A recession isn’t good for any business, but a recession caused by a crash in real estate is particularly hard on developers. When cash is king, only those companies with disciplined spending practices and a dedication to excellence can take advantage of the opportunities that do arise. Colorado-based McWhinney is one such company.
“Every day, our business is directly affected by the latest fluctuation in the real estate market,” said Dean Barber, VP of development for McWhinney’s medical, industrial, and commercial office division. “To survive, we have to be flexible, and we have to maintain a clear focus on what is important.”
What is most important to Barber and everyone at the McWhinney firm is the company’s clearly defined purpose and promise: to create great places for people and provide fabled experiences for customers.
Dean Barber, VP of development for the medical, industrial, and commercial office divisionEven when Barber joined McWhinney six years ago, when it was barely 28 people, everyone was devoted to that mission. Today, the company is a full-service real estate firm able to handle everything from horizontally integrated, community development projects that include commercial, residential, entertainment, healthcare, and hospitality facilities to property management and accounting.
“We’ve come a long way since I joined, but there is always room for improvement,” Barber said.
Chad and Troy McWhinney lead and own the company, which is still relatively small at 87 employees. Barber said the company’s size contributes to a collaborative atmosphere, which helps keep everyone focused on the promise and purpose. These days, McWhinney’s reputation for delivering on that promise is helping it succeed when other developers are failing.
Barber explained that not long after he joined McWhinney, the company brought on board an executive consultant to help improve company-wide communication and teamwork and bring everyone in line with the company’s promise and purpose. Johnna Bavoso, the consultant known as McWhinney’s company coach, became a full-time employee and implemented her program called GroupsWork to do just that.
“Chad and Troy knew the company was growing fast but didn’t have the tools to handle it,” Barber explained.
Bavoso’s coaching was crucial in helping McWhinney’s leadership team become well aligned. Those efforts, in conjunction with a five-year strategic plan the company recently finished with the help of Robert Charles Lesser & Co., is now the roadmap for the company. Far from being set in stone, the plan is a tool to keep the company focused on the big picture, according to Barber, who added that is always difficult for entrepreneurial companies, especially in times like these.
But Barber isn’t worried. He explained that McWhinney has always carefully managed its debt, held diversified assets, and maintained a certain amount of liquidity. That strategy puts McWhinney in the position to snap up strategic opportunities as they arise while the market recovers.
He added that during the recession, the company will continue to invest in its people. “We understand that it’s crucial to maintain our talent and expertise in the bad times so we’ll be able to hit the ground running when the good times return,” he said.
The talented people at McWhinney have already proven themselves leaders in development by improving strategies for mixed-use projects and by adhering to rigorous sustainability standards.
One of McWhinney’s flagship projects is Centerra, a 3,000-acre master-planned community located in Loveland, Colo. At Centerra, commercial office, medical office, and industrial uses are integrated alongside residential neighborhoods, retail, dining, and entertainment. Future plans at Centerra based on market conditions include developing walkable mixed use, whether it is vertical or horizontal.
Barber said that vertically integrated projects, which feature buildings with a ground floor dedicated to retail and entertainment, a few middle floors for office space, and three or four top floors for apartments or condominiums, are more challenging and expensive.
“With vertical integration, each building depends on three markets being equally vibrant all the time or else you have vacant space. This project type has suffered because both the residential and retail markets are very soft right now,” Barber said.
Conversely, horizontally integrated mixed-use projects feature mostly stand-alone buildings that give developers more flexibility. If residential is booming and commercial is dropping, they can adapt the overall master plan and still capitalize on the more active markets. While there will always be a place for vertical mixed-use projects, which is still planned to be a focal point for the Centerra community, Barber said McWhinney’s next project will be more horizontally integrated.
“We see that as the future of development,” he said. “Even in this economy, those kinds of projects are attracting higher lease rates and lots of interest. This new urbanist, mixed-use design is what people want, and a horizontally integrated layout is the most effective way to provide that.”
People have also proven without a shadow of a doubt that they want to live and work in sustainable buildings. Barber said in the last year or so he’s seen the biggest shift in the development industry in the last 20 years as everyone now incorporates sustainable building practices in their facilities.
“There was so much noise about sustainability, but it’s died down in the last few months because building that way is a given now, rather than new and edgy,” said Barber. “We’re proud to say McWhinney has always been developing greener, cleaner buildings.”
He explained that after years of developing projects, the company decided to pursue LEED certification for one of three office buildings at a new site. They earned the certification, but all three buildings are nearly identical.
McWhinney’s real contribution to sustainable development comes from the size of its projects. Through the company’s recycling programs for the construction site and the users of a building, for example, it can divert up to 75% of construction waste from landfills. Spread out over 8 million square feet of commercial space, that adds up.
At McWhinney’s Centerra site, the company did more than enforce recycling protocols and install efficient systems. Rather than turning two large lakes in the center of the site into a managed park system, the company worked with local environmental agencies to create a protected natural habitat environment, complete with surrounding hiking trails.
“We’ve been doing that sort of thing all along. It’s part of our promise and our purpose,” Barber said. “We aim to bring dreams to life and create vibrant communities our tenants will enjoy. We will always do whatever it takes to make that happen.”