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NWA Founders is a voice for Founders, Owners, and Builders driving growth in Northwest Arkansas, and is hosted by Cameron Clark and Nick Beyer.
'NWA Founders' is a voice for Founders, Owners, and Builders driving growth in Northwest Arkansas, hosted by Cameron Clark and Nick Beyer.
To recommend a guest or ask questions, reach out at nwafounders@gmail.com and follow us on YouTube and LinkedIn for video content.
[00:00:00] Jeremy Hudson: The goal is to build the next great neighborhood in Fayetteville.
[00:00:03] Cameron Clark: What are the biggest challenges?
[00:00:04] Jeremy Hudson: The spaces between the buildings are, what really matter over the long term for an asset like that? Why
[00:00:09] Nick Beyer: do
[00:00:09] Cameron Clark: you think that one didn't work?
[00:00:10] Jeremy Hudson: If I had it all do over again, we would've still done commercial, but we would've had it in a separate building.
[00:00:14] Cameron Clark: Strategic focus on the four main downtowns here. Why
[00:00:17] Jeremy Hudson: we're either going to be building where there's already a meaningful place or we're gonna be building at the scale that we can create a meaningful place.
[00:00:36] Cameron Clark: Afternoon, Jeremy. Uh,
[00:00:37] Jeremy Hudson: good afternoon.
[00:00:38] Cameron Clark: Thanks for, uh, coming on here with me and Nick. Um, and we're right in the middle of South Yard, the kind of latest activated development. I mean, I guess, I dunno, maybe Rogers is more, more latest than this, but
[00:00:51] Jeremy Hudson: Yeah.
[00:00:52] Cameron Clark: Make an argument.
[00:00:53] Jeremy Hudson: Yeah.
[00:00:53] Cameron Clark: One way or the other. Um. But I want to, I want you to kind of go through everything that y'all do, but [00:01:00] I think one thing that I admire so much about you and y'all in general is, is just how much you stay to the core of, of who you are.
[00:01:09] Cameron Clark: And I believe on your website, it's like developing for health and culture. I don't Yeah. All the, all the language you have, but now you're at such large scale. And, um, I'm curious how you'd say that you do that still today. Mm-hmm. I think it's easier, maybe easier when you're smaller and you're kind of just doing a few things.
[00:01:28] Jeremy Hudson: Yeah.
[00:01:28] Cameron Clark: But I think you keep it, keep the identity there at a large scale here across the board.
[00:01:33] Jeremy Hudson: Yeah. Um, well thanks for having me first and. Um, I mean, the truth is we're still figuring it out, right? I mean, but, um, I think the answer to the, to the question is it's all about culture. Um, and, and having a strong culture and being true to our values.
[00:01:51] Jeremy Hudson: And so even though like, I don't, I don't think of us as big scale and a lot of people look at us that way, um, because we are, you know, we've got, [00:02:00] I guess for developers in northwest Arkansas, we are big scale, but we don't really act that way. And we don't really feel that way because we're just, you know, a group of folks here working in an office together in Fayetteville.
[00:02:11] Jeremy Hudson: Um, but I think the answer is, you know, over the years it's certainly evolved, but very early on, um, really starting with it, it kind of. Our culture and our values were birthed when we did Eco Modern Flats. Um, and you know, that's kind of a whole story to itself. Um, but, uh, we, we, we discovered kind of who we wanted to be as a development company and, uh, through that process.
[00:02:39] Jeremy Hudson: And, uh, again, even though, you know, some of the specifics and the language has evolved and, uh, and morphed some over time, like we've stayed true to that. And we hire people, uh, who align with those values and, and we work with partners and consultants who align with those values. Um, and so that's really what it's about.
[00:02:58] Jeremy Hudson: The only the only way that we can [00:03:00] stay true to that is, is a, um, uh, you know, because, well I is, is most importantly because the people that are on our team, um, we're all values aligned and, and, you know, focused on, on the same things. And, um, you know, a lot of people talk about multiple bottom line. It's hard, but that's, that's what we're trying to do.
[00:03:21] Jeremy Hudson: And, and everybody understands that and everybody's working towards that. And, um, you know, we, we try to find not just, I talked about consultants and partners, but also capital partners. Mm-hmm. Um, you know, uh, that, that also understand what we're trying to, to do and accomplish. And so for the most part, that allows us to, you know, keep doing the types of things that we wanna do.
[00:03:43] Cameron Clark: Yeah. Talk, talk about eco, like the Yeah. Was that 2010? 2000?
[00:03:46] Jeremy Hudson: It was, uh, two thou. Yeah. We bought it in 2010. So 15 year, 16 years ago.
[00:03:50] Cameron Clark: A apart apartment remodel.
[00:03:52] Jeremy Hudson: Yeah.
[00:03:52] Cameron Clark: In downtown Fayetteville.
[00:03:54] Jeremy Hudson: Yeah.
[00:03:55] Cameron Clark: I guess, yeah. Talk, talk about that and figuring out who you are through that, through that deal.
[00:03:59] Jeremy Hudson: Yeah, [00:04:00] absolutely.
[00:04:00] Jeremy Hudson: Um, you know, so, you know, my, the, like, the crazy short nutshell of pre eco for me was, you know, study construction in college always had a desire and, you know, or design desire and, and design bent, um. But then spent the early part of my career in brokerage, uh, and then in property management. Um, and Eco was the first time where we were able to put, uh, all of those pieces of, of construction design, um, and our, our brokerage and property management pieces together as a principle.
[00:04:35] Jeremy Hudson: Mm-hmm. Um, and kind of your classic, like, you know, we, we partner with someone that, that we had worked for in the past and, and done deals for them as a, just as a, as a, you know, as a agent or whatever you wanna call it. Um, and classic deal where, you know, we found an opportunity and we, we ask 'em if they'd be the, you know, if they'd be the money and we'll do the, we'll do the equity or sweat equity, and, and they said yes and, [00:05:00] and really went into that thing, um, knowing that it was in a.
[00:05:06] Jeremy Hudson: Really good strategic location, but that area was very emerging back then. Mm-hmm. Um, and, you know, felt like because of where the market was at that time, there was, you know, it was kind of at the bottom of, of, uh, you know, the recession and felt like there was just opportunity, just frankly just on paper.
[00:05:23] Jeremy Hudson: Right. You just look at, and we understood the apartment business and felt like there was, there was a need for apartments in downtown. I was 30 ish and, um, you know, had my own experience of, uh, living, you know, buying a house. You know, I was a real estate agent, so as soon as I could afford it, I bought a new house and, you know, living a four bedroom house basically by myself in a suburb, not a suburb, but, you know, in a, in a subdivision.
[00:05:48] Jeremy Hudson: And, um, you know, learned. The pros and cons of, of that, you know, type of lifestyle, uh, and felt like there was a need for, you know, a place for young professionals to live in [00:06:00] downtown Fayetteville. There's, if you could afford a historic home or a condo, then you'd have a place. Um, but I couldn't, and a lot of other, you know, professionals certainly couldn't.
[00:06:09] Jeremy Hudson: And the only other really alternative was just old, old apartments that weren't very nice. Yeah. Uh, and, and so the, the, the very simple play was just your classic value add. Like, let's just make a, let's just, you know, fluff and buff this thing and, and people wanna live there. But as we dug into it, um, literally and figuratively, we, we found, you know, just all these opportunities that, uh, and the, the biggest one was utility cost.
[00:06:38] Jeremy Hudson: I mean, the utility, I, I forget the exact numbers, but something, the, the, the average rent, there was something like 475 bucks, four 70 bucks, something like that. And like. Close to 200 of that was, it was master metered, and so utilities were included. So close to 200 bucks of that was just getting, you know, geez, down to the bottom line.
[00:06:57] Jeremy Hudson: So it's no wonder why we're able to pick [00:07:00] it up so cheap. And we, so I, I realized pretty quickly the way to fix this thing is we got a energy efficiency. And to be totally transparent, that did not come out of any amount of altruistic motivation at all at the beginning. It was just like, this is how you make the math work.
[00:07:14] Jeremy Hudson: But that sent us down this path. Um, and I'm just old enough that like sustainability was not a part of my construction management, you know, training like that, that was, it was green, was too green back then. And, uh, and so I just kind of learned on the fly. I'd had some friends that had, uh, been in the construction and design business that, that really had a focus on health and sustainability and it, so I just started these series of things and, um, we decided to pursue lead certification, which then started teaching us about health and indoor air quality and all of these things.
[00:07:46] Jeremy Hudson: In particularly the indoor air quality one, um, resonated with me because I grew up with pretty severe allergies and asthma. Um, obviously living in Arkansas, some amount of that was just environmental. Yeah. And, but, but [00:08:00] I believe that there were parts of it that were also very much, um, the unhealthy indoor environments that I lived in.
[00:08:06] Jeremy Hudson: Um, and so once this big, you know, this, the, the indoor air quality thing was a big light bulb for me. And I realized, okay, like for years, my brokerage days, we sold a lot of first time, uh, a lot of homes, the first time home buyers. Uh, even in our property management days, you know, you'd, you'd, you'd show someone an apartment and had a fresh coat of paint and nice new carpet.
[00:08:25] Jeremy Hudson: And I came to realize like, you know, that's VOCs and formaldehyde and all these things, like these new smells that are actually really toxic, you know? And so when I realized that, I was like, okay, well we're not gonna, we're not gonna be that type of developer. We're not, not gonna just throw, you know, fresh coat of paint and carpet in something, um, that's not gonna be healthy for people.
[00:08:44] Jeremy Hudson: And so, uh, you know, again, that was the, that was the spark that, that lit for me personally. And then, you know, for our company and culture, um, that we had to weave in, um, health sustainability [00:09:00] and a sense of community. And the, the sense of community piece goes back to my experience of buying a four bedroom home in a cul-de-sac subdivision.
[00:09:08] Jeremy Hudson: Living there for a long time and like having to like awkwardly try to introduce myself to my neighbors because it wasn't designed for that, you know? Yeah. You know, you go in your, you pull in your garage and you shut the garage, and if you go outside, it's in a six foot privacy fence and, and you don't, you don't even, you know, it's, it's just not conducive.
[00:09:24] Jeremy Hudson: And I'm not a out, I'm not a extrovert by nature. And so, um, I felt like, uh, that and some of our experience managing apartments, um, you know, older apartments, um, that are what I would, you know, call, you know, garden style, um, garden style apartments, kind of the same thing. Like literally, you know, the whole, the whole site plan, the whole architectural plan is centered around how do you get someone to park as close to their door as they possibly can and mm-hmm.
