Billionaire and real estate magnate Ross Perot Jr. has a smile on his face minutes after shaking hands with the CEO of his newest tenant at AllianceTexas, a massive industrial development in Dallas-Fort Worth, because it signals the start of a long-term partnership.
But don’t use the ‘L’ word in calling his company a landlord.
“We don’t even use that term,” Perot told CoStar News in an exclusive interview. “These are our customers; these are our friends. Landlord-tenant is a little too rough. We really work hard to take care of the client base. That’s how we continue to win.”
Perot is chairman of Hillwood, the developer behind AllianceTexas, a 27,000-acre, master-planned, mixed-use development built around the Perot Field Fort Worth Alliance Airport, the nation’s first industrial airport catering to cargo distribution. The industrial airport is named after Perot’s late father, H. Ross Perot Sr., who ran for president in 1992.
Perot Jr. spoke with CoStar News following the grand opening of Henry Schein’s largest distribution hub in the United States at AllianceTexas.
Like other developers in the Dallas-Fort Worth region, Hillwood is contending with what was once the nation’s largest industrial pipeline hitting the market in the past year. Industrial construction has begun to scale back after North Texas added more space than most U.S. markets in the past year, said Cody Gibbs, CoStar’s market analytics director covering the sector, in a recent report. The surge of new development has pushed up industrial vacancy in the region and caused some developers to pull back on plans.
Rather than pull back, Hillwood is betting on landing even more deals like Henry Schein, which just leased more than 811,000 square feet of vacant space at AllianceTexas. Dallas-based Hillwood has 3.5 million square feet in the design phase in the region with construction recently getting underway on one of its speculative buildings.
“We win on quality, and we win, if you move into a Hillwood building in the Alliance area, we are on your team,” said Perot Jr., who spent eight years serving as a fighter pilot for the U.S. Air Force. “We own our buildings; we take care of the buildings, and we really work overtime to spoil the client base. Most of our peers build a building and sell it and that client no longer has that relationship. For us, we have a 95% client retention rate. No one leaves. The only clients we have lost were acquired in the last 30 years.”
Lower Costs
And Hillwood also has the upper hand when it comes to the tens of thousands of acres it owns spanning multiple municipalities along Interstate 35W.
“We can always win on price,” he added. “If we want a client, no one can be cheaper than we are. We’ve owned this land forever. Most rivals around us bought the land for a higher basis and we own our construction company, in which we can build a better building. I think we win in every category.”
Perot Jr. said the booming Fort Worth area in the larger Dallas-Fort Worth region puts the “wind at our back” with a continued interest in North Texas from companies seeking to exit California, New York and Illinois. Perot declined to disclose the names of potential tenants seeking to move business to the Dallas-Fort Worth region, but said he’s been in conversations with company executives who say leadership in those states haven’t been treating them well.
Even if there aren’t economic incentives given to a company, Perot Jr. said company leaders want to feel wanted and culture has a lot to do with it.
“It’s the culture of Texas,” he said. “We want business, and we want business to be successful.”
The upended capital markets also play to Hillwood’s favor, Perot Jr. said, with the firm having no issues with loans for projects. Many developers can’t get those loans, he said, helping Hillwood “win business because we can get buildings built and financed.”
Hillwood has begun reaching out to developers to team with them on projects throughout the country, he said, adding he expects it to remain a “hard financing” environment for the next two years. “If you can get the financing, there’s lots of industrial build-to-suits with really great clients out there,” Perot Jr. said.