going to bemore demand from home builders
in the future and they're goingto be able to step into that and
fill a void.
I think it's just kind offiguring out.
Each asset is going to beunique.
Each asset class is going to beunique.
Speaker 1 (40:14):
Well, that's just the inside information I was
looking for.
I had to wait till the very endof the recording to get there,
matt, so I appreciate it, noproblem.
Well, thanks for coming on.
How can people who areinterested in either becoming a
consultant, working with aconsultant, what Cushman
Wakefield does, what Matt Davisis up to, how can they get in
(40:36):
touch or follow you?
Speaker 3 (40:38):
and how are you reachable?
That email's best Matt Davis atCushwakecom.
So, mattdavis at cushwakecom,I'm always available, happy to
help give anyone guidance ifthey're thinking about the
industry or just have a questionon an asset.
(40:59):
A lot of what I do is justconnect the dots and get out of
the way.
We get a lot of inboundinterest from people in
different markets and it's justgetting them to the right folks
and it's not something I canhelp with, but we just get
employed in the right direction.
Speaker 1 (41:11):
Matt.
I will give my own personaltestament to Matt and Cushman
Wakefield.
I referred a friend network uphere who's also a real estate
professional to work with them.
I joined in on some of theintroductory calls that Matt had
(41:34):
for a master plan communityhere in Montana, billings,
montana.
That was transitional realestate way out of my
understanding and my knowledge,as well as the other
professionals.
That's why I had them engage.
Matt, I was very impressed andit was one of those going to be
(41:54):
over $5 million deals, highlycomplex, multi-year and the
amount of risk going into that,capital at risk and highest and
best use alternatives.
It was very complex and I wasdelighted and very pleased at
your engagement with this client.
(42:16):
I highly recommend people workwith you and talk to you if they
have these projects and justwant to commend you on how you
worked with that friend, thatpeer of mine.
It was very rewarding andexciting what I got to listen in
on.
I appreciate that.
Thanks, matt Again.
Any other way people can reachyou or recommendations you have,
(42:39):
please just follow him onLinkedIn or contact me and I can
put you in touch.
Matt, thanks for coming on.
The Ranch Investor podcast.
Speaker 2 (42:49):
Click subscribe on your streaming platform so you
know when the latest episode hasdropped.
Be the source of knowledge andthe maven that other
professionals are excited torefer.
I'm Colter DeVries, owner of Ranch Investor Advisory
and Brokerage Services.
I'm an accredited landconsultant with the Realtor Land
Institute and proud member ofASFMRA.
Speaker 2 (00:13):
The Ranch Investor Podcast is the most downloaded
and informativeindustry-specific content that
intrigues while entertains.
Speaker 1 (00:21):
Tell me about Cushman Wakefield and Matt Davis.
What's your background?
How did you end up with CushmanWakefield?
What are consultants and whatdo they do?
Why does Steve Jobs hateconsultants?
Speaker 3 (00:38):
That's a question I probably can't answer, but I can
definitely hit the first ones.
Cushman Wakefield is a largecommercial real estate firm.
Global firm Went public a fewyears back.
I started with a small companycalled Burnham Real Estate back
in 06.
I'm doing more local streetbrokerage what I would call some
(01:00):
leases, some owner-user sales,some small private client
investment sales of commercialretail office product.
Then in 2010, I partnered witha guy who was later in his
career, had been a land brokerhis entire life.
A lot of greenfield developmentfor sprawling suburban
residential in the greater SanDiego and Southern California
(01:22):
region.
So partnered with him in 2010,and he retired just in end of 21
.
I had a great 10-plus year runwith him and was able to learn
from him.
I'd say he's one of the best,but been in the business 35-plus
years, cut his teeth in MidtownManhattan with IBM and sales
(01:43):
for them back in the day Just areally polished expert in the
space.
We recognized that in San Diegowe were out of land.
We got Camp Pendleton to thenorth Ocean to the west, mexico
to the south and Desert to theeast, mountains to the east
before the desert actually.
So there wasn't a lot of landthat was going to happen in San
(02:05):
Diego other than infill and wewanted to do bigger, larger,
more complex projects.
So we started looking outsideof San Diego for where our
business was going to go.
So over the last decade we kindof built a business that I'd
say has four general businesslines.
Today we do a ton of work inHawaii in partnership with some
folks there in Honolulu, but wework on all the major islands
(02:27):
there.
We do a lot of renewable energywork across the country.
So we work both with principalsand developers developing
renewable energy projectseverywhere from Hawaii to New
York.
We do a lot of farmland in thewest, so primarily California,
in the desert southwest, movingnow more into the Pacific
(02:47):
Northwest as well, as we see alot of demand for kind of
climate resilience and watersecurity.