[00:09:53] Jeremy Hudson: And so you don't have opportunities for interaction with neighbors. And so, um, this, that was the. [00:10:00] The thesis that we put together, that, that led all through the, the strategy of eco, which was, again, it was health focused, community focused, and then energy efficiency and, and water and, and, uh, water conservation.
[00:10:15] Jeremy Hudson: Um, so that was, that was kind of the big, you know, the big moment for us. Um, and of course lead certification. And then, um, led to that being a really big part of, of everything that we've done since, and, and a real big focus for, you know, 10 plus years on, on leads specifically.
[00:10:33] Nick Beyer: Yeah. Talk, talk about the end of that project.
[00:10:35] Nick Beyer: How did it work out?
[00:10:37] Jeremy Hudson: Uh, it was great. Um, uh, it, uh, you know, we ended up winning the usg, BBC's like global award, you know, multifamily project of the year. And it was just wild because, you know, we um, you know, ended up on stage with like, you know, Amazon world headquarters types, you know, projects. And we got this little value add apartment [00:11:00] project in, in Fayetteville, Arkansas.
[00:11:01] Jeremy Hudson: So it was pretty wild. Um, but yeah, I mean we still, we still own and manage it to this day. Mm-hmm. And, um, it's, it's just really cool. The other big thing that, that has taught me that to this day is at the center of everything that we do is that the spaces between the buildings are what really matter over the long term for an asset like that.
[00:11:21] Jeremy Hudson: Like I, I'm not, not to discount all the building science and health that happens on the inside, but when we think about long-term value, uh, and, and uh, and of course everybody talks about placemaking, but we talk about the spaces between the buildings 'cause. The buildings themselves are really, really important.
[00:11:38] Jeremy Hudson: But that is such a good example of like, we didn't, the buildings were there, we completely gutted and reimagined those buildings, but at the end of the day, the box was still the box. It was just a healthier box. Um, but what we really did there, and, you know, tons of credit to our partners and Modus and Stuart Fulbright who did that project with us was, we totally reimagined the, the spaces between the buildings.
[00:11:58] Jeremy Hudson: And, um, [00:12:00] you know, we have residents that have lived there and I, you know, for a long, long, long, long time, a lot longer than you, you normally see people live in apartments. And I think so much of that is because the community, the, the community, I mean the actual community creation that happens because the space is outside, outside of the apartment are, are conducive to hanging out with other people.
[00:12:19] Nick Beyer: Hmm. And how much value is that as someone who holds the asset still? Like retention for your
[00:12:27] Jeremy Hudson: Oh, yeah. Huge. For your
[00:12:28] Nick Beyer: residence.
[00:12:28] Jeremy Hudson: Yeah. I mean, it's huge. I mean, um, you know, like, like just about any business, right? I mean, customer acquisition is one of the most expensive things, and that's certainly true in, in apartments because when somebody moves out an apartment, you know, typically, you know, you've, you've got a decent amount.
[00:12:42] Jeremy Hudson: You not only do you have to acquire the new customer, but you gotta, you gotta, you know, renovate or, you know, at minimum you're cleaning and you know, painting. And so, um, you know, keeping that customer is, uh, is, is very, you know, very, very important.
[00:12:54] Cameron Clark: Mm-hmm. Well, I wanna go back to the beginning before, before we keep going forward.
[00:12:58] Cameron Clark: So, you're from [00:13:00] Arkansas?
[00:13:00] Jeremy Hudson: Yep.
[00:13:01] Cameron Clark: And then construction management from JBU, right? Mm-hmm. And then, um, and talk about getting into just like the real estate in industry in general. Yeah. Because I think the, you know, the, everyone you know, may wanna know, like, how do you become. I don't even think there was anything like the, the job title developer probably didn't even exist.
[00:13:21] Cameron Clark: Yeah, it did not exist here then. And so I don't even think there was like an aspiration is what I'm assuming.
[00:13:25] Jeremy Hudson: No.
[00:13:26] Cameron Clark: On your end.
[00:13:26] Jeremy Hudson: Yeah, no.
[00:13:27] Cameron Clark: Probably to do what you do.
[00:13:28] Jeremy Hudson: Yeah. Uh, yeah. So born and raised in, in north central Arkansas. I came over here to John Brown to go to school. Um, I actually thought I wanted to be an architect.
[00:13:39] Jeremy Hudson: There was that, that was actually in the catalog if you're old enough to know what a actual catalog is at a college where they used to have all the degrees in the classes. And I get over there and I'm like, you know, I obviously wasn't enrolled yet, but I was like in these, you know, kind of. Whatever, you know, interviews kind of finalizing where I was gonna go to school and found out that they didn't have architecture anymore, but they had this thing [00:14:00] called construction management.
[00:14:01] Jeremy Hudson: And so I just decided, okay, I felt like I was supposed to go to school there. So that's what I pursued. Uh, and I loved it. I mean, there are a lot of things I liked about it, but at the same time, by the time I got outta school, um, I kind of knew, like I don't think I'm, that that program for the most part prepares you to do one of three things.
[00:14:17] Jeremy Hudson: Uh, go to work for a large construction company, a commercial construction company, uh, kind of start your own residential home building type company, or a lot of, uh, not a lot, but you know, some of the folks that go through there are already in family businesses and they're going to, you know, learn how to run their family construction business.
[00:14:33] Jeremy Hudson: I, I was none of those things. I worked for Manhattan Construction out of Tulsa for a couple years while I was in school. Learned a lot, loved it. Um, but I had already decided that I, I didn't want to just go straight into the construction, commercial construction industry. It just didn't feel like it was a culture fit for me.
[00:14:49] Jeremy Hudson: And, you know, what I, what I wanted to do. Um, so when I got outta school, I honestly wasn't really sure what I wanted to do. And, um, Seth, my, you know, Seth [00:15:00] Mims, who's my partner now, I had met, uh, and he's like, Hey, you should, you should think about real estate. And I didn't, I didn't even know real estate was a career.
[00:15:08] Jeremy Hudson: I, you know, I grew up in small town Arkansas. Uh, the only realtor I knew was like my aunt who was a realtor because she was a school teacher and gave her something to do in the summer. Um, so I was like, my first thought is like, I've got a college degree. Why would I be a real estate agent? Um, but ultimately I decided, what the heck?
[00:15:25] Jeremy Hudson: You know, let's pursue it and see what happens. And. And, uh, started working with Seth and, and we built, you know, this small boutique real estate, uh, brokerage called me, Costa Real Estate that focused on Spanish speaking customers in Springdale and Ro well, all of, no, those Northwest Arkansas, but specifically in Springdale and, and Rogers.
[00:15:43] Cameron Clark: What year was that?
[00:15:44] Jeremy Hudson: Uh, that was oh two, 2002. Okay. Um, and we, you know, like a lot of people back then, we rode the wave of, you know, crazy, you know, crazy market from 2002 to about 2006 and kind of during that time, um. I started getting really interested [00:16:00] in, in the, the investment slash business side versus just the, the sales side of the business.
[00:16:06] Jeremy Hudson: And, um, we had some clients or customers that had some small scale properties that they needed property managed too. And so we just kind of incrementally were getting into property management and I thought I saw that as a way to diversify our revenue stream and a need that frankly nobody was really serving.
[00:16:23] Jeremy Hudson: And there's Lindsay that of course, you know, um, was by far the biggest apartment, you know, property manager for their own account, but there really wasn't anybody that was really serving their customer, uh, or kind of differentiating themselves. There's just a lot of very small Yeah. Property management shops.
[00:16:39] Jeremy Hudson: Um, and then when the wheels fell off the bus, you know, late 2006, early 2007, and, and everybody's including our brokerage, you know, business went, you know, just. You know, just fell apart. Um, luckily we had, you know, we had some property management business to fall back on. It wasn't a lot then, but, [00:17:00] um, we kind of were in the right place at the right time and ended up being kind of the go-to guys for a lot of local banks or investors that got, they started getting deals handed back to 'em, didn't know what to do with it.
[00:17:11] Jeremy Hudson: And, and we had learned how to reposition, um, either just, you know, either physically reposition or, or even just, um, you know, through operations and marketing, reposition these assets. And so we kind of, our, our property management business grew really fast. And a big part of that was apartment projects in Fayetteville, um, that we took over for several local banks and even the FDIC at one point.
[00:17:36] Jeremy Hudson: Um, and, uh, and so we kind of learned, uh, the apartment business and. You know, the student apartment business now that wasn't Purpose-Built Student and that, you know, it's very different than what we have now with Purpose-Built Students. Those were just, these were just apartment complexes that were full of students.
[00:17:51] Cameron Clark: Mm-hmm.
[00:17:52] Jeremy Hudson: Um, and, and just learned a ton. Um, so that's kind of, I call those my wax on wax off days. You know, there was [00:18:00] about, uh, you know, I don't know, seven or eight years where just, you know, we were selling a house a day, so like 300 plus transactions a year. Um, you know, helping people, you know, get financing, buy a home, sell a home.
[00:18:16] Jeremy Hudson: Um, and then kind of the same thing on the apartment side and just lots and lots of transactions, lots of understanding of, of, you know, why people buy a home, why they wanna move. Um, understanding, uh, a lot of bad development decisions or bad asset management decisions that we saw when people started getting stuff back and.
[00:18:35] Jeremy Hudson: Construction projects that were halfway through or people ran outta money or just all these different things that happened back then to a whole lot of people. Um, and so we were, I just, you know, we, it, we kind of got thrown into the deep end of the pool and, and had to learn to swim and, and learned, learned a lot of things from it.
[00:18:52] Jeremy Hudson: So, um, that really prepared, I think, uniquely prepared us. Uh, you know, I didn't, I didn't go learn real estate finance in [00:19:00] school, or I didn't, uh, you know, uh, I didn't come to the industry that way. I just came through many diff you know, the, the, the major different aspects that it takes. Um, and frankly had to self, self, self-teach, you know, uh, or so self-taught when it comes to real estate finance and development.
[00:19:17] Jeremy Hudson: Like literally, I bought the book on real estate development from the ULI bookstore. Um, you know, and I was like, okay, what does this mean? How do I, what the hell is a pro forma and how does that work?
