Trammel Crow Eases Back into Real Estate Development

N.Y. Times News Service

DALLAS _ Trammel Crow Co. is cautiously resuming real estate development, according to James D. Carreker, who took over as chief executive of the company in August.

Trammel Crow, the nation's largest real estate developer until the industry crashed in the 1980s, survived by becoming the largest real estate manager, collecting rents and sweeping floors.

"If Trammel Crow was way over here, totally a development company," Carreker said Friday in an interview, at first swinging his arms toward his right, "and then swung over here, totally a service company, I believe that pendulum is going to swing back."

Far from going back to the future, Carreker will share the profits and risks with other investors and concentrate at least as much on redevelopment _ improving older properties _ as building new ones.

Carreker said he also planned to scale back the seven regional offices that have had the power to block strategies devised at the Dallas headquarters.

Trammel Crow, which has two offices in metropolitan Oklahoma City, manages 235 million square feet of commercial space nationally, more than in all the office buildings of midtown Manhattan. Carreker wants the company to profit not only from its management fees, but also from the higher property values that renovation and improved management can create.

The company says it achieves rental and occupancy rates above those prevailing in 95 percent of its local markets.

Carreker is hunting for properties like shopping centers that can, with sprucing up and a new layout of store space, attract more, better-paying tenants.

With a higher, more predictable cash flow from these properties, other investors, including insurance companies and pension funds, would step in.

As for new projects, the company will be far more conservative than before. Instead of breaking ground with few tenants lined up, the company will build largely to the specifications of committed tenants and buyers.

The company has already been pursuing its new development strategy with about a dozen projects last year. Carreker plans as many as 20 projects this year and shoots for an annual growth rate of 30 percent.

Jon Litt, a real estate analyst at Salomon Brothers, said the company's approach suited this stage of the real estate cycle. Especially with office space, he said, "Development is not where you want to be. You want to be buying existing assets, positioning them to improve their occupancies."

Carreker's plan for the company to have a strong Dallas headquarters and 31 city offices completes a transformation from far more freewheeling days under the company's founder.

"Trammel Crow flew around the country, finding people he liked and saying, `I'll be your partner.' Then he'd get on his plane and leave," Carreker said.

The collapse of the real estate market in the late 1980s left scores of the partners broke. The company took over their ownership interests in return for forgiving their debts.

The company switched from partnership to corporation in 1991, nearly ceasing development but installing new, central auditing and controls. Carreker followed through this week by turning two regional managers into executives with companywide responsibilities.

He has hired the former chief of Federated Department Store's computer and information systems to keep tabs on the Crow Co.'s operations.

Carreker also continues to manage the Crow family's chain of 52 Wyndham Hotels and Resorts. He said he planned to take the hotel company, but not the Trammel Crow company, public.

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