Brian narration: This is Built, a podcast series where you’ll meet the people behind some of the biggest transactions and investments in commercial real estate, and hear how they got to where they are today.

I’m your host Brian Maughan, chief marketing officer with Fidelity National Financial.

And those of us in this business, well we know the buildings...but how many of us know the stories of the people behind those structures?

This time, my guest is David Adelman. David is president of AREA Real Estate in San Antonio, a firm he founded over a decade ago. Though as you just heard, he got into the industry a lot earlier than that.

He specializes in bringing older buildings back to life, and I was excited to get a glimpse into his built world.

Brian Maughan: I wanted to start with asking you, you have this – it seems – you have this attraction to historical redevelopment and that seems to be kind of in your DNA a little bit. And I wondered if maybe you could start there with why or what attracts you to kind of that historical redevelopment activity?

David Adelman You know, I guess growing up in San Antonio is part of the story. So San Antonio's a 300 year old city, so by nature, you know, I live in a historic place. So I think that growing up in a historic place and living in a historic place, you tend to appreciate what the historic context adds to sort of the flavor and the sauce of the city. And I've just sort of been one my entire career to look at things and wonder what could be. And it's one thing to look at a greenfield site and imagine an entire development or even a city for that matter, coming out of the ground. But it's another matter to see something that's old and maybe a bit beat up and think about how you can recover it and restore it and bring it back and polish it up to a new beauty. And I also think that in the same…at the same time, if you kind of look at consumer products in America and places in America, there's a big thirst for authenticity, and so authenticity sometimes comes from that historic fabric, the story that was told, the story that played out in that place.

Brian Maughan: I think you're right on, I think there is a level of authenticity that comes only after it's kind of been weathered and gone through something, right?

So tell us a little bit about some of the projects that you have redeveloped in San Antonio. I think you've got St. Paul's Square redevelopment and then you also have the Borden Creamery redevelopment…

David Adelman: Sure. I'll talk about the Creamery first. So the Creamery was built in the early 1900s. It was actually called the Mistletoe Creamery, and Mistletoe is a street in San Antonio, again, another historic street. And Mistletoe was moving into their newly expanded creamery when they were bought by Borden, and people might be familiar with Borden dairy. It was a pretty big milk company. They're still in business. And so it was designed by a very, very famous architect in San Antonio named Atlee B. Ayres: A Y E R S. And so that project, you know, had been a creamery for decades and decades. And then in the about 25 years ago, a developer converted it to mini storage. So they put mini storage inside the old dairy building and they put mini storage out on the land around it. And actually, another developer came to me, a very large scale national multifamily shop, and they said, Hey, we have the uh, the old Borden Dairy building under contract, and we were wondering, would you like to redevelop the historic component of it, which was the original building? It's a historic building, and they would - if they had made an attempt to demolish it, they would have been the villain of San Antonio. You know, it would have been a problem. So within literally, I think that that time from requests to answer was about two milliseconds. And I said, it's an Atlee B Ayers Building, it was art deco. It was built in the early 1900s. And I would love to get my hands on that building and restore it.

Brian Narration: So David’s company, Area Real Estate, partnered with the developer that approached him about the Creamery. Area is developing the original building into food and beverage, retail, and office space. Their partner is building hundreds of apartments and parking spots.

David Adelman: And one of the cool things is we were able to - I was able to convince that multifamily developer, Hey, let us use a couple hundred of your parking spaces for daytime parking - so you're going to build them anyway, your residents are going to drive out for work and they're going to be coming home in the evening and our office tenants are going to show up when they leave. So we'll do a shared parking arrangement. They were excited to do it. It made the economics for their project a little bit better, made the economics for our project a little bit better, and we're underway. So we're in construction right now looking for an early fall opening of the project, and we're basically 98 percent pre-leased on our commercial project.

Brian Maughan: Wow that’s great…I mean, I know you said that you're from San Antonio, you grew up in this 300 year old city. There's something authentic about it, but…dive into that. Why is that so important that you would in that moment know for sure this historic building, I'm going to do something with it?

David Adelman: So I'm a big believer in design. So a lot of times these historic buildings also came with really great bones. I wished everybody listening to this could come see this building both before and after. And even then, what would be amazing is if we could have seen it in 1918. Personally, I would have loved to have seen it. I'm sure it was really amazing, like the Mistletoe Creamery, the people who set out to do the building…It's not what you would see today if you went to a dairy building today in an industrial park, it would look like a tilt up building and nondescript and look like all the rest. But these particular business folks, back in the early 1900s, they really built something special and it's, it's beautiful. And so I would ,I never would have thought the building would have hit the market just because it was in a very hot location with a very successful mini storage owned by an institutional owner that owned 400 mini storages across the US. So again, it just didn't occur to me that it would be available, came available and I didn't want to waste it another millisecond.

Brian Maughan: So if you look back at maybe the milliseconds that happened after you said yes, right, and you started to dig into the creamery project, what are some of the challenges that this project or other historical redevelopment projects…What do they give you? What do you face when you try to do what you do?