[00:19:28] Cameron Clark: What I mean? So, and talk, talk about like at the time, I mean, we were. There were no real development shops here.
[00:19:36] Cameron Clark: And I think even, even now, it's like there's not mm-hmm. That many, it's, and I don't know how many, you know, some of these major, major markets have, but like, um, I mean, was there, was there anyone at all, like then?
[00:19:51] Jeremy Hudson: No, I don't think so. I mean, there was, I mean, there's some of the legacy people and or families, um, you know, that, did you know apartments [00:20:00] at a big scale or did, um, you know, kind of big box retail or Yeah.
[00:20:05] Jeremy Hudson: You know, retail, I mean, which some of those, you know, families and folks are still around, but there was no. There was no, I mean, they kind of had their niche and they did their thing. Um, um, but yeah, no, there was, there was nobody. Now there were a lot of, there were a lot of paper developers back in those days.
[00:20:21] Jeremy Hudson: Right? Yeah. I mean, and, you know, anybody could build a home and anybody could develop a subdivision.
[00:20:25] Cameron Clark: Mm-hmm.
[00:20:25] Jeremy Hudson: Um, but as far as like the type of development that we do or, you know, vertical development, um, yeah, there really wasn't, I mean, I mean, and it's, and it's only been, I mean, you think about it, it's really only been over the past, not even quite 10 years, um, that there have, that there's even been outside development, you know, that's, that's coming and doing stuff.
[00:20:45] Jeremy Hudson: Um, um, so, uh, yeah, it's, it's been unique. I mean, it wasn't that long ago that we had to convince capital to come look at Northwest Arkansas. Yeah. Which, you know, now is a completely different story.
[00:20:57] Cameron Clark: Mm-hmm. Well, let's go post [00:21:00] eco. So, yeah. You talked about what, what everything that eco meant for you and Seth kind of building the company, what.
[00:21:07] Cameron Clark: What happened next? What was the wind in the sails? Yeah, like, I mean, it's,
[00:21:12] Jeremy Hudson: well, we, we took a bit of an atypical approach after Eco. One of the things that Eco taught us, um, or, uh, one of the things we discovered was we, we, we designed and built that for young professionals. But what happened, we, we started getting some students showing up, you know, with nice cars and parents, you know, wanting to, wanting to rent apartments for 'em.
[00:21:34] Jeremy Hudson: And we're like, well, who are these people? Um, and you pay for, and so we, we, we quickly discovered like, there's this, there's clearly a, a, a, a market that not isn't being met. Um, of course the university's, you know, rapidly growing too. And we realized that there was a real need for student housing. Um, and, you know, again, the combination of our, uh, brokerage apartment and, and apartment, um, knowledge.
[00:21:59] Jeremy Hudson: [00:22:00] Knowledge, um. Allowed us to begin to kind of see some opportunities, put some things together, um, that were way bigger developments, um, than we could have ever accomplished, you know, uh, or executed on our own. Um, but we put together some opportunities, um, you know, put together some early designs and entitlements and went out and found partners, um, you know, with, with BiggerPockets and, and more expertise than we did.
[00:22:25] Jeremy Hudson: And we did a series of, um, of, uh, what are now called, you know, purpose-built student housing projects, um, in, in and around downtown or, or, you know, campus adjacent. Um, I guess we were the first guys to do, you know, the campus adjacent, uh, adjacent stuff. Um, and we, you know, we did a series of three or four or five deals, you know, over, over a few years.
[00:22:49] Jeremy Hudson: Um, and that was kind of this phase where I say we took an atypical, atypical approach because we, you know, we did this first deal, it was a 50 50, you know, like sweat equity type [00:23:00] deal. Um, at Eco and then we jumped straight into these deals that we frankly had no business being in, um, from a experience or or capital standpoint.
[00:23:10] Jeremy Hudson: Um, rather than kind of doing incremental smaller deals, we just jumped in and started doing these, these giant deals, um, that obviously we had to find other partners for. Um, and so we learned a lot really, really fast. Mm-hmm. Um, uh, again, like this kind of rapid, um, you know, lots of lessons, um, that we learned from those partners.
[00:23:27] Jeremy Hudson: Um, uh, and that was kind of that phase. Uh, and then we, um, you know, decided that, you know, uh, felt like we had kind of met what we wanted to do in the student space and, and then kind of turned back towards more conventional multifamily.
[00:23:44] Nick Beyer: Those were Sterling and Cardinal, or what were the
[00:23:47] Jeremy Hudson: Yeah. Sterling Frisco, uh, the Cardinal, um.
[00:23:52] Jeremy Hudson: Yes. Uh, and then there was a couple other deals like next to the Cardinal, I forget what it's called now, but, um, that we had, uh, we had [00:24:00] basically teed up but ultimately didn't develop on our own.
[00:24:03] Nick Beyer: I mean, those are big projects.
[00:24:04] Jeremy Hudson: Yeah.
[00:24:05] Nick Beyer: Now I can't imagine.
[00:24:07] Jeremy Hudson: Yes.
[00:24:07] Nick Beyer: Back then,
[00:24:08] Jeremy Hudson: one of the most stressful days of my life was the day that we opened, or the day before we opened the Cardinal.
[00:24:14] Jeremy Hudson: Um, and. You know, with each deal that we did, we took, you know, we had more responsibility, we had more experience, and therefore we took more responsibility. And the Cardinal, um, was, was much more of a true jv even though we did not have anywhere near the balance sheet to execute that on ourselves. We, um, you know, we're, we had really great partner who allowed us to, you know, to be, um, you know, very much active in the development.
[00:24:41] Jeremy Hudson: And we did property management on our own for that deal, which is the first time that we had been the property manager for a pure student project. And it was wild. Uh, you know, it was 470. I still remember the exact stats, you know, it was 471. Um, beds and every one of 'em was leased, you know, a hundred [00:25:00] percent occupied on move in day, and we couldn't get the fire marshal, you know, to, and this is nothing against this was, you know, there's, there's real issues and we were having trouble getting just small details, but important details, you know, signed off and, I mean, we literally had a line out the door at seven o'clock, you know, in the morning on move in day and no certificate of occupancy.
[00:25:20] Jeremy Hudson: And it was the most stressful thing I've ever done in my life. Ultimately, we pulled it off, um, and got people moved in, but it was, it was crazy. Um, and I haven't done any students since.
[00:25:31] Nick Beyer: That's crazy. And y'all managed the, did you manage Sterling too, or y'all
[00:25:34] Jeremy Hudson: No, no, we did not. Okay. No, the, the, the partner that the, there's a, it was a national student developer that, that executed on that.
[00:25:42] Jeremy Hudson: Yeah.
[00:25:43] Nick Beyer: It's crazy. Those are, those are big deals.
[00:25:45] Jeremy Hudson: Yeah. I
[00:25:46] Nick Beyer: can't imagine back then too.
[00:25:47] Jeremy Hudson: Yeah. Yeah.
[00:25:50] Cameron Clark: And so was, was that the moment it was like, Hey, like, let. Let's take a step back.
[00:25:55] Jeremy Hudson: Yeah. Yeah. I mean, like, you know, it was like three summers in a row. I didn't have any vacation. I [00:26:00] wouldn't spend, you know, I had, I guess I, I mean, I didn't have kids at the time, or maybe I had, I had a couple of small kids.
[00:26:05] Jeremy Hudson: Um, and it was just like, this isn't, this is, this is rough, you know? Yeah. Um, and so, uh, yeah, I was kind of a step back and I was like, okay, what do we really want to do? And, um, I'm still really proud of the fact that we put students, uh, you know, right. You know, where they need to be. Mm-hmm. Um, right next to campus and in downtown.
[00:26:23] Jeremy Hudson: Um, but it was hard and, and there was other people beginning to, you know, meet that market as well. And, and, um, kind of wanted to get back to honestly, like that original eco thesis, which is there's a bunch of young, you know, young professionals, others too, but young professionals that are seeking a, a better place to live.
[00:26:40] Jeremy Hudson: They don't, they what we call rent by choice. Like for whatever reason, um, you know, they're, they would prefer to rent, um, in this time period. And, um. That may be because they're just moving here. That may be because, um, what, whatever reason. Um, and, and there just wasn't product that would, you know, there's still not, I still, there's still not [00:27:00] near enough product even to this day, um, for, uh, for, for folks that wanna live in and around downtown.
[00:27:06] Jeremy Hudson: Um, and so that's kind of, you know, where we, where we started focusing again.
[00:27:11] Nick Beyer: Hmm. Talk about the next project, then what was kind of post the student?
[00:27:16] Jeremy Hudson: The, the first thing we did after the student deals was uptown up by the, the Razorback Cinema. And that entire project was, um, kind of, uh, that entire project was, um, whatever the word I can't think of.
[00:27:33] Jeremy Hudson: But, um, you know, the, the thesis or, or the idea there was, um.
[00:27:42] Jeremy Hudson: We needed somewhere that we could build that scale of housing. Um, you can't, you know, it was very hard, very expensive to buy dirt in downtown Fayetteville still is expensive. Back then, it was expensive. There was no proof of concept other than eco that you could charge higher rents. And so we had to go somewhere where [00:28:00] we could buy less expensive dirt, um, and still build surface parking rather than structured parking, um, you know, apartments.
[00:28:07] Jeremy Hudson: Um, and everything that we had done, part of this was purely fate. Part of it was our own choice. Everything that we had done to that point, uh, was, was practically right on the trail. Uh, and so we knew like, okay, this trail thing, and this was, you know, this was. Whatever, nine, 10 years ago. Actually, this would've been more like 11 years ago.
[00:28:31] Jeremy Hudson: Um, but, uh, you know, so we could see like this trail thing has value. Um, you know, there's a transportation piece of it, but there's also a big recreation piece of it. And so if we were gonna do something that was not in downtown, we felt like doing it on the trail, um, was important. Um, the other thing that we had discovered was, um, in, in all of our apartments, um, that were the, the young professionals, many, many of those young professionals had jobs in Benton County, but they wanted to live in Fayetteville, um, for [00:29:00] obvious reasons.
[00:29:01] Jeremy Hudson: Um, and so we, we felt like building a project that was cl you know, that was convenient for them to go north, but they still could access all the amenities of Fayetteville fairly easily. Um, you know, was was a good play and ultimately. Um, you know, that's, that's what we were able to do, um, was, was build, uh, you know, a project that was easy to get in and out of on, on I 49, close enough to amenities and, and obviously a different type of amenity than what you have downtown.
