Capital Region Business Journal

A: After traveling the country on real estate field trips with the UW Real Estate Program as a student, I got the idea of starting an office park by the airport on the Interstate because that was where all the office parks in other cities were located and yet Madison did not have an office park in such a traditional location.

Between classes, I went out and started calling on and talking to the farmers and other land owners along the Interstate and U.S. Highway 151. I happened upon a Texas developer who was about to file bankruptcy and was more than happy to sell me a 90-day option to purchase 141 acres along the Interstate for $5,000, which was about the total sum of all the money in my checking account at the time.

Ninety days later, I extended the option and one year later closed on the purchase. The funny thing was that during the option period the owner did file bankruptcy in Texas. I had to hire a Texas attorney to represent us with the court, and the judge actually closed the deal.

Q: Last year, T. Wall Properties sold some retail holdings on Madison's East Side so the money could be used for office construction and industrial park development. What was the reason for this decision?

A: As part of our strategic plan to continue to focus our business, back in the late 1990s we sold off all of our apartments and decided to focus purely on commercial, which would be office, industrial and retail. We made a strategic decision in 2004 to sell off the retail. It was the right time. We were fully leased up. We had increased the value and decided we could redeploy the equity to office and some vacant land for development to continue to build return on the equity.

Q: The recent investment campaign of T. Wall Properties raised $14.1 million, much more than expected. Why do you believe the campaign was so successful?

A: Actually, we almost doubled our goal of $7.5 million, and I think it was so successful for a couple of reasons. One is we built up a name and a reputation, and we have a track record of success. And two, it's because the structure is very unique. When people invest with us in the holding company, their investment grows as the company grows.

Traditionally, you invest in what is called a single asset, one building. So that building only has a potential return based on the income stream. It's never going to grow beyond the one building, right? Whereas if you invest with us, we grow the portfolio because we're constantly acquiring and developing more assets in Wisconsin.

So it's like a bank holding company. Every time they add a branch bank, the owners don't put up more capital, they just automatically get ownership through the holding company of that additional bank. And it also provides diversity. You're not investing in a single asset. You're investing in a couple dozen assets, which gives you some financial diversity and some risk diversity.

A: We expect to expand into other states this year. We're actually negotiating in a couple states: Arizona, Colorado and also some Midwest states. Just like our Wisconsin fund, we're going to probably establish a separate fund in each state that investors could invest in. So people in Wisconsin would also have the opportunity to invest in those other states through these funds.

Another thing that makes us different is I have substantial ownership interest in all the funds. Typically, developers in a single asset deal will sell out to investors and only own 1 percent or some small percentage. My shareholders know that I'm heavily involved in everything that we're invested in.

Q: As T. Wall Properties expands to other states, what are your long-term goals for the company over the next couple of decades?

A: Our long-term goal is to acquire and develop about 1 million square feet in each of four other states in addition to Wisconsin so we will have at least 5 million square feet or more that we can take the company public with or sell the entire portfolio to a pension fund in 10 to 15 years. We can actually develop another 4 million square feet on the land we own in Wisconsin, so Wisconsin will remain our primary focus, but in order to go public, we have to be in multiple markets. Of course, I'll never retire, I'll just move on to some other opportunities at that time.

Q: Growth in Madison and new building projects seem to continue despite downturns in the economy. Is there a limit to Madison's growth?

A: I don't think there's a limit to Madison's growth, although certainly certain people are trying to limit Madison's growth.

I'd say there are many reasons for Madison's growth. One is that giant sucking sound called tax revenue being sucked in from the rest of the state. Fifty percent of the construction that occurs in Madison is government construction � university buildings, government buildings � and that creates jobs (and) opportunities.

The second primary reason for Madison's growth is it's a lifestyle city. People move here because they want to live here. They don't move here because they're attracted to a particular job. They move here first, then they look for a job or they create a job for themselves. You know the old paradigm of the manufacturing town where the town tries to attract a manufacturer and then the manufacturer brings the jobs and the people. That's gone. In a lifestyle community, the people come first because of the lifestyle � the lakes, the bike paths, the amenity package � and then the jobs follow that.

So there are many people who work in Madison who really don't do much business here. Their business is national with clients all over the country, but they choose to live in Madison. And what's neat is that these creative people then create very creative companies, startup companies. Madison, if you really look at the history of it, we're really an incubator of creative companies, all these creative companies that started here and then grew from nothing into a thousand jobs.

Unfortunately, the next thing that occurs after that is these creative companies typically get sold off, sometimes are moved out of the city and we lose those jobs.

The trick now for us as a city or a community is to figure out how we retain these creative companies here. The biggest detriment is a lack of capital and over-regulation. Basically, the only alternative available to the entrepreneur is to sell to some big conglomerate from out of state. If we would loosen up the regulations, if we would do some things to encourage investment capital here, then that would open up some opportunities for entrepreneurs to sell to people in Wisconsin and keep those jobs and companies here. Once a company is sold out of state, typically it'll be moved within a few years.

Q: You recently clashed with Madison Ald. Brenda Konkel over her attempt to enforce the city's lobbying law. You've been critical in the past about city policies. What are your views about how government works in Madison?

A: I would say that currently what we have is a vacuum of leadership. We've got too much sticking the finger in the air to see which way the political wind's blowing and not enough management and leadership pushing the issues that are important to mainstream Madisonians. Unfortunately, the squeaky wheel gets the voice. The squeaky wheel is a very small percentage of the overall population. The agenda is being driven by the squeaky wheel, and that's just not right.

I do have very strong views about democracy, how democracy should work, and the ability of the citizen to address his government. Unfortunately, we're seeing the tables turned where government officials are demanding that private citizens answer to them, when really it's the other way around.

It's just important to me that our city function as a democracy and not to the whims of what a few people want but rather for the greater good of Madison.

A: I love the water, so I spend a lot of time with my kids kayaking, boating, swimming, and I bike a few times a week as well. I've got six different types of Trek bikes, and I'll pick one depending on my mood. We also do a lot of walking and hiking, too. In the winter, I like to board (as in snowboard) as well.

Wall built his firm from the ground up

By Marv Balousek

Resources

Printable format

E-mail this story

Index of advertisers

Directory