Yield PRO TV presents NAHB Power Hitters. Host Linda Hoffman talks with Greg Anderson, SVP of Shea Properties.
Transcript: NAHB Power Hitters interview. Linda Hoffman with Greg Anderson, recorded August 5, 2021
Linda Hoffman: Once upon a time, property rights cases rarely made national news. Sure. There was the periodic local dispute. But never a whole cloth challenge, and certainly, never at the national level.
Over the years, maybe notably beginning with the EPA’s Waters of the United States rule, federal agencies began to write rules that would directly challenge the sanctity of our country’s coveted property rights. And lest we forget, especially as landlords, equally as important to land rights is contract law. It is that which protects our enterprises and ensures that our life’s work remains our own.
We are a nation of developers, builders and entrepreneurs. It is our laws, beginning with the Constitution, that allows opportunity. No property rights, no prosperity. No sanctity of a contract, no protections.
It’s times as these that it’s good to remember that our nation’s legislation was intentionally built to be slow and plodding—where tension forms great progress. It’s quite brilliant, actually.
I believe we’ll see its greatest performance in the days ahead as we sort through CDC’s latest ruling on rents.
Even without the CDC’s order Tuesday, ten states had extended the eviction moratorium beyond the federal mandate. Among these were California and Washington, two states in which Shea Properties, headquartered in Aliso Viejo, operates.
Shea is one of our country’s all-star entrepreneurial stories of drive and ingenuity. Everyone knows Shea. It’s a well-diversified real estate company with over 10,000 apartment units, millions of square feet in office, industrial and retail… and more to come with a strong pipeline for the future.
Here’s what you may not know. Shea began as family-based plumbing company in 1881. That was in Portland, Oregon. Since then this rare fourth-generation company has gone on to help build America, including the San Francisco Golden Gate bridge, the Oakland bridge, Hoover Dam and the list goes on.
I’m am bedazzled to welcome Greg Anderson, senior vice president of Shea Properties to the show. Great to have you, Greg.
Greg Anderson: Well, thank you for having me and thank you for that kind introduction and those kind words for Shae. Very appropriate. Thank you.
Linda Hoffman: Greg, you’ve got some great scores yourself. Let’s start with a bit about yourself and how you came to work with Shea.
Greg Anderson: Well, I’ve been in the real estate business for probably 40+ years now and I’ve worked with companies like Forest City and JPI, and then worked on my own with Crown Pacific Properties for a number of years. And then about eight years ago, I sat down with Colm Macken, who’s the CEO of the Shea properties, and we came to an agreement and I joined. And I certainly have absolutely no regrets.
It’s a fabulous company, good people, great culture, high integrity. It’s a real pleasure to, it’s rare to have a fourth-generation company that works this well. But it is very well organized, runs very well. And it hits it’s great to be able to speak to cities and public entities with the knowledge that you’ve got that backing of integrity behind you at all times. So, it’s a pleasure to be part of this organization.
Linda Hoffman: Shea owns communities in California, Washington and Colorado. At least two of those are known for being high barrier, just tough places to do business. What’s the secret?
Greg Anderson: Perseverance. I don’t think there is as much of a secret as there is it is you’ve got to understand the process. You’ve got to be willing to go through significant monetary risk to get to the point where you get an entitled property. So, it’s a matter of patience and building a group of staff that has the technical ability to take you through that process, along with the vital consultants that you need to get through it. So, it’s a question of patience more anything else.
Linda Hoffman: California has notably had two referendums on rent control, both defeated after strong opposition by the apartment industry. What are the prospects for round 3 and did the passage of 2019 state-wide rent cap law blunt the drive for rent control?
Greg Anderson: Well, hard to predict. I’d love to say yes, it’s blunted that drive. Proposition 10 came at us and we worked very hard to defeat it by a 60 percent margin. So, we thought, okay, there’s no way this is happening again. And, to see the same folks put together another attack. And, what was it? Prop 21 more recently. But, surprisingly, a slightly better than 60 percent.
They were both at about 60 percent, but the margin was slightly higher the second time around, which seems quite decisive. And with the rent control of law in place now, you would think that would blunt it, but the people that are behind Prop 10 and Prop 21 want something far more draconian. I think the measure that was passed in California recognizes that you don’t want to lay these requirements on a newer property, so they put a limit of 15 years.
I think that, I would be surprised if we didn’t see another attempt, to be honest. Unfortunately.
Linda Hoffman: Oh, that’s not good.
Greg Anderson: No.
Linda Hoffman: I was hoping that wouldn’t be your answer.
Greg Anderson: Me too.
Linda Hoffman: But, yeah, we’re in California, so I understand.
Greg Anderson: Yeah. And in today’s political climate, actually, probably generates more energy behind that kind of a concept, than in the past.