[00:29:30] Jeremy Hudson: Um, but also right on the trail. Um, so that was the next big thing. That was the first project that we did as a, like, pure gp where, you know, we didn't have, we had capital, obviously outside capital, but no other developer. Nobody's, uh, you know, uh, no other developer. It was just us. Um, and so that was a huge lift.
[00:29:49] Jeremy Hudson: Um, you know, that was a, I don't know, pretty much all consuming for about three years. We still. We still had some, um, we still had some other things going in downtown. We kind of [00:30:00] always, the two things that we've always done historically is mul ground up multifamily or adaptive reuse, multifamily or, uh, value add multifamily, but then also, um, adaptive reuse projects downtown.
[00:30:12] Jeremy Hudson: And so, you know, during that time we were also, um, doing some stuff on Church Street, you know, where I think where Lulu Lulu is and, and our segas. But the main focus, um, was, was that, uh, apartment project.
[00:30:29] Nick Beyer: Talk about that project, because back then we both grew up here, but don't, don't recall prior to whatever, 2014 ish
[00:30:38] Jeremy Hudson: Yep.
[00:30:39] Nick Beyer: There being mixed use stuff. Yeah. In Northwest Arkansas. Yeah. So was that, was that the first, I mean, not, not to like stick, you know, put a stake in the ground, but like Yeah,
[00:30:48] Jeremy Hudson: I mean,
[00:30:49] Nick Beyer: I, did y'all have any benchmarks for that or was it like, Hey, we're kind of. We're taking an idea from a different market, we're bringing it here.
[00:30:56] Jeremy Hudson: Yeah. It was very much taking an idea from other markets, um, [00:31:00] uh, through the, the recognition that Eco got, I got plugged into both the U-S-G-B-C, um, but also ULI nationally and started, you know, attending meetings and traveling and, and seeing projects all over the place. And so that's kind of, uh, to some degree where, where the uptown, um, you know, concept came from was like, okay, if we're gonna put, if we're gonna, we know, we know we need to build housing.
[00:31:27] Jeremy Hudson: We know we can't, we're not gonna find, you know, seven or eight acres, uh, in near downtown. Even if we could, we won't be able to afford it and make the numbers work. So we had, so, so we found that location that was, uh, you know, on the trail and it's surrounded by things, but it's certainly not, you know, what I would call walkable or, um.
[00:31:47] Jeremy Hudson: You know, uh, you know, certainly not a, you know, not a real mixed use environment. And so we felt like we needed to do something to, you know, give it a sense of place. And, um, and so that's, you know, why we decided to do [00:32:00] mixed use. It was crazy hard. We could barely get capital to pay attention to it. Um, to this day, it's hard.
[00:32:06] Jeremy Hudson: I mean that, like we, we, there's a lot of things we should have done differently with the retail there. Um, but uh, you know, grand scheme of things, it, you know, it was, it was ultimately successful. Um, but learn, you know, learn lots of lessons, uh, along the way for sure.
[00:32:24] Cameron Clark: What'd you learn from that one?
[00:32:26] Jeremy Hudson: A few different things.
[00:32:28] Jeremy Hudson: Um. I think it's really good to, to travel and to look at other markets and bring things that you learn from other markets or see in other markets, but also our market's unique. Um, you know, and I think you have to be really careful how much you extrapolate certain things. And, um, you know, one thing I would say is like, we learn really quickly that, uh, you know, people aren't going to drive behind a building to, to park.
[00:32:54] Jeremy Hudson: You know, they want to like, you know, this is the end of the day. This is, this is still Arkansas and some of this is beginning [00:33:00] to change, but. Um, you know, people, you know, they have a certain pattern and ways that they think about parking, and so, um, that was a big, hard lesson is a hard lesson still, you know, that, um, it's hard to retrain a, you know, a consumer to do, do things.
[00:33:15] Jeremy Hudson: And, and it's one thing if they're in downtown, right? They're already expecting to have to look for parking. It's another thing when they're in a big box retail environment. Um, so that's a big one was, you know, the, the siding of, of the, uh, you know, of the commercial space, um, the way it's parked. Um, you know, vertical, what, what I call now vertical mixed use where you actually stack the apartments on top, um, is, you know, is very difficult except for in certain urban markets, if I had it all to do over again, we would, we would've still done commercial, but we would've had it in a separate building.
[00:33:47] Jeremy Hudson: Um, yeah. Uh, something else we learned on the apartment side. Um. It's, uh, we designed that, um, [00:34:00] there's this, there's this book called Happy City that I don't remember when it's written. That's probably been at least a decade. Um, and there's really interesting kind of social, um, I don't know, research, but, um, this guy, uh, Christopher, oh gosh, what his name?
[00:34:15] Jeremy Hudson: I think Charles Montgomery. Um, and he, he lived in Vancouver and he, uh, if you know anything about architecture or Vancouver, there's this thing called Vancouver. Vancouver is, and they have these unbelievable blocks. Um, and you have to build basically two or three stories of the street. So there's all these town homes on the street, but then all those things are, are done that way because then they have high rises in the middle and there.
[00:34:39] Jeremy Hudson: So these huge high rises. And of course the high rises are more expensive than the town homes. So this guy worked his way up, moved out of a town home into a high-rise, and lived in this high-rise condo and began to realize he found himself looking down from his high-rise condo at the street life and his former friends that are on their front [00:35:00] porches or, or roof decks on these town homes.
[00:35:03] Jeremy Hudson: Um, and began like asking these questions like, well, you know, why is there so much more life there? And long story short, um, because I'm not gonna do the book justice, but one of the takeaways he started, you know, looking into and researching was that when you live in a, in a building, um, and this could, this could be for an office building or a home, I think, um, is, is like number of interactions.
[00:35:26] Jeremy Hudson: Um. Determine like social outcomes particularly. Meaning if there are a hundred people that live in this condo building and they all use the same two or three elevators, there are not, like, you don't see the same person enough, um, to then be, begin to feel comfortable engaging with them because, and you're not gonna remember a hundred people's names versus if you live in a certain type of building where you're, there's only two or three neighbors or whatever, and he ended up with this, you know, his ideal thing is 12.
[00:35:56] Jeremy Hudson: Um, if you have no more than 12 people that are kind of using your [00:36:00] entrance and this little shared common space, then um. Then you're much more likely to build these social ties. And, and, and so we began to apply some of that. I mean, it was really, you know, first draft, um, and on purpose separated that project into what was kind of three many, 100 unit projects with, um, entries that only served a smaller number of people and all of that.
[00:36:25] Jeremy Hudson: And a lot of it, you know, a lot of it, um, worked out really good. One thing that I learned, um, though, is in, I think in northwest Arkansas, and there's certainly exceptions to this, depending upon location, but, um, big projects like that, uh, you know, that one was 308 units, not counting the commercial. You have to have an, you have to have a lot of leasing.
[00:36:50] Jeremy Hudson: Velocity. Velocity, velocity. Uh, you have to have a lot of velocity of, of leasing to get that thing full. Mm. And [00:37:00] if you don't, then all of a sudden 12 months in and you're leasing against yourself. 'cause people are moving out and it's this big thing in the industry. Well, in a lot of markets, big markets, Dallas, whatever.
[00:37:10] Jeremy Hudson: You've got so many people moving in, moving around. Not a big deal, I think in northwest Arkansas. And I think there's other examples as you look around northwest Arkansas where people have built these big, these much bigger complexes, particularly if they're reaching for, you know, top of the market. Um, and they kind of take scale from other markets that have way more job growth than we have.
[00:37:32] Jeremy Hudson: Um, we have great percentage job growth, but whole, you know, whole number job growth and apply it to northwest Arkansas and then find out the hard way that. Hey, it's really hard, you know, to, to move 25 or 30 people every month. Mm-hmm. In
[00:37:47] Cameron Clark: mm-hmm.
[00:37:48] Jeremy Hudson: Um, and so that was a turning point for us. Whereas where, and part of it is, is the sheer, you know, leasing, uh, the, the demographics and the leasing effort.
[00:37:58] Jeremy Hudson: Part of it is also [00:38:00] scale and, and community. That 150 unit, or a hundred unit or an 80 unit project, while you still have many of the same, you know, challenges, entitlement design, a lot of it takes the same amount, whether there's a hundred of 'em or 300 of them. From a placemaking community and, um, you know, leasing perspective, um, we really like a medium scale instead.
[00:38:29] Jeremy Hudson: Um, and everything that we've done since then practically, I think has been, well, not practically, everything has been in that medium scale of a hundred, 150 units big enough that you can, uh, you know, still have some economy of scale big enough that you can still have hopefully, you know, uh, pretty efficient operations.
[00:38:45] Nick Beyer: Mm-hmm.
[00:38:45] Jeremy Hudson: But small enough that it just doesn't feel like you're in a complex, um
[00:38:49] Cameron Clark: mm-hmm.
[00:38:49] Jeremy Hudson: Uh, 'cause I don't think anybody really wants to live in a complex. Right. They wanna live in a neighborhood.
[00:38:55] Cameron Clark: It's cool. Um, okay. So [00:39:00] what was the team size then? That was like, was it still pretty, I mean, you and Seth mm-hmm.
[00:39:04] Cameron Clark: Just a couple others, or was
[00:39:06] Jeremy Hudson: back then? Um, yeah. Back then there really was not a development team. Um, the development team was me and, um. Hope who's still working for us, um, was kind of my right hand. And then, um, our property management team. So we had, we had a property management team, but we had no development team.
[00:39:25] Jeremy Hudson: You know, Seth was the, the real estate guy and I was the development guy.
[00:39:29] Nick Beyer: Hmm.
[00:39:29] Jeremy Hudson: Um, and, you know, with an assistant basically. Uh, and then we really started, I think the first hire on, the first hire on the development team would've been like 2017 or 2018.
[00:39:42] Cameron Clark: Okay. And where did, where did y'all go from, from there, from that project there?
[00:39:47] Cameron Clark: Was it, I mean, hey, we're gonna go, we're gonna go do two of these next year, or we're gonna, we're gonna, I mean, how, how quickly does that kind of scale up?
[00:39:55] Jeremy Hudson: The, the next thing we did would have been of, of scale. The next [00:40:00] department project of scale would've been, um, brick Avenue in Bentonville. And so we, we really took, um, a lot of what we learned from, from uptown.