So we do a lot of farmland.
We love the agriculturalbusiness I'd say that's probably
our fastest growing sector andthen we get involved in some
really unique assets.
So the kind of fourth is kindof all the other stuff that
doesn't really fit in anyone'swheelhouse 8,000 acres of timber
(03:10):
we sold earlier this year up inNorthwoods, new Hampshire.
We're selling a golf courseoutside of Princeton, new Jersey
, right now that is owned by theheirs to the Johnson and
Johnson family.
So we just get involved in alot of really unique, complex
assets that we can kind of comeinto, peel back the layers,
really understand the differentcomponents of value and how to
(03:33):
appropriately position it in themarket and get it sold.
Speaker 1 (03:35):
Those are the fun ones.
Speaker 3 (03:36):
Those are the fun ones.
Speaker 1 (03:37):
Those unique, complex , difficult.
Speaker 3 (03:40):
I tell people, if it was easy we wouldn't get the
phone call.
Speaker 1 (03:43):
Yeah, and that's I mean.
Probably part of the reason whypeople generally hate
consultants and brokers isbecause we have proprietary type
information.
We have a trade where that's aspecialty to be able to crack
those nuts, crack that shell onthose complex ones, and people
(04:06):
have to pay for that and theydon't like the idea of
outsourcing that.
A lot of people you know wantfull control.
That's private property rights.
It is all about control.
And when you have to pay someother professional to come in
and tell you how to do your job,that doesn't feel good.
Speaker 3 (04:23):
Well, I tell, I mean we deal with mostly landowners,
but I'd say 80% of our businessis probably working for sellers.
So the bulk of our business ishelping landowners figure out a
transition right and the driversof that transition are unique
client to client.
We ask the question what is aline consultant?
(04:44):
What do we do?
And I think some of the thingswe do really well and maybe not
unique to us as a team, but Ithink accredited land
consultants through RLI and theaccredited ad consultants
through ASFMRA, the AmericanSociety of Farm Managers and
Rural Appraisers do well is wetake that step back and we kind
of ask the client what are youactually solving for?
(05:05):
You called us because you wantto sell or you want to
understand your value orsomething you know.
Aside from that, what are theactual drivers of this
conversation?
And, if we can understand whattheir actual goals are, what are
they actually solving for?
Like, we just sold a large farmfor a guy who had a mother and
an aunt who are in their 90s andthey've had this large farming
(05:26):
asset in the family forgenerations and he wants to
diversify his investment tosecure the cash flow for them,
because the cash flow from thisasset from the tenant is what's
funding their living expenses,and so having it tied to one
asset was a little bitconcerning, especially with
things going on in the ColoradoRiver and droughts and things
(05:48):
like that.
He was concerned that that cashflow may be at risk and so we
started working with him andthen, through some health stuff
and things like that, we decidedto pull it off the market
because he just wasn't in aspace to transact at that time.
And then we started talkingwith him again about OK, the
market's down a little bit.
Drought on the Colorado israising concerns about the buyer
pool shrunk, economy shifting.
(06:09):
Maybe now is not the right time.
And we kind of felt like valueis probably down 10% to 20% and
from what we really felt thevalue was the asset, and so we
were kind of talking around, notselling and just holding in,
waiting for a couple of years.
And then, as we really dug inwith him and understood what he
(06:29):
was solving for, it's like waita minute, you're looking at
moving this money into net leastassets.
Diversifying across multipleassets.
The market has impacted thoseassets as well, so the return
expectations from investors havegone up, so you're actually
buying those assets at adiscount.
So, even though you're sellingat a discount, we can help you
(06:51):
buy at a discount and you'regoing to double your cash flow.
So you're going to double yourcash flow, diversify your
investments.
You're going to accomplish allyour goals.
And so, yeah, we're selling in alittle bit of a discount.
But is peak value actuallywhat's driving this decision?
And the answer was no, and sowe were able to accomplish all
of his goals and really, themoney he left on the table from
(07:11):
peak value, he's going to makeup in a couple of years from the
increased cash flow.
So it ended up being anabsolute win for him.
And I think that that's thekind of conversation we try to
have with our clients is toreally understand what we'll be
solving for, and if we reallycan get inside their head, then
we can come up with a strategyto actually accomplish that.
Speaker 1 (07:30):
So what would be the threshold to justify bringing a
consultant that you come withcosts?
Are we looking at a minimum 5million type project or?
Speaker 3 (07:43):
Yeah, it's case by case.
So we're primarily transactionbased, success fee based
commission.
We have some accounts that webill hourly, but for the most
part we're success fee based,and so we just really have to
look at what's the commitment weneed to make to help this
client accomplish our goals.
Is it a fit for us?
Is it a space where we want tobe?