Linda Hoffman: Agree. Shea builds homes in 10 states, but only operates multifamily properties in three. First, why is that? Secondly, any plans to offer rental housing in other states?
Greg Anderson: Well, to answer the question, you kinda have to look at the way these companies were formed under the Shea umbrella. Shea Homes predates Shea Properties. They were formed in the 60s and, I was out of the company in the 60s, but as I understand it, the intent at the time with take advantage of those smile states. And, so, there in the south, southeast, and the West Coast. And that was actually the intention of the company when they organized and pursued it in that manner.
Shea Properties started, initially, providing some retail projects for these subdivisions that were being built, and then sort of became its own entity over years with purchase of the Mission Viejo company. And that kind of laid a platform for the company in California. It grew in California. It’s a more complicated business in that the structures are very complicated and the entitlements very complicated. So, there was never the desire to spread staff elsewhere and frankly the rent growth numbers and the value growths in California have been really good, so there’s not been the real impetus to move beyond. We are, you know, we invest ourselves. We use institutional money, but not exclusively. For the most part we invest Shae money, so there isn’t this endless capital to take us to other states. So, the returns have been good and there’s been no reason for us to follow the original mandate of the housing plan.
Linda Hoffman: Colorado recently implemented a law banning discrimination based on residents’ sources of income, including housing vouchers. This is something also proposed at the national level. Many landlords are reluctant to accept housing vouchers because of the red tape. Does Colorado’s law work and have some inspection requirements been waived?
Greg Anderson: Well, as a caveat I want to point out that our Colorado division is run separately, so, I don’t run Colorado. When I told you about the Mission Viejo company, it also, at the same time, that same purchase purchased Apex in Highlands Ranch. And then since then, we’ve gone on to buy additional properties out there. And, so, it’s managed separately.
But, my understanding is that the marijuana industry was experiencing some prejudice of that income source, and that was sort of the impetus that started that in Colorado. At least, getting that secondhand. But nonetheless, that is my understanding. So, they passed that law so that there wouldn’t be discrimination against different sources of income.
The vouchers, I mean, to be honest with you, most of our properties are too expensive for there to be vouchers presented. But I would think that at a national level I would expect that to spread, so that because we are in an era that, you know, equity and equality and all those things, are very important. So, you know, my crystal ball would say, yeah, you’ll probably see that spread to other states.
Linda Hoffman: Wow. Well, here’s another one. I understand that it’s more of a franchise, but maybe you can shed some light on this. I had no idea of the marijuana’s influence. That was enlightening.
Greg Anderson: Yeah, it was for me to when I wanted to find out, what’s the reason.
Linda Hoffman: Colorado seems to be a news maker these days. It recently passed a law requiring employers to advertise the salary for each open position. Has this impacted how you do business in that state?
Greg Anderson: Yes. It’s difficult. Every single position requires it to be posted with the salary range on it and that obviously creates a lot of problems. A lot of people see these numbers going by. It creates a lot of angst within the company and it makes it more difficult to go out seeking other positions. I think, you know, although the range tends to be large on there—probably on purpose because companies are just saying we’ll put a larger range and it won’t be as obvious exactly where we’re going to land. It’s difficult. It’s arduous and it’s an unfortunate ruling that we have to live with.
Linda Hoffman: Certainly, you wouldn’t be the only company that’s avoiding that.
Greg Anderson: Yeah.
Linda Hoffman: Shea Properties are low- and mid-rise, urban ring with one exception: Quincy in Denver. Quincy is the luxury high-rise at the center of the city. A great showpiece, but urban—many urban cores are suffering post pandemic. How’s Quincy faring?
Greg Anderson: Very well. It has bounced back completely. We are back to where we were before the pandemic. I think, you know, Colorado suburbs have done even better. But Denver has rebounded very, very quickly.
We’re seeing rebounds in other areas, you know. We’re seeing a strong rebound in Orange County. We’re starting to see a very strong rebound in San Jose. It’s kind of starting now in Seattle, as well. But Colorado bounced back very quickly and Quincy is doing very well.
We’ve been tracking delinquencies through this whole thing, and they’re very nominal at this point.
Linda Hoffman: So there’s hope? What do they say, this, too, shall pass? Good or bad. I think we’re all ready to get back to business as usual. It’s not every day you get to speak with a company with the longevity and success of Shea. Thanks for joining us, Greg.
Greg Anderson: Thank you for having me.
Linda Hoffman: We are a nation of developers, builders and entrepreneurs. Our greatest strength, as we’ve proven through the decades, or in the case of Shea, over the century, is that time, economy or adversity, is no match for the innovator, the problem solver, and the builder.
The entrepreneurial spirit is alive and just looking for the next opportunity.
Thanks for joining us. I hope you enjoyed our show. I’m Linda Hoffman. See you on our next exciting episode of NAHB power hitters.