[00:40:10] Jeremy Hudson: Um, and, and it was, uh. I wouldn't say rinse and repeat because nothing we do is rinse and repeat. But it was, it was as much of, you know, that as, as we've ever done of Okay. You know, um, we scaled the project down just slightly, um, but took a lot of the same, um, you know, a lot of the same momentum, a lot of the same consultants and, and, um, a lot of the same strategy of how do we build a place, um, that feels, feels good, is walkable, is community focused, feels urban, um, but is actually, you know, surface park, apartment buildings, um, you know, arranged and, and landscaped in a way that it feels like, uh, you know, feels like a or is a neighborhood.
[00:40:55] Cameron Clark: Mm-hmm.
[00:40:55] Jeremy Hudson: Um, and so we went and did that, um, was the next big project [00:41:00] that opened in, that would've opened in 2019. And at the same time, we were beginning to work on our Markham Hill project in early stages of, of acquisition and entitlement. Uh, and then about that same time would've been when we started pursuing this piece of real estate in 2019, I believe, um, and started planning South Yard.
[00:41:22] Cameron Clark: And how do you, and what would you tell someone who's like, you know, getting into this space, who, how do you know if you're trying to do too much or, you know, hey, we, I mean, like, like, like you were saying earlier, we didn't say we as you, you and the team, and you and Seth, whenever you were jumping in the, the student stuff at the beginning, it was like, Hey, we're just, we're figuring it out.
[00:41:43] Cameron Clark: And it was, it was, we just took a big jump and it, it was good. But how do you know what's, what's right there?
[00:41:49] Jeremy Hudson: Yeah. I, I don't know. Uh, how about that for an answer? Um, I mean, I think, uh, I mean, one, one, I think one really important thing, no matter [00:42:00] what, uh, you know, is. I mean, don't be overconfident and, and understand what you know and understand what you don't know.
[00:42:09] Jeremy Hudson: And, you know, we've always been, um, of the mind that, you know, um, finding good partners and consultants that do have experience and, and partner could be with a capital P or a lower lowercase p uh, you know, advisors, capital, you know, capital sources, whatever it is that, that have experience. I mean, I would never want to go, you know, do a project that we didn't have deep experience on without, you know, designers, capital providers or consultants that, that don't have experience in that space.
[00:42:40] Jeremy Hudson: And so certainly we've been able to, you know, do different things and, you know, over, we're doing much more than just pure multifamily now. Um, but, uh, you know, try to always do it with, you know, really good advisors and a lot of collaboration. I mean, that's the thing. A lot of collaboration, which takes [00:43:00] time.
[00:43:00] Jeremy Hudson: Um, you know. Um, but yeah. Um, I don't know if that answers your question. Um, but, you know, yeah. I mean, when you look at most of what we do, um, still falls back into those two big buckets that I talked about. It's, it's, it's multifamily and it's, it's adaptive reuse or creative commercial space. And, um, you know, the vast majority of the square footage in dollars is in the multifamily space, which we understand deeply.
[00:43:33] Jeremy Hudson: Um, and, uh, you know, um, you know, this, we, we got into this project in Markham hospitality, which is now stone breaker at a extremely, uh, unfortunate time, you know, 2020 in COVID. And so, you know, we had bit off, you know, we were planning 30,000 feet here, uh, you know, of, of food and beverage and, and a [00:44:00] hotel.
[00:44:01] Jeremy Hudson: Uh, you know, when, when nobody was going out to eat and nobody was staying in a hotel, and so obviously we, you know, we slowed some things down and paused and
[00:44:08] Cameron Clark: mm-hmm.
[00:44:09] Jeremy Hudson: Um, so, um, you know, maybe that's part of it too is like knowing when to, you know, know when to slow down or knowing when to say no. And that's not, that's not always easy.
[00:44:21] Jeremy Hudson: Um, yeah. You know, when you're, uh, especially when you're working in your, you know, we're working in our hometown and places that we love and, you know, we wanna do cool stuff, but, um, also have to be careful that you don't, uh, you know, don't, don't get into something that you don't really have expertise in.
[00:44:36] Nick Beyer: Yeah. Well, let's keep diving a little bit deeper into the business side of it, and then we can go back to some of these projects. So from the business perspective
[00:44:45] Jeremy Hudson: mm-hmm.
[00:44:45] Nick Beyer: How, how do y'all look at your timeline? Are y all a buy and hold? Is that kind of the buy, hold, manage? Or have y'all flipped out any of these properties?
[00:44:54] Nick Beyer: Yeah. How do you guys view that? Sure. What your thesis, your investment thesis?
[00:44:57] Jeremy Hudson: Uh, so early days, [00:45:00] um. You know, up, up until, uh, really up in, well, so Eco, we have managed to hold onto. Um, a lot of what happened from eco leading up to say Brick Avenue, um, we, we have sold out of, um, with the exception of some of this adaptive reuse commercial downtown stuff.
[00:45:20] Jeremy Hudson: Um, and you know, that's really for two reasons. One, we probably, in many cases we didn't have a choice because we were the developer, but the capital provider would call that shot. Mm-hmm. You know, uh, uh, uh, for the most part and or because we needed to build our capital ourselves, you know? And so, um, obviously it takes, it takes, uh, cash and it takes a balance sheet, uh, to do these types of projects.
[00:45:42] Jeremy Hudson: And so there's definitely a series, you know, there either because of the capital PRI provider or in a lot of student stuff. You know, we had a JV partner. It was, you know, they were taking way more risk than we were, um, you know, post entitlement. And so, um, yeah, we exited a bunch of stuff. Um, you know, [00:46:00] kind of in that decade, that first big decade.
[00:46:02] Jeremy Hudson: Um, but our, our general philosophy is to develop it and hold it and operate it. Um, uh, you know, the, so, um, we operate the multifamily on our own. We outsource typically the, the commercial property management to somebody that can, can do that better than us. Um, but yeah, I mean the, the, the general, the general investment strategy or, or business strategy is, is to, is to design and build, um, these places that are hard to replace.
[00:46:33] Jeremy Hudson: Um, places that have higher barriers to entry, places that make a difference in our community. And people wanna, you know, people are attracted to for reasons, you know, other than just because they're the new shiny thing. Um, and we think that we can create a lot of value over time, both for the community and for ourselves.
[00:46:50] Jeremy Hudson: Um, and it doesn't, it's not always the case and, you know, you've gotta, sometimes you gotta sell things to, you know, to churn capital and be able to invest in new things. Um, but the general. [00:47:00] The general desire and strategy is always to, to build, um, stabilize and put permanent financing on it that allows us to hold it for the long term.
[00:47:10] Nick Beyer: So the capital partners that you work with have to be okay with that long, long term thesis? Yeah.
[00:47:14] Jeremy Hudson: Yes. Yeah. I mean, uh, you know, we've had all kinds of different capital partners, um, and learns lots of, lots of lessons. Um, you know, we've worked with, uh, you know, you know, big name private equity firms that have that, that I'm, that I, even though there some of that was really hard, um, just because, you know, we were young and learning and, uh, and when you're doing that with a, you know, a group that, uh, has a ton of experience, um, that can be difficult.
[00:47:45] Jeremy Hudson: Um, but I wouldn't trade it for anything because we learn so much, you know, um, learn systems and tools and, um, you know how to do things and, um, but you know. Now, luckily, uh, you know, [00:48:00] we're in a position that for the most part, um, you know, we get to this is gonna, I would, I'm, I'm not gonna say we get to choose our capital partners.
[00:48:09] Jeremy Hudson: Um, that's maybe a little too, maybe a little too wishful thinking. But, um, to a large degree we kind of do, you know, um, and, um, that's really important. You know, it's not just about who's gonna give you the most money mm-hmm. Or who's gonna, what the, I mean, it's really about, it goes back to the values thing from the very beginning, right?
[00:48:26] Jeremy Hudson: I mean, um, you know, we, we could have an amazing internal culture, but in our business, if we then went and had capital partners that, uh, or whatever consultants, I mean, it could be any, uh, it could be, uh, you know, uh, design consultants, or it could be financing consultants, it could be capital partners. If they're not aligned, um, with what we're doing, um, then it'd be really hard to, to do what we want to do over the long term.
[00:48:50] Jeremy Hudson: And so that is a huge part of, of how we. Think about deals and put deals together now as, as partners that, that share [00:49:00] values. And, and it's not that, it's not that every capital partner has to like, you know, you know, be totally aligned with everything, uh, you know, all of our, our values or deep sustainability or health, but they have to understand that's who we are.
[00:49:16] Jeremy Hudson: Yeah. And they have to be willing to, uh, you know, invest in a deal and in a structure that allows us to operate that way. Um, and we, and we found, um, you know, that having, having, uh, having local, you know, and like-minded capital. Um, is kind of the best of all worlds and it's people that we, you know, that are not just, you know, they're not just a, not just a number, uh, you know, in your phone or on the screen, but it's people that you actually, um, you know, can collaborate with and, and they bring, bring value other than just the capital.
[00:49:53] Nick Beyer: Talk about that a little more. I mean, was that harder to find 15 years ago? Has that gotten, finding local capital? Has [00:50:00] that been easier as time has gone on? Um, part of it's obviously if you're having success, more people wanna invest in your deals locally, but just generally the area, the growth.
[00:50:09] Jeremy Hudson: Yeah. Yeah, absolutely.
[00:50:11] Jeremy Hudson: I mean, I would say yes on several different levels there. I mean, um, one 10 or 15 years ago we were very much blazing a trail, um, and, uh, whether that be the type of projects that we're doing, the locations we're doing, whether that be us talking about, you know. Sustainability or, or indoor air quality. I mean, there's a lot of these things that, especially pre COVID, you know?
[00:50:36] Nick Beyer: Mm-hmm.
[00:50:36] Jeremy Hudson: People don't have any idea what we're talking about, you know? Um, and now, um, both as the market has moved that way generally, and then accelerated by things like COVID and people understanding that indoor health is, or you know, that, that your indoor environment and your outdoor environment really affects your health.
[00:50:54] Jeremy Hudson: So part of it's just awareness in the, in the market, moving a certain direction. Um, so that's, you know, [00:51:00] thinking about our value system and finding capital that understands, is willing to invest alongside that, or even really is on board with it, is, is much easier. Um, generally, uh, yeah, there, and there's just more capital sources, right?