David Adelman: That's a loaded question. Everybody who remodels their own home, for instance, knows the story. You're over budget and late. You know it takes longer, costs more. And so I think that once you decide you're willing to go for it, A) I think a little bit of experience matters, so if you've been down this road before, those challenges are a little bit less, the traditional challenges. So I would say, for starters, we have the technology today to know everything about a building. Anybody who tells you about unforeseens just doesn't know the tools and technology that is available to go check out a building, They can look behind walls. You can look underground with X-ray. There's a lot of due diligence that’s possible today that probably wasn’t possible 30 years ago perhaps. So I'd say that you've got to do your due diligence. I always like to tell people, and this applies to our new developments as it applies to our renovations…I went to a school for racecar driving. Porsche of North America runs this driving school in Birmingham, Alabama. And one thing they teach you is slow in, fast out. So racecar drivers that hit a turn too fast, they'll lose time around the track. And I have used that analogy a thousand times in real estate: slow in, fast out. So if you take your time and kind of your pre-construction and your design phase of your project, particularly when you're dealing with older properties and historic buildings, you'll have a better time during construction.

Brian Maughan: And when you look at that building that you mentioned, the Creamery had good bones and I know that you've done many, many projects other than the Creamery, but is that one of the most important considerations that you look at, is kind of the good bones side of it, is it…?

David Adelman: Good bones. I'm always about good bones. I can drive down every residential street and it's kind of the curse of the developer, but you can look at a house and go, yeah, I could fix that. Or, no, not possible. Same street. You know, just as I think good bones are essential, I think great location, the classic real estate…Yes, of course. You know, it's got to be in a great location. But if it's urban and it's reasonably accessible these days, location is a little bit easier to overcome than it used to be.

Brian Maughan: Alright. So take us back now and tell us about a great story, but your first investment: how did you get involved in commercial real estate? What was the catalyst that started your career?

David Adelman: So I'm kind of one of those rare people, it seems, and having raised two daughters now and through college, you know, who kind of knew early on what I wanted to do. So when I was in high school, one of my buddies and I, we mowed a lot of lawns and, you know, somebody would pay us, we would do it. So if it was painting, if it was, you know, demo-ing out a screen porch, whatever, we would do it if you'd pay us. And my dad was a solo practitioner, attorney, small scale local practice. But he bought rent houses and never had many, he had five or six at any one time. And so as you can imagine, I was the lawnmower and painter that he leaned upon a lot to do these small scale improvements and cleanups. And so one day when I was 16, I said to my dad, Hey Dad, can I buy a rent house? And he said, I don't see why not, you know, call Ruben, he is the realtor that I use, and he finds me a house every so often. Give him a holler. So I called Ruben and I told him, I want to buy a house. And he said, I'll come pick you up on Saturday at your house. You keep in mind, this is in the 1980s. This is before cell phones or anything like that. So he comes over to my house and picks me up, and he was driving a Lincoln mark seven, the finest automobile I had ever seen…

Brian narration: The Lincoln Mark VII was a luxury sedan most teenagers could only dream of riding in. So Ruben picks David up, they drive around, and eventually they find the right house. The homeowner was behind on some payments, and David found out he could take on the mortgage by making up the back payments and paying the closing costs and realtor fees.

David Adelman: And so with a grand total of about $6,000 and I assumed a mortgage, I bought a two bedroom, one bath house in San Antonio and I put a for rent sign in the yard with my phone number, my home phone number on it, my family's home phone number, and I was in the real estate business at 16 years old.

Brian Maughan: A great origin story, but you have to give, I guess, props to Ruben for picking you up, right, because I don't know, when I was 16, I'm not sure I would have been allowed in a Lincoln mark seven. I may have been able to wash it. Probably not, though they would have thought that I would have done something different…you know, hurt it in some way, but that's great…well so you’re in San Antonio, you’re from San Antonio. Have you ever thought of expanding outside of kind of your home town?

David Adelman: No. You know, I've always had this idea that real estate, commercial real estate in particular is very main street as opposed to Wall Street. And I know that there are institutional class real estate investments, whether they be apartments or office buildings or what have you, that that can pretty much be replicated anywhere. But a lot of real estate is very, very local, like hyper local knowledge. So I've always just said, you know, there's enough to work on in San Antonio. I'm a little bit mixed on product type. I have actually built a fair amount of industrial and I own a fair amount of industrial and service center. We own some office. We've done plenty of office, and then as well lately, I've been doing a lot of multifamily, so I'm more crossed over the product type, but stay geographically focused. I'm super purpose driven in what I do and not terribly concerned about how much money I make or don't make. I definitely want to be profitable. I definitely measure success, including that these are financially stable, good investments. But I don't. I just I don't really get wrapped up in the whole thing. So being bigger is not necessarily better for me.

Brian Maughan: You mentioned you want to be profitable, but it doesn't sound like the financial side of commercial real estate is the only thing driving you. You're not driving down the road looking just for, how can I flip that? How can I turn that? How can I redevelop that? There's something deeper that drives you, is that fair?