(08:05):
What's the saying If you try tobe everything to everyone, you
end up being nothing to anyone,and so I think that's important,
because we do a lot, but we dohave to keep a focus on where
can we actually be most valuable?
So, yeah, generally 5 millionplus, but we do.
I mean, I've got a couplemillion dollar plus or minus
(08:26):
deals we're closing right now,just at the end of the year, and
they were kind of low hangingfruit.
They're in a market where we'retransacting, so it just makes
sense to try to get them done.
Speaker 1 (08:35):
Everything that everyone reminds me of a mailer,
and I shouldn't be so criticalof my own peers and my own
industry, but I received amailer from a local real estate
brokerage team husband and wifethat they said they specialize
in residential, farm and ranch,commercial and industrial.
(08:59):
And I was like, well, which oneis it you specialize in?
All of them?
Speaker 3 (09:05):
It's impressive.
Yeah, that's the thing I haveto remind myself is that
everything we do is land.
That's the saving grace withour crazy business plan, but the
diversification does allow us alot of stability.
I mean, I think where a yearlike this or the market volume
is down, transactions are down.
We're having the best yearwe've ever had, and the reason
(09:28):
is is because we were able topivot 16, 18 months ago.
We had some residentialdevelopment, some master plan
community stuff that was fallingapart because the market was
shifting.
Interest rates were going up,home builders were walking away.
We recognized that that trendwas likely to continue through
2023.
And so we kind of leaned awayfrom that business.
(09:49):
We still did some of it, butadvised a lot of our clients
hold don't.
Now is not the time to go tomarket.
Let's get through this.
Things will stabilize and wewere able to go focus on
renewable energy or things wherethere is transaction activity.
Renewals right now is insane.
It's like the Wild West andInflation Reduction Act had a
(10:09):
lot of tax credits and benefits.
That's driving a lot of that.
So affordable housing isanother one.
Still have affordable housingdeals going.
Where government money flows,deals happen.
So it's kind of being able tobob and weave within our
business plan year to year tomake sure we're moving where the
activity is.
Speaker 1 (10:30):
So when do you bring in a consultant?
Is it after the purchase?
I bought this land, or I havethe land.
Or hey, matt, I'm thinking, mywife and I, we have this five
year goal that we would like toget moved into the outskirts of
(10:51):
Boise, idaho, or Bend, oregon,and we've got this development
that we would like to live inpart of it and develop out the
rest of it, but that's fiveyears out.
Like when do we bring in aconsultant and say here's what
we're looking at.
Is it?
Boy, I've got the money rightnow.
We got to do something the next12 months.
(11:12):
I've got the land.
I'm chasing a market.
This thing's about to fold upon me.
Help me get out before I lose afew, a few thousand dollars in
market value.
What is it?
When do you come in and engage?
Speaker 3 (11:29):
So for me personally, sooner the better.
You know.
I'd love to hear from somebodywhen they're first thinking
about whatever it is they'rethinking about.
I mean, one of the examples Ican give is we've had many
clients where you know familyasset held in trust you know,
prior generation passes away.
Now it's time to liquidate theasset.
(11:51):
They step up in basis and theywant to dispose of the asset.
They call us and they say, hey,we got this land, it's prime
for development, let's sell it.
And we say, okay, you know it'sgoing to be a multi-year escrow
to allow the buyer time to getentitlements and complete the
approvals for the process.
So they know what they'rebuying.
That's driven by their equity.
It's driven by risk associatedwith entitlements.
(12:11):
It's driven by time, value ofmoney.
You know the cost to carry it.
If they were to buy it now andthey go no, no, no, we want to
liquidate it now, we go okay,well, that's like a 40% to 60%
discount based on all thosefactors.
And so really the right time toengage us was two or three years
ago, you know, or whenever,when you kind of had visibility
of this shift coming that wecould have gotten ahead of it,
(12:34):
and then we can help them kindof devise a strategy to maximize
value and a timeline that worksfor them.
So I feel like the best thingwe can know is what they're
solving for as soon as possible,and then we can help.
You know, either let's talk intwo years, or let's talk in a
year or let's get going rightnow.
You know that's a.
We just had a conversationyesterday with a lady that owns
(12:57):
a bunch of farmland and she'sgot solar interest and she wants
to do the deals and then sellthe farmland a couple of years
from now, and so we're helpingher kind of figure out how to
structure deals now so thatshe's in the best position to go
through an orderly liquidationover the next few years.
Speaker 1 (13:12):
So how do you?
How do you address thesechallenges?
You have clients that have alot of options.
Like you said, there'srenewables on the board today,
transitional real estate yousaid greenfield,
multi-multi-housing, affordablehousing and maybe at some point
(13:35):
housing becomes saturated andit's not as lucrative.