[00:51:16] Jeremy Hudson: Um, there's more capital sources, like I said before. I mean, when we, when we did our first, um, in what I would say institutional scale deal with an institutional partner, I mean. They had never done a deal in northwest Arkansas before. It was extremely hard just to get 'em to show up and then convince them that it was worth it.
[00:51:33] Jeremy Hudson: Um, and uh, you know, now there's, there's, there's all kinds of capital here from all over the place. Um, and I think that's great. Um, but you know, when we have our, when we have the opportunity, we would still prefer to use capital, local capital sources. Mm-hmm. And I think, um, that is also much more readily available.
[00:51:54] Jeremy Hudson: Um, you know, uh, lots of developers, you know, do you know, and there's a lot to be said for this, you know, kind of [00:52:00] friends and family, um, you know, kind of self syndicated, fancy word that I didn't know what it meant for a long time. Uh, you know, self syndicated deals and that's great. Um, but now we have, um, you know, we have local offices and local, um, teams and funds, um.
[00:52:17] Jeremy Hudson: That can come alongside you as well and take a lot of that burden, you know, off of you. And, and, and we found, you know, we, we would like, like to be able to work that way.
[00:52:26] Cameron Clark: That's good. Um, talk about, so I mean, I wanna talk about here, south Yard. This is my, like, absolute favorite project that y'all have done.
[00:52:36] Cameron Clark: Um, but you know, doctor, I think you said 2017 when you really started to build the team, the, why did you choose to do that? And I think there's the, you know, when people who aren't in this industry so they understand, it's like there's pressure on doing projects when you've got
[00:52:54] Jeremy Hudson: Yeah.
[00:52:55] Cameron Clark: A payroll Yeah. Hit it's like, hey, we, there's, you know, [00:53:00] the, the, the business model is making money through all, all the, these projects are big, there's fees they're related that allow to pay payroll.
[00:53:08] Jeremy Hudson: Yeah.
[00:53:08] Cameron Clark: It's like how do you balance
[00:53:11] Jeremy Hudson: Yeah.
[00:53:12] Cameron Clark: Hiring too many, too little.
[00:53:15] Jeremy Hudson: That's a great question. Uh, and it's, I mean, it is very, it's, it's a really difficult task. Um, we have, you know, we have chosen to invest over, invests is probably not the right word, but we've chosen to, you know, to choose to spend money, to acquire good talent, to keep good talent around, even when, you know, the, the opco piece of that doesn't make sense in the short term, um, just because, um, A, it's necessary, you know, and b um, you know, it, it, uh, it's what makes, it's what makes the investment makes sense.
[00:53:53] Jeremy Hudson: Yeah. Um, you know, we're not developers for developer fees. Mm-hmm. We're not a fee-based development company that's developing [00:54:00] things for other people. Although, as we grow, that is something that we, you know, have begun to, to consider and or do for folks because we have the capacity and expertise to do that.
[00:54:10] Jeremy Hudson: Um, but, but the vast majority of our work is really where our own client essentially.
[00:54:15] Cameron Clark: Mm-hmm. Um,
[00:54:16] Jeremy Hudson: of course we have capital partners too, but, um, so yeah, it's the thing in, in anybody that's been around the development industry, uh, particularly if you start looking at, you know, outside shops and, and, uh, you know, bigger companies outside of this area, like that's the, you know, the concern or the fear or whatever is like, you get so big and then you have all this payroll and it's a real thing.
[00:54:36] Jeremy Hudson: It's hard to manage. Uh, 'cause deal flow is, you know, is, is not, especially at kind of the scale that we're at. Like, we, we may look big, but at the end of the day we're, you know, we're, we're 13, 15 people in our kind of core team, not counting our, uh, you know, not counting our, um, you know, property management, you know, admin teams.
[00:54:56] Jeremy Hudson: Um, and so that's, you know, that's a pretty hefty, pretty [00:55:00] hefty, um, you know, um, whatever the word is, you know, pretty hefty payroll. And, but we're in a market and we're highly selective about what we do. And as you know, like, you know, we can work on a deal for two, three years, sometimes longer before we ever see a dollar of income.
[00:55:19] Jeremy Hudson: And so, um, it's something that we're constantly working on having the right balance of. Um, but, uh, so I don't have a great answer as to like how to do it, but it's a, I mean, it's a constant thing. It's a constant thing of making sure that we're, we've got the best talent, we've got enough capacity, but we're not overdoing it either because, um, you know, because that deal flow, um, you know, is, and, and there's things that happen completely outside of your control.
[00:55:46] Jeremy Hudson: You know, you may be working on a deal that for whatever reason doesn't work out. You got an entitlement issue, you got an environmental issue, you've got. Or something turns in the market like COVID. You know, we were, we were, you know, we were gearing up to do [00:56:00] several things, including this project and just kind of had to put it on the shelf for a while and that, you know, that sucked.
[00:56:05] Jeremy Hudson: Um, so you've gotta be smart, um, from a capital allocation perspective too, that, you know, we're, you know, we're not just, we're not just looking for every deal we can possibly do and, and stretching ourselves too thin. We gotta make sure that we've got the, you know, the capital to, to support our own, you know, our own team and our own growth.
[00:56:25] Nick Beyer: Before we dive into South Yard, I want, I want you to touch a little more on Brick Avenue. 'cause it seems like every project we've talked about is within like a couple mile radius Yeah. Here in Fayetteville. And so what was the vision for going up north? Was that risky, scary at the time, or did y'all feel pretty confident in, in the knowledge that you'd gained in the Uptown project?
[00:56:47] Nick Beyer: Like how, how did that feel back then?
[00:56:49] Jeremy Hudson: Um. No, it really, to be honest, it didn't really feel risky. I mean, we were, I think, the first to market with, with multifamily of any scale there. [00:57:00] Um, and, um, you know, so we felt like, you know, a, it's our, it was our core business. B it was in a, in a strategic location. We did not know the campus was gonna be expanding there.
[00:57:12] Jeremy Hudson: So that was pure luck. I mean, seriously, pure luck. Um, what we did was kind of like what we did with Uptown was, you know, you look at, okay, like in order to make a deal like this work, um, you know, we need a certain size piece of dirt, um, we're not gonna be able to pay, you know, whatever crazy number it would be to put that, you know, on Maine and Maine, but where do we put it that's clearly still walkable to downtown, still easy to access via car.
[00:57:40] Jeremy Hudson: Uh, and, you know, we zeroed in on that location and, and, and. And that that piece of it worked out. Um, but yeah, I mean, I think, I think we felt like we knew that there was, we knew there was demand for, you know, of course that was, um, you know, that would've been 20 we opened in 2019, so I guess it was probably 2016 ish [00:58:00] when we started working on that project.
[00:58:01] Jeremy Hudson: And, uh, while it clearly isn't what, what it is today, I mean, there, downtown Bentonville is beginning to turn. Obviously there's a sense of place there, um, and, and a reason for people to wanna live downtown. Um, and so I don't, yeah, it didn't, I don't think that ever really felt, um, too speculative. Um, like, like happens to us many times.
[00:58:23] Jeremy Hudson: There was no clear comp that we could point to. Like you have to point to like, well, here's a fourplex or a sixplex, or whatever, you know, and we're trying to do that at a 252 unit scale. Um, but um, yeah, I mean, uh, it, it, it worked out, uh, it worked out well. Um. Still, you know, still own and operate that, that piece as well.
[00:58:46] Jeremy Hudson: And, you know, probably will for a really long time. Um, but yeah, I think, I think because it was so squarely in our wheelhouse, um, and, you know, we, we felt fairly, you know, fairly confident [00:59:00] in, in what downtown Bentonville would be, uh, and continue to be. Um, you know, that one, uh, that one I feel like that one was kind of right down the middle of the fairway for us.
[00:59:09] Jeremy Hudson: Yeah. And we, you know, we had, had, we had had property management experience in, in Benton County, Benton County, even though we didn't have development experience. And so it wasn't like we were, you know, we still, we still understood the market.
[00:59:23] Nick Beyer: Mm-hmm.
[00:59:25] Cameron Clark: And I mean, as far as, well, let's talk about this first, but I wanna talk about like how you, how you select sites now.
[00:59:31] Cameron Clark: And like, I, I imagine, you know, I mean, you're probably getting called on a bunch of things now. Hey, a look at this, take a look at this. Um, you're not developing any outside of northwest Arkansas, correct? Yeah. Um, still feel like there's plenty of things to do here.
[00:59:46] Jeremy Hudson: Yeah.
[00:59:47] Cameron Clark: Um,
[00:59:47] Jeremy Hudson: yeah, I think so. I mean, um, we're constantly having, I mean, not, I mean, it is, it is fairly regular that we'll have a conversation about a project outside of northwest Arkansas.
[00:59:58] Jeremy Hudson: Had one last [01:00:00] week. Um, you know, uh, with a group that we like a lot and there will be a time where we will go partner with someone else in another market, um, with a like-minded developer or capital partner or land partner. Um, but we haven't done it yet. Um, there's, there's, you know, there's, there's so much opportunity here.
[01:00:20] Jeremy Hudson: Um, certainly, uh, you know, there are way more people doing multifamily now. Um, to some degree the type of multifamily that we do, you know, in northwest Arkansas than, than there used to be. We kind of were a lone wolf for a long time and now we're definitely not a lone wolf. Um, but, um. I mean, yeah. I mean, our, our deal is, is we want to build where there is, uh, you know, a sense of community close to, you know, close to jobs, close to, uh, entertainment activities.
[01:00:52] Jeremy Hudson: It's all the things, right? Yeah. I mean, you know, used to, people didn't understand that necessarily in this market, but now I think everybody [01:01:00] understands, you know, um, and, you know, uh, it's, it's harder to find those sites. The due diligence, everything about it is harder. Um, the, the, the good part of that, um, is that some people, you know, either don't want to or don't have the ability or the expertise, you know, to do that.
[01:01:19] Jeremy Hudson: And, and I probably said this earlier, but you know, a, a, a lesson that I learned earlier, um, that's kind of a fundamental real estate term is barriers to entry. Yeah. And, yeah. If you look across practically everything that we've done save maybe like Uptown, um, in, in Fayetteville, it's pretty high barriers to entry to get into places that we're in and whether that be, um, you know, whether that be like, you know, site cost related or whatever, you know, whatever it may be.