David Adelman: Totally fair. And in fact, I tell people all the time when you're super- focused on how much money you can make or money you'll make, a lot of times those are the people that do hit the cycle hard and fall hard. I always say, if you do great projects, you'll make a good living, like you, you'll be fine. Like, focus on the product, focus on the softer side of the business, the people, the community and do the right thing. You'll make a plenty fine living. That’s kind of my philosophy for living that drives a little bit what I do.

Yeah, I mean, there's a lot of stuff I could have done that I could have made a ton more money, but this really wasn't about that for me.

Brian Maughan: When you do a project and it's about the building and it's about whatever you want to do, whether it's brand new construction or redevelopment…have you seen that commercial real estate impacts the greater or the larger area than just your building? And what's that look like for you? Or is that satisfying for you?

David Adelman: For sure. I'm not a super religious person, but I've been born and raised as a Jew in America. And one of the sort of super strong focuses in our faith is the idea called ‘tikkun olam.’ And it means repair the world. So it's what I tell people all the time. A different way of saying it is just leave the world a little better than you found it. So we, as real estate developers, we can do a lot of harm. It's very possible for us to do that or we can do a lot of good or we can kind of straddle the middle somewhere in there. I always say, just try to leave the world a little better than you found it. So I've done a couple of projects, one in particular that really set off a chain reaction to really cleaning up a neighborhood that had been sort of in disrepair and was sort of postwar industrial neighborhood. But it was infill. It was in the right path of growth, so to speak, regrowth back into the city, but it really was an early, early project, actually, a couple of projects were really early, really took a risk, really went, you know, swam uphill or whatever they call that. And now the neighborhood is flourishing and other people are making money in the neighborhood. Both developers, small businesses, people living in the neighborhood. And it gives me personally great satisfaction. And like, that's that double bottom line.

Brian Maughan: It’s nice when the unintended consequences are good consequences.

David Adelman: Yeah.

Brian Maughan: Couple of things I’ve heard… I really like slow in, fast out, right? Great advice for anybody, but great advice for commercial real estate development. And you know, if you're buying property, probably something to think about. I love making the world a little bit better than you found it, right, or leaving it a little better than you found it. So, any advice you would give a, you know, you're a successful commercial real estate entrepreneur. What does it take to be that today, in your opinion?

David Adelman: I tell everybody, if you're John Smith, you're John Smith, Incorporated. Doesn't matter if you work for USA Real Estate Company or Trans Western or pick a company, CBRE, whatever: invest in your own personal education, spend your own money because oftentimes your company's not going to pay for it. Spend your own money to go and learn firsthand, best if you can do a workshop because I think sometimes you could buy some books, but I don't know how much you get out of books. When you're with people, other humans interacting in a workshop, go to a conference, sit through the lectures, take notes, learn a little something, really invest in yourself. I think that people often just sit back on their laurels and don't really invest in themselves if their company's not doing it for them. But I think people are not just employees, they're their own corporation. So that's my number one advice that I give to the young folks all the time.

The second thing is, it's all about kind of crawling before you walk, walk before you jog, jog before you sprint. And life is a marathon. It is not a sprint. Your career is a marathon. So invest in yourself. Take your time. Be a bit patient in that way.

Brian Maughan: And you might have to go through some times where you get a little weathered, you get a little beat up. But that builds authenticity, kind of like back to the beginning when you started from. Interesting. San Antonio, you love the city. What's the future of it? What's great about it? What's going to be great about it in five years?

David Adelman: So that's the great challenge. So what's so great about it is it’s a very large small town, literally. If you walk down the street here, people look you in the eye. People say hello, oh are you lost? Can I help you? It's an incredibly friendly place. It's quite livable. We don't have deep traffic congestion. We don't have civil unrest. It's a very comfortable place to live, still fairly affordable. I don't know, some people might argue that a little bit, but we're certainly no Austin and we're no California and we're no New York. So quite affordable. But just I always say it's very livable. And the last thing I would say is that it's a city where you can contribute. If you come here, you know, if you have a great idea, you can get a meeting with the mayor in 20 minutes. It's not a problem like you can contribute here. And I always feel like if I were to move to say, the big city of Dallas, I'm not sure I'd be as relevant. I'm not sure I'd be able to contribute as much. So great place to come and make a difference and have a nice quality of life.

Brian Maughan: Great stuff. Well I – I want to come visit, it’s been a while.

David Adelman: I’d love to give you a tour. I’m super excited about our city, and a lot of stuff, good stuff happening here.

Brian narration: Thanks for tuning in to this episode of Built. We’ll be back with our final episode of this series in a couple of weeks.

Built is a co-production of Fidelity National Financial and PRX Productions. From FNF, our project is run by Annie Bardelas. At PRX, our team is producer Ashley Milne-Tyte, Senior Producer Genevieve Sponsler, and associate producer Courtney Fleurantin. Our editor is Isabel Hibbard. Audio mastering by Rebecca Seidel.

The Executive Producer of PRX Productions is Jocelyn Gonzales.

I’m Brian Maughan.

Every story is unique, every property is individual, but we’re all part of this BUILT world.