The margins aren't there.
How do you sit down and decideboy, I don't care what we do
with this land and I don't carethe timeline, just make me the
most money.
That's one of the.
Speaker 3 (13:55):
I think that's one of the unique aspects that we
bring to the table being landexperts.
As a land expert, especiallywhen you're dealing with
transitional land where it'smoving from one use to a higher
and better use as the marketshifts, and that could be, you
know, from agriculture torenewables.
It could be row crop land to apermanent crop.
It could be, you know,greenfield or farmland to houses
(14:19):
.
You know, it could be anynumber of things.
Part of it is looking at itholistically and because we're
land experts and not industrialexperts or industrial,
commercial, residential, likeyour friends up there that are
experts in everything you knowwe compete a lot with.
Like we just pitched on anindustrial asset, a six and a
(14:39):
half acre site on the port, andwe were pitching against guys
that are purely industrial andthey're very good at what they
do.
But we came in and said, look,it could be industrial, could
also be renewables, could bethis, could be that.
And we're able to look at itfrom a higher level and think
about the different potentials,beyond kind of the myopic focus
of the guy who's trying to, youknow, sell to an industrial
(15:01):
developer so they can lease itup so that they can sell it, you
know, et cetera.
They've kind of had their theirlane that they're focused on.
So we try to take a bigger lookat it, further back, test a lot
of things you know we'll callrenewable energy groups.
Say what do you think of thissite?
Does it have any legs?
Yes, no, okay, we got somefeedback.
Now we can start to develop astrategy around that.
(15:22):
So we tend to be slower on thefront end.
When we're working on an asset,we don't just throw it up on the
MLS and let the phone ring.
You know, we're, we're lookingat it, we're making phone calls,
we're kind of strategicallyreaching out, gathering feedback
and Intel from the actual, youknow, potential potential buyer
pools, and then we can sit downwith a client and say, okay,
(15:43):
here now we have betterinformation because as much as
we're the expert, we're theexpert because we have access to
people that may have interestright, and so we can.
We can connect those dots andthen, once we understand where
that interest lies, we candevelop a strategy and a process
to to maximize their value,whether it be, you know, going
(16:04):
to a full blown marketingcampaign, sometimes it's just,
you know, making 20 phone callsbecause we we know who the
active buyers are.
We just talking with a guy whohas a geothermal lithium asset,
um out in the Salton Sea, youknow, and it's like, okay, well,
there's, there's five groups,you know the one.
I want to call them all and seeif there's any interest and and
solicit feedback, and then wekind of know the land and we can
(16:25):
figure out next steps fromthere.
Speaker 1 (16:27):
Yeah, and that's, I mean, that's really the biggest
piece of consulting, isn't it Isbeating the bush is, if you're
going to explore, you've gotthese paths path A, path B, path
C uh, you, you have to reallyexplore your options, that
decision tree within each ofthat, and that's, I mean, that's
(16:47):
why you outsource that task isthere's a lot of phone work that
goes into beating the bush andjust scratching and saying, hey,
I've got this 20 acres.
Uh, what do you think it'sworth?
What's the least value?
What could you do?
Um, that, that is for peoplewho appreciate their time.
I mean, that's that's why youpay a consultant is they are
(17:10):
going to bring an objectiveopinion that is not myopic, as
you mentioned.
So how does one get into this?
I mean, it seems like you kindof have to be a master of all or
a jack of all trades, master ofnone.
How does one become aconsultant, do you?
Is it just as simple as gettingan MBA?
Speaker 3 (17:30):
Um, no, I, I think it's, it's, uh, it's time on the
street, right, it's, it's, it'sdoing the legwork to really
learn it all, and and and, tosome extent also focusing on on
whatever specific niche you wantto focus on.
I mean we, as you know, we comea lot of across a lot of folks
at realtors, land Institute orASFM, ra that are maybe really
(17:51):
focused on agriculture andthat's what they do.
I'm working on a project inIllinois right now where I
called one you know, one of ourcolleagues from RLI and he said
cool, I'm not your guy.
You know, this is, this is myspace right here, regionally
product.
This doesn't fit in that.
You should call this other guy.
And I think that's um, knowingwhere you fit within this whole
(18:14):
business opportunity, that theentire spectrum that's out there
is important, and saying no isimportant because, again, we're
not one size fits all.
And um, and how do you becomean accredited land land
consultant or a consultant ingeneral?
Um, in the land space?
Um, it's, it's a, it's a laborof love, I would say.
(18:36):
I mean, I laugh and I tellpeople that one of the beauties
that I see in my business planwith our team here is we really
don't have that much competitionwe, there aren't that many
people doing what we do, withthe way we do it, the scale we
do it.