[01:01:51] Jeremy Hudson: Um, but we've been able to, to find those sites and in many cases assemble, assemble multiple parcels, um, you know, into bigger sites. Um, [01:02:00] and we're willing to where when it makes sense and where it's appropriate to do mixed use projects like, like South Yard. I mean there's, you know, there's, there's, this is a very complicated, you know, very mixed use project that a lot of people wouldn't bite off.
[01:02:15] Cameron Clark: Yeah. Talk about this deal. Like what, when you were you and or Seth who, you know, when you're looking at it for the first time.
[01:02:21] Jeremy Hudson: Yep.
[01:02:23] Cameron Clark: Besides the location, um, I guess talk about the location too, but like what made you love the site and see the potential on the site? Then think hotel, food and beverage, apartments, everything.
[01:02:35] Jeremy Hudson: Yeah. Um, so really this, this site started simply looking for places to build like that kind of medium scale multifamily, you know. Um, so, um, started off that way. We wanted, you know, we knew we wanted to be on or very near the trail. We want to be, you know, near downtown Fayetteville, near jobs, near university.
[01:02:59] Jeremy Hudson: Um, so where are [01:03:00] the places that, you know, we can, we can find land that fits that bill? Um, and this, you know, this opportunity is, it was, it was on the market even though it wasn't really on the local market that the co-op, you know, was looking to sell. And because they already planning to move. And so, you know, we kind of swooped in and started looking at this.
[01:03:17] Jeremy Hudson: At first the concept was not adaptive for use. At first it was just like, Hey, you know, they've got a pretty nice piece of parcel, a pretty nice piece of dirt, um, you know, would make great multifamily dirt. You know, it's, it's on a corner that, that, you know, provides lots of visibility. Um, so, you know, just kind of checked all the boxes.
[01:03:36] Jeremy Hudson: And then as we, you know, as we started understanding these buildings, um, you know, we started looking at it and having this conversation. It's like, oh my goodness. You know, it's like, it's not a lot on the surface when you look at these things, but, um, and this was, yeah, and to, to pause for a second, um. I, uh, I mentioned ULI earlier, so [01:04:00] in like 2013, I started going to the ULI national meetings and got plugged into.
[01:04:05] Jeremy Hudson: Um, one of the ways that ULI is organized is called product councils. And so there's this groups, you have these smaller, maybe medium scale groups. Um, they get together and, and they're called product councils. 'cause a lot of 'em are organized by like what it is you work on, whether that be office or industrial, whatever.
[01:04:23] Jeremy Hudson: Mm-hmm. I got plugged into what's called the adapt, uh, the Redevelopment and Reuse Council. And so, um, lots of different use cases, lots of different, um, you know, um. Ways that the space gets used. But everybody in this council does adaptive reuse stuff. Uh, and so for years and years, you know, I would go twice a year, sometimes more.
[01:04:45] Jeremy Hudson: And a big part of what we do is tour, tour projects in other cities. And, you know, so I had been exposed to a lot of adaptive reuse stuff and always like, every, every year or every, it was every spring, every fall I'd go do that. And I'd like, I'd get so inspired and then I'd [01:05:00] come back and I'd be like, well, we don't have any giant, you know, brick warehouses.
[01:05:03] Jeremy Hudson: Yeah. We don't like, we don't, you know, Fayetteville and Northwest Arkansas generally, like, you know, we're, we grew in the era of big box. You know, we don't, we don't have a lot of old, you know, uh, particularly, you know, industrial or commercial building stock. And so it was, it was always just kind of like, Hmm, I wish I could do that in Fayetteville.
[01:05:20] Jeremy Hudson: But we don't have those types of buildings and, uh, and so. All of that kind of started marinating, and we're looking at these buildings and we're like, you know, there's some interesting things. There's board form concrete, which we can never afford to build on our new projects, which we really like. And, and we just started kind of just brainstorming about, you know, what if could this be reused?
[01:05:41] Jeremy Hudson: The geometry is crazy, weird.
[01:05:43] Cameron Clark: Yeah.
[01:05:44] Jeremy Hudson: And all this stuff. And so we just started kind of, well let's, let's, let's work a site plan where we keep this and let's see what happens. And so it just really was just back to our, you know, very collaborative, very iterative design process. And, um, because of, um, you know, [01:06:00] the fact that we had had success, um, off, off the square, um, with our adaptive use projects there, um, you know, felt like there was, there was an opportunity here.
[01:06:09] Jeremy Hudson: And, um, so that was really kind of the, the initial piece was. These buildings were interesting while, you know, not big, tall, beautiful brick warehouses. Um, there was some like real embodied culture here. Like this is, you know, there's, you know, the ag industry and farmer's Co-op meant a lot to a lot of people and this was a place where people gathered and, and connected.
[01:06:33] Jeremy Hudson: Um, and there was, you know, we felt like there was something that we could pull out of that and, and find a way to, to kind of, you know, uh, reuse and, and breathe new life into these. Uh, so we started exploring that. We hired a firm, um, that I had been exposed to from other projects outta Austin that had done a bunch of this cool stuff to, to then collaborate with Modus and um, you know, that just kind of went from there.[01:07:00]
[01:07:00] Jeremy Hudson: The hotel was not in the original plan. Um, we had been working on some other things and had some conversations about, um, uh, about hotel, uh, hotel opportunities and, um, really just started kind of playing with it and part of it was like, okay, well what's the highest and best use, um, for this site? And, um, how can we maximize, um, you know, how, how can we, how can we make the commercial successful?
[01:07:27] Jeremy Hudson: Um, what's needed in Fayetteville that didn't exist and felt like, um, you know, there hadn't been a new hotel built in Fayetteville in a long, long time, um, and felt like even though, you know, this was in some ways a bit of an odd spot, um, you know, to put it, um, that it could work. And so we just kind of started having some, again, collaborative.
[01:07:47] Jeremy Hudson: We brought in somebody that, um, you know, not from here, but has a lot of hotel experience and to kind of advise us and help us think and work through it. Um, and, um, you know, just kind of kept. Kept, [01:08:00] kept designing and, and scheming it until we found something that we thought works. Uh, and, and, um, moxie specifically, we, um, you know, we were looking for, we felt like, um, you know, we knew this wasn't going to be, you know, didn't feel like it needed to be, uh, you know, you sort of like high-end, you know, hotel.
[01:08:22] Jeremy Hudson: But we definitely wanted it to be, um, yeah, we wanted to be true to the site. True to Fayetteville and Moxie, we felt like it was a really good fit, not only for South Yard, but for Fayetteville generally. Um, it also just physically made a ton of sense because small format rooms, not a lot of public space.
[01:08:39] Jeremy Hudson: Mm-hmm. We knew that we wanted to figure out something cool to do with the ground floor.
[01:08:43] Cameron Clark: Yeah.
[01:08:43] Jeremy Hudson: Um, and you know, so it all just kind of made sense. There was no Marriott, there's no Marriott product in, in the core of Fayetteville. Um, and so, you know, all those stars just kind of aligned. Um, even though it was a little bit, a little bit difficult on the front end to convince Moxie to put a, I mean, convince [01:09:00] Marriott to put a, let us put a moxie in, in a old farmer's co-op in Arkansas, because at the time, pretty much everything was like, you know, New York.
Yeah.
[01:09:09] Jeremy Hudson: Like all down, like pure, like downtown core locations
[01:09:13] Nick Beyer: and talk about a project like this with so many different uses are, is the, the capital partners the same for all of that?
[01:09:21] Jeremy Hudson: Yeah.
[01:09:21] Nick Beyer: And, and is that common or uncommon? I mean, what's,
[01:09:24] Jeremy Hudson: um, I would in, in a, in a project like, I mean, I don't know that I have enough frame of reference to tell you whether it's common for other people or not.
[01:09:36] Jeremy Hudson: Sure. It's common for us. I mean, um, we, we looked at this from the beginning as, you know, one project, one. Uh, one Capital One Fund. Mm-hmm. Um, for a couple reasons, partially because this is an opportunity zone, so it made sense to raise a specific fund. Mm-hmm. And, and, and we did that for this project, uh, but also because we knew like, okay, these, all these [01:10:00] things work together.
[01:10:01] Jeremy Hudson: Um, they're going to be conflicts between them and we want the capital to be aligned to make everything successful.
[01:10:09] Nick Beyer: Mm-hmm.
[01:10:09] Jeremy Hudson: I don't want the, I don't, I don't want the, you know, retail or restaurant investor complaining about something or whatever. Um, while there's still a lot to manage there, no matter what, we want everybody to be aligned economically to make everything, you know, uh, function as, as well as it is, as it can and drive, drive success across all the different uses.
[01:10:35] Jeremy Hudson: And so that's the way we approached it. Each project is each phase or each project is independent. You know, it's. Uh, independent, you know, entities and independent debt, but same investment fund.
[01:10:48] Nick Beyer: Okay.
[01:10:49] Jeremy Hudson: That way, um, you know, yeah. Again, and then that way the interests are aligned to make the South Yard as a whole, as successful as possible, and not just trying to maximize one [01:11:00] independent, uh, piece of it.
[01:11:02] Nick Beyer: And talk about the food tenants that y'all recruited early on. I mean, how, how long was the courting process for that? I mean, there's some pretty big names that
[01:11:09] Jeremy Hudson: Yeah.
[01:11:09] Nick Beyer: Just kinda talk about that.
[01:11:11] Jeremy Hudson: Uh, kind of a mixed bag. I mean, some of, some of them, you know, we, you know, started targeting and recruiting, you know, way, way, way early on.
[01:11:22] Jeremy Hudson: Others came to us. Um, you know, others kind of came through relationship. Um, so I mean that no question, like that's, I don't know. I mean, the hotel piece is hard too, but I mean, uh. Food and beverage and, you know, this type of creative commercial is super hard, especially when, you know, we clearly spent a lot of money on this space.
[01:11:44] Jeremy Hudson: Yeah. Um, and so, uh, you know, you, we gotta, you know, nobody is gonna retire from the commercial investment here, but it's still gotta make sense. It's gotta make financial sense. Um, and so, uh, you know, it's, [01:12:00] we, you know, we're, it's, it's a higher price point, which requires, um, someone that can really generate the revenue mm-hmm.
[01:12:07] Jeremy Hudson: And really perform. And, um, you know, we're in a market where there's not a ton of, you know, deep f and b, you know, operational experience. And I think this, I think our market and, and Cameron, you know this better than I, but I think our market much like it has in other things, like there was a time period in, in multifamily where like people looked at us.