There are very capable localbrokers, um, but we can step
into a market a lot of times anddisrupt that Um.
(18:58):
But because the, the, the leadtime of what we do, you know,
again, it's not transactionallyvery active.
We don't.
We're not listing a housethrown in on the MLS.
30 days later it's an escrowboom.
We get paid, we're onto thenext one, um, the, the about the
fastest we see revenue from thefirst time we engage with a
(19:19):
client is 12 months.
So it, you know you got to havea bank account to start out,
you know, or you got to stepinto a team that's got an
existing book of business and um, or you got to just grind it
out and and find revenuewherever you can find it or have
some other means.
So it's a really I think it's areally challenging space to
enter into Um.
(19:40):
It's one of the things I likeabout it is the, the you know I
think the barriers to entry arepretty substantial and it takes
a long time.
I mean it, uh, you know again,started in the business in 06
started in land in 2010.
I originally thought I wasgoing to be a developer, so my
background was a real estatedegree planning.
You know, focus.
Um, I'd worked with a city tolearn planning and land use and
(20:03):
the entitlement process fromtheir side while I was finishing
college.
So I I had a good background inland and development but, um,
it kind of took a few years inmy career to get back to where I
was really putting that to use.
But I, I mean, starting 2010, Istill, I mean, I'm still
learning stuff today.
You know, I I definitely don'tfeel like I really had to get a
handle on it for at least, youknow, until at least 2015.
(20:27):
That was basically nine 10years in the business.
Speaker 1 (20:29):
At that point, Well, let's talk about some.
These are going to be one-offtangents and somewhat technical,
somewhat not evergreen.
This episode might get datedreally quick.
But let's talk about this trendof billionaires and, like the
(20:51):
tech titans, creating cities.
What's going on with that?
What is the deal with?
They're going to create these,these utopian societies.
One of them is in the desert.
You know someone's got one inthe desert and then you got the
group that includes what I thinkis one of America's greatest
(21:12):
thought leaders, that techinvestor out of San Francisco.
Speaker 3 (21:19):
Flannery Associates one outside the military base.
Speaker 1 (21:22):
Yes, yes, flannery Associates.
Yeah, and that is gosh dang it,the ball guy.
What's his name?
I don't recall, it's out of myhead, but yeah, I can't remember
either.
But what's the deal with thesenew cities trying to pop up?
Why not just fix what's already, what's broken?
Speaker 3 (21:42):
Oh, I'm sure there's some value to starting with a
blank canvas.
I imagine and this is purespeculation on my part but I
imagine with with a certainamount of wealth and freedom
comes kind of some altruisticgoals right of putting that
capital to use in a way that youfeel is going to you know
(22:02):
better society.
But I mean you can go back andthis has been a trend that's
played out forever that I canthink of.
I mean, disney was trying tobuild, you know, cities of the
future.
I think Ford yeah did some stuffas well, and so I mean, there's
always been whether it'sindustrialists or just high net
worth individuals from oneindustry or another trying to
(22:23):
think about how to do it better.
And if you think about it,that's probably how they got to
where they're at right is theyfigured out how to do it better
in one space and they generatedimmense wealth through that and
and now they're looking toreplicate that or to enjoy it
and something that is a passionproject or or or other other
driver.
You know again, kind of comingfrom the planning background
(22:46):
originally, and how I approachedreal estate and development.
Planning is important.
I heard once that you know,planners had their heyday in the
industrial revolution when theyseparated coal driven
industries and you know heavypolluters from residential and
they've been trying to relivethat glory ever since by
(23:09):
separating everything fromeverything.
And and with that comes youknow the commute that I enjoy
every day and and everythingelse.
And now we're looking at infilland we're looking at mixed use
and we're looking at kind ofbringing these uses back
together.
And so you know the pendulumswings right.
We're just we're, we're, we'retrying to, you know create a
(23:31):
better better system at thispoint, but we're probably just
recycling some of the old ideasthat we used to have.
Speaker 1 (23:37):
Yeah, I mean, I was going to say it seems like the
new trend because I watched alot of those YouTube videos
about planning, zoning and howto, how to optimize and maximize
brown fields and gray zones,and mixed use is definitely one
of them, and I can speak fromexperience that when you submit
(24:00):
an application to your city foran ADU, it gets personal.
People lose their minds, yourneighbors, you find out what
their true colors are and itgets super heated.
Do you ever, in your job, inyour position, do you ever have
to show up to some of those citymeetings, those city councils,
(24:20):
and, oh my gosh those arehorrible.
Speaker 3 (24:24):
Not only do I show up to them, sometimes I have to
speak at them, or sometimes Ihave to call council members in
advance and, you know, plead thecase and try to make the
argument where, say, if it's aboard of five, you got to count
to three.
Right, you got to get your freevotes to get a project through.
So a lot of times, yeah, weabsolutely do that.
Yeah, I mean pitchforks andtorches, right, I mean that's
(24:47):
one thing Zoom has been good for.
Is it separated some of thatfrom the physical sense.
But community opposition, youknow, is we as a society.
Many regions have looked atstopping or limiting sprawling
development.
Right, california is a goodexample of that and I think,
(25:08):
yeah, specifically, which iswhere I live and so I know it
well as a regulatory body theybasically stripped all the
density from the rural areas anddumped it back in on the urban
areas.
So great, we need lesssprawling infrastructure.
So now we just need to maintainand set a developed new
infrastructure and we're goingto intensify our existing
communities and we're going tofocus it on nodes and villages
(25:31):
and things like that Makes a lotof sense.
The biggest challenge with thatis, instead of sprawling
development where you'reimpacting some rural landowners,
farmers, whatever ranchers, whoare sparsely populated and few
in numbers.
Now you're, by design, puttingintense new development into an
existing community that, againby design, is going to change
(25:53):
the character of that community,and we have to accept that.
That is a reality of theregulatory environment we've
chosen as the preferred pathforward.
And with that is going to comeintense community opposition
from folks who like thecommunity the way it is today,
(26:14):
and that's an unfortunatereality of the regulatory path
we've chosen.
And with regulatory actionthere's always winners and
losers, and most of the timethere's winners and losers.
And so I think the folks thatwant the community to stay
exactly as it is today are goingto be the ones feeling like
they're the losers when a newbig development comes into that
(26:38):
vacant lot or underdeveloped lotin their existing community.
I take a perspective of citiesare living, breathing things.
They're either growing orthey're dying, and so while
change is hard, rooftops, peoplebring services and services
bring an exciting, very diversecommunity and town center or
(27:04):
whatever it is.
And then so I mean the littlecity I live in.
I've seen it change immenselyover the last 10 years, and it's
because of new housing beingdeveloped.
So we've got new restaurants,new shops, new things that are
catering to this new demographicof people and more people that
are coming in, and so I thinkit's a positive.
Doesn't mean it's not hard,doesn't mean it doesn't
(27:26):
negatively impact some peopleTraffic, there's always noise
from construction, there's allkinds of real impacts.
Speaker 1 (27:33):
Well, and this is more of a philosophical, I mean,
this is what we get into, whatwe see from all perspectives
being presented at a communitymeeting is so it's Mark Andre
and who's leading that buyergroup for this new utopian city
outside of San Francisco?
And Mark Andre, I think he'sone of the thought leaders of
(27:53):
our generation.
I think he's he is the HenryFord.
He's right up there with ElonMusk.
He's he's insanely ahead of histime of what he understands
with, with the world.
But what I see, some of some ofthat city he wants to create is
California Elk habitat and Idon't know California that well.
(28:19):
I would imagine Elk habitatspretty rare and I would.
I would imagine that it'sspecial and this is just
subjective, but I would thinkthat something that's going to
come up is is a Starbucks more?
You know, is that better thanan Elk habitat is?
Are these, are these nice newmillennial mom family homes?
(28:44):
Are they?
Is that?
Does that create a better lifethan than the natural ecology?
Is that really what we shouldbe striving for and managing for
?
And this is just completelyphilosophical and subjective map
.
But you see and you know, thisgets into sprawl and I think our
generation is.
We are critical of sprawl andwe are looking for a better way.
(29:09):
But then you, like I, drivedown the road here in Montana
and there's a brand new ministorage out next to Rock Creek.
And they did that in the countybecause there's no zoning and
regulation and I'm a bigadvocate of free markets.
And no regulation and no zoning, like well you've got to.
(29:30):
You have to accept both sidesof that sword.
If you want, if you want freemarkets, you can't drive past
the mini storage and cuss it.
Speaker 3 (29:41):
You can.
You know that's your call.
Yeah, I mean, I think, is itbetter?
I mean that's all a matter ofperspective, right to the folks
live in there using thatStarbucks.
I'm sure they think it's better.
So, those of us that enjoyedthe El Cabotette and like hiking
out there or whatever it is, no, it's the worst thing that's
ever happened to us, right, Imean?
(30:02):
So again, that sword cuts bothways and I think it's really
just depends on which side ofthe aisle you're on, is it?
As it relates to thatdevelopment, I always joke that
that mastermind communities anddevelopments like take the name
of whatever it is that theyreplace.
So it'll be like, oh, glenn,you know, or whatever, and it's
like that's the beautiful thingthat used to be there that they
bulldozed to put in, you know.
(30:24):
So whatever meadows or, youknow, elk meadows or whatever.
It's probably all this thing.
But, yeah, is it better?
I think that's a matter ofperspective.
I think the we need housing.
You know we have to house ourpopulation and we need a variety
(30:45):
of housing products, and Idon't know that there's any one
silver bullet on how we solvethat, but we do need to build
and it probably means some levelof sprawling development and
some level of infill development.
And as someone who you know,like you I try to spend at least
(31:05):
10 days backpacking the Sierraevery year.
You know I like to get out andenjoy the natural environment
and get out of this that wespend our lives in, you know,
most days, and so I like to seethat protected.
And you know, for better orworse, we've got California
environmental quality act which,as part of the development
(31:25):
process, will require mitigating, you know, adverse
environmental impacts and soyou'll see, you know they'll
look at habitat, they'll look atthings like that as part of a
development, and you knowthey'll determine that this many
acres of whatever criticalhabitat are being impacted by
this project and they'll have togo offset that somewhere else.
(31:46):
So put something else intoconservation to protect it into
perpetuity, and so you do getkind of a balancing effect.
Again, you're still losingsomething, but you're also
protecting something else.
Speaker 2 (31:59):
That won't be lost later.
Speaker 3 (32:02):
So there's some level of balance in the system, but
it's an imperfect system.
Speaker 1 (32:11):
I'm going to continue philosophizing with you.
Let's do it.
But to me that sounds moredystopian.
If you're going to take, let'sjust say, 10,000 acres near the
coast and you're going todevelop it for a master plan
city community and then you'regoing to offset that with per
(32:33):
into perpetuity, a conservationeasement in the hinterlands, for
hours from the coast, andyou're going to do that with,
you know, 30,000, 50,000 acres,whatever the equivalence is,
you're creating a more dichotomybetween the hinterlands and
that dense area they're.
(32:54):
They are becoming further andfurther culturally from each
other Because you have justcreated these economic
conditions that separated themeven more.
I think it's becomingdichotomous.
Speaker 3 (33:09):
Yeah, I think to some extent there's a requirement
that the offsets be mitigated orthe impacts be mitigated with
similar habitat in the region.
So there is a nexus or aproximity obligation there, but
to your point you know,mitigation being just one piece
(33:30):
of it.
Yeah, there's absolutely adichotomy that there's a
divergence right between oururban areas and our rural
communities, and we're seeingthat play out across the country
.
We're seeing it play out inCalifornia.
I mean, I've had pictures outon ranches in California that I
show my friends or I post onsocial media or something and
people go, wow, where is that?
You know it's CentralCalifornia.
(33:51):
And they go wait, really that'sin this state.
But you know they live in LA orsomething, and so all they see
is like this dense urbanenvironment.
They don't even realize thatthere's 30,000 acre ranches in
California, you know, but theyexist and it looks like another
state to them because theyhaven't gotten out of their
little myopic urban bubble.
Speaker 1 (34:10):
Echocamber of, yeah, culturally, and economically
where that divide is becomingwider, even though
geographically it's, you knowit's the same distance.
But I would say culturally,economically, and I have no data
to support this map.
This is completely Allanecdotal.
Speaker 3 (34:31):
Yes, Look, we see it in Even in our industry.
So I'm heavily involved inRealtors Land Institute on a
national level in the governmentaffairs committee, which I
chaired this year.
I'm heavily involved in theCalifornia Association Realtors
and our local association,specifically because their
impactful lobbying andgovernment relations bodies that
(34:56):
matter to our clients or focuson issues that matter to our
clients, and in one of those iswater, and so I'm like the lone
voice many times talking aboutour rural communities, land,
agriculture and the impacts ofwater.
And it's so interesting to hearpeople that are primarily
(35:18):
focused on residential realestate that talk about like well
, we should just get the waterfrom the farmers so we can build
more houses.
And then, you know, it's like myhand goes up and they get
totally tired of hearing from meand I'm like hey, remember, we
focus primarily on privateproperty rights and protecting
those as an overarching kind ofdriver of how we interact with
(35:39):
these types of regulatorychanges and they're like, oh,
yeah, but water is really theissue at the Farm Bureau and I'm
like water is part of thebundle of rights, right, do you
remember your real estateclasses?
Like water is absolutely whatwe do and in protecting those
rights for the landowner,regardless of what we think the
greater beneficial use of thatasset may be like, we should be
(36:02):
protecting those rights and thatlandowner should get to make
the decision on what they thinkthey want to do with that asset.
And it's an important piece ofwhat we do and, as we deal with
scarcity and natural resources,it's going to be a greater piece
of, I think, what we have todeal with on a regular basis in
(36:22):
our business.
Speaker 1 (36:24):
Absolutely Well.
I have one more, one moretechnical subject issue to cover
with you, just to hear whatyou're seeing.
It seems like with the increasein borrowing rates, yet cap
rates have not adjusted toreflect the increase in the cost
(36:48):
of leverage, and I don't knowwhy.
Supply and demand if you mightbe able to get into that but so
you have an increase in capital,cost of capital, you have an
increase in the cost ofmaterials, land, labor,
resources, so you have adecrease in margins, profit
(37:09):
margins, and it seems like Idon't know if you're seeing this
and if you are consulting withyour clients to financialize
some of these tangible hardassets and turn them into paper,
turn them into owner financing,contract for deed, lease
purchase options, mezzaninecapital, mezzanine financing is.
(37:30):
Are you starting to see a shift, a wave of mezzanine kind of
come up and start replacing someof these projects that just
couldn't get done because themargins weren't there, the cap
rate, the leverage, cash flowmargin isn't there.
Are we starting to see in yourbusiness a financialization and
(37:52):
people moving to paper ratherthan tangible real assets?
Speaker 3 (38:00):
I think you hit a lot of factors there.
I think, starting with the lastone, I'll hit it from the
perspective of when we talkabout cost of capital and maybe
owner financing or some othercreative structure, lease to own
something that provides somelevel of benefit or incentive to
(38:23):
a buyer, that's coming at acost to the seller.
The reason they're doing thatis to get a higher value.
But if they're providing debt,it's got to be at a lower cost
than what's available on themarket or there's zero incentive
to the buyer In the exceptionof debts in some cases just
(38:46):
generally not available.
When we're talking aboutavailability of debt, then that
would be a plus, I think, for aseller.
They've got a way.
Is taking this loan and therisk that comes with that better
than liquidating at a lowervalue and rolling that into
another asset that's seeing somelevel of increased return or
(39:07):
similar decrease in value?
Or do I pay my taxes and go bytreasuries and a pretty high
risk free rate of return rightnow and keep it liquid?
I think that's a reality ofwhere we're at right now is
there are assets out there thatgenerate a healthy return, that
(39:29):
provide flexibility in the nearterm?
That's a long way of saying,yeah, we're seeing some of it.
I don't know that it's aprimary driver.
I think this is a time anytimewe see a shifting market
creativity becomes moreimportant, Whether it's lease to
own, whether it's multi-yearescrows to give buyers time to
(39:52):
work through a process wherethey think they're going to get
through this uncertain shiftingperiod where debt's going to
stabilize and we're going tocome back to a more reasonable
market, or there's going to bemore demand from home builders
in the future and they're goingto be able to step into that and
fill a void.
I think it's just kind offiguring out.
Each asset is going to beunique.
Each asset class is going to beunique.
Speaker 1 (40:14):
Well, that's just the inside information I was
looking for.
I had to wait till the very endof the recording to get there,
matt, so I appreciate it, noproblem.
Well, thanks for coming on.
How can people who areinterested in either becoming a
consultant, working with aconsultant, what Cushman
Wakefield does, what Matt Davisis up to, how can they get in
(40:36):
touch or follow you?
Speaker 3 (40:38):
and how are you reachable?
That email's best Matt Davis atCushwakecom.
So, mattdavis at cushwakecom,I'm always available, happy to
help give anyone guidance ifthey're thinking about the
industry or just have a questionon an asset.
(40:59):
A lot of what I do is justconnect the dots and get out of
the way.
We get a lot of inboundinterest from people in
different markets and it's justgetting them to the right folks
and it's not something I canhelp with, but we just get
employed in the right direction.
Speaker 1 (41:11):
Matt.
I will give my own personaltestament to Matt and Cushman
Wakefield.
I referred a friend network uphere who's also a real estate
professional to work with them.
I joined in on some of theintroductory calls that Matt had
(41:34):
for a master plan communityhere in Montana, billings,
montana.
That was transitional realestate way out of my
understanding and my knowledge,as well as the other
professionals.
That's why I had them engage.
Matt, I was very impressed andit was one of those going to be
(41:54):
over $5 million deals, highlycomplex, multi-year and the
amount of risk going into that,capital at risk and highest and
best use alternatives.
It was very complex and I wasdelighted and very pleased at
your engagement with this client.
(42:16):
I highly recommend people workwith you and talk to you if they
have these projects and justwant to commend you on how you
worked with that friend, thatpeer of mine.
It was very rewarding andexciting what I got to listen in
on.
I appreciate that.
Thanks, matt Again.
Any other way people can reachyou or recommendations you have,
(42:39):
please just follow him onLinkedIn or contact me and I can
put you in touch.
Matt, thanks for coming on.
The Ranch Investor podcast.
Speaker 2 (42:49):
Click subscribe on your streaming platform so you
know when the latest episode hasdropped.
Be the source of knowledge andthe maven that other
professionals are excited torefer.
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