[01:12:28] Jeremy Hudson: Like, we were completely nuts that we thought we were gonna get a thousand dollars for a one bedroom apartment, you know? And now like the, you know, it's just ubiquitous, right? Yeah. I mean, it's just the assumption. And, and I think kind of the same thing is happening in food and beverage. Like, you can go to many peer markets and like 30, $40 a square foot.
[01:12:47] Jeremy Hudson: Like that's just normal. And it's not like people there are eating out more than are eating here. It's just, you know, either, it's either a shift in the market perception and reality and or more, you know, [01:13:00] operators that are able to drive more, more profit, uh, you know, bottom line profit. And so that's, that's been a huge challenge here.
[01:13:07] Jeremy Hudson: Um, no question. And, and you know, we've, we've already had, you know, uh, a, a casualty from a concept that. Um, you know, on the surface looked like it was going to be a complete slam dunk. Yeah. Mm-hmm.
[01:13:19] Nick Beyer: Um,
[01:13:20] Jeremy Hudson: and yet, you know, they were the first one out. Um, so lot, lots of, you know, lots of, lots of lessons and I'm sure we'll continue to learn lessons here.
[01:13:27] Jeremy Hudson: But I think that's just kind of part of, um, you know, part of this type of, of commercial, uh, and f and b in, uh, investment. And again, one of the things that's been a huge blessing for me is, uh, my. General interactions, general, general, um, experience with ULI groups, whether that be national ULI or, um, we've had really close relationship with a lot of folks in Oklahoma, particularly Oklahoma City, ULI, who have done a lot of this kind of stuff too.
[01:13:56] Jeremy Hudson: And so we've been able to, you know, relationships and [01:14:00] resources, um, you know, just to learn and how to, you know, make these things work. And the bottom line is, you know, anybody I think that's in this space that has this type of commercial creative f and b, like, you're, you're gonna be a partner with your tenant.
[01:14:15] Jeremy Hudson: You just are like, are you formally a partner or not? Doesn't matter. Like, you gotta work together. And, and, um, you know, we're still, you know, we, we certainly have a ways to go in doing that, but, um, that's the way we try to approach it, is it's not just like they're a tenant in some building that we don't have to think about.
[01:14:32] Jeremy Hudson: Like they're our, literally our neighbor here, of course. Mm-hmm. But also we think of'em as a partner because, you know, we, we need to help each other be successful.
[01:14:40] Nick Beyer: Why do you think that one didn't work?
[01:14:45] Jeremy Hudson: Um,
[01:14:47] Nick Beyer: because I'm the same as you. I mean, I, I remember going to, to Memphis. Yeah. That's one of the core places. Uh, yeah,
[01:14:54] Jeremy Hudson: I think mostly execution. Um, [01:15:00] mostly execution. I, I don't think that they executed well here locally. Um, uh, that's part of it. Um, I also think that they over, um, overestimated their brand reach and that, um, certain, you know, um, very well known name recognition in parts of the state for sure.
[01:15:23] Jeremy Hudson: But also, um, Fayetteville and a lot of the population in Fayetteville dunno anything about Memphis Barbecue. Um, and actually, you know. You know, places like rights that people just love. It's totally different style. Mm-hmm. And so I think it was partially style, but largely, well, partially style, largely, um, execution and, and I say execution everywhere from the space to the food, to the service.
[01:15:52] Jeremy Hudson: Um, and, um, you know, just it's, I think it's a, to some degree, it's kind of the classic example of like, [01:16:00] restaurant gets investment expands beyond its home territory and doesn't quite, doesn't quite work, right? Mm-hmm. And there's, you know, it's a combination of things
[01:16:09] Cameron Clark: well talk about. I, I want to, I want you to talk about Markham.
[01:16:11] Cameron Clark: Um, but I mean, I, I think it's important for people to know, like, I mean, y'all have, I mean, done things in downtown Rogers, downtown Bentonville, and all your fa I mean, you've, you've got a big reach kind of across the whole, the whole market. Um. Talk about what's going on in Mark Markham Hill, and then I wanna kind of shift into the future and kind of what Yeah.
[01:16:35] Cameron Clark: Maybe what's next?
[01:16:36] Jeremy Hudson: Yeah. I mean, so Markham, uh, you know, it's kind of one of these, it was total, you know, legacy project. I mean, never would've thought we would've bought 144 acres, you know, right next to the university. Um, it's, you know, it's gonna be a, you know, a long-term, you know, uh, labor of love up there.
[01:16:55] Jeremy Hudson: But the goal is, you know, we're to build the next great neighborhood in [01:17:00] Fayetteville. Mm-hmm. Um, and that's a combination of single family homes and that's it's town homes and it's cottages and it'll probably even some small scale apartments. Um, and then of course stone Breaker, the hospitality piece.
[01:17:12] Jeremy Hudson: And we, you know, we, in some ways, we kind of did things backwards and that's partially because of there was already assets there, physical assets there. But, um, you know, we kind of built the amenity, um, before the neighborhoods there. And, um. We're, we're learning lessons up there right now every day, you know?
[01:17:28] Jeremy Hudson: And so if you don't know what Stone Breaker is, please go. If you've already been and you didn't have a great experience, let me know and go back again. Um, but you know, we're, we're deep in the hospitality business there. I mean, we are the restaurateurs, right? I mean, we don't operate it. We have an operating company, but, but, but we are the owner.
[01:17:46] Jeremy Hudson: Um, and, um, but yeah, I mean, uh, the, the big picture there is all of the things that we have put into our projects over the years, um, from a values perspective, uh, and [01:18:00] again, the, the, the, the things that I talked about earlier, you know, a focus on place and, and the spaces between the buildings, a focus on health and, uh, and for us, like health is not, I mean, there's indoor air quality, but boy, it's, it's way more than that too.
[01:18:15] Jeremy Hudson: I mean, like. Steep building science stuff, um, that affects health. It affects long durability and longevity. It affects, um, you know, it affects, um, obviously energy efficiency and sustainability. And so, um, we've, we've, the, the vision there has always been, well, it's not only people that live in apartments that are gonna care about those things.
[01:18:37] Jeremy Hudson: And, you know, some of us are really lucky to get to live in historic neighborhoods that were built, you know, in a certain way. And the reality is, most of the neighborhoods today are not built that way. And there's very little sense of community, and many of the homes are not, um, you know, they're, they're built for cost, not built for, you know, for health or for wellness or for community.
[01:18:59] Jeremy Hudson: And so our vision [01:19:00] there is we're gonna do that. Mm-hmm. Uh, we're gonna build really high quality homes. And when I say home, again, I don't, I'm not boxing that into just a detached single family, although that will be the, the majority of it. Um, and we, we feel like there's a market for folks that. Um, care more about, um, you know, that quality of product than they do about necessarily just the square footage or how many garage bays you have or how big your lot is because up there, um, you know, you're, we're gonna be forever surrounded by a hundred acres of woods and mountain bike trails and there's a about a five acre, you know, park right in the middle of the, you know, on top of the hill in the neighborhood that'll always be there.
[01:19:37] Jeremy Hudson: And so, you know, giving what we think is kind of the best of both worlds of, um, you know, high quality physical home product, um, but access to nature, access to shared green space is obviously access to hospitality and restaurant and club, but also right next to the university and right next to downtown.
[01:19:59] Jeremy Hudson: Mm-hmm. Yeah. Um, [01:20:00] which is just such a, a rare thing, not only for northwest Arkansas, it's just kind of a very rare thing, period.
[01:20:05] Cameron Clark: Yeah.
[01:20:06] Jeremy Hudson: Um, and, um, we are, uh, we, we built a few homes there last year. Um, that are kind of what, uh, we call it phase one. It's really just some things that are on the way up to the top of the mountain.
[01:20:23] Jeremy Hudson: Uh, and just a few weeks ago we started, um, the first phase of homes and town homes that are on top of, on top of the hill. Mm-hmm. Um, so if you drive past Stormbreaker, you'll see some construction that's happening there. We've, so later this year we'll have town homes and some single family homes for sale up there for the first time.
[01:20:40] Jeremy Hudson: That's awesome. Super, super pumped about it. And we're, we're about to have a kind of brand launch where we're gonna, um, you know, a lot more information will be coming about that.
[01:20:48] Nick Beyer: Are those like specs or is there opportunity for custom homes or what's the,
[01:20:53] Jeremy Hudson: uh, there's some opportunity for custom homes. So a couple of ways I would answer that, like, yes.
[01:20:58] Jeremy Hudson: What's, what we're building right now is [01:21:00] specs. We do have some lots that we've set aside that we're calling custom lots, um, that we would sell. There's not very many of them. Mm-hmm. Um, but there are some that we would sell. And then of course, you know, there'd be a process of architectural review. Um, and then, um, the real end goal up there is that, you know, we're, we will have the opportunity to, you know, sit down with you, figure out what it is that you're looking for, and help, uh, you know, kind of semi customize a plan, um, um, that we can work with and then, and then build it for you.
[01:21:36] Cameron Clark: That's
[01:21:36] Jeremy Hudson: pretty cool. So, combination of spec and what we would call, you know, semi-custom or I, that's not the right way, but I mean, it's just like a lot of national, or not national, but a lot of, uh, you know, builders would do that are building neighborhoods is, um, you know, um, we'll have some core plans that can be customized.
[01:21:54] Cameron Clark: Mm-hmm.
[01:21:54] Jeremy Hudson: Um, you know, to some degree. Um, and so, um. We'll be able to do that over [01:22:00] time. But right now what's happening is, is some specs and then some op a few opportunities for custom home lots.
[01:22:05] Nick Beyer: And is this the first time in specialized history y'all are doing like homes, single family homes, or have y'all done some of that before?
[01:22:12] Nick Beyer: And this is, this isn't
[01:22:14] Jeremy Hudson: so way back in the, in the Mikasa days, we did some, uh, we did some home building and a lot of consulting with home builders on, on single family. This is, that's like, you know, apples and Kiwis, I don't know, like yeah. Very, very, very different. Yeah. Um, but yeah, so the last year we built, uh, we built those homes right there on Markham.
[01:22:38] Jeremy Hudson: Um, and, and so yeah, this is the first time that we're, uh, you know, that we're both the builder and the developer, um, on that project.
[01:22:44] Cameron Clark: Hmm. And, uh, I, I'm just thinking so the, for the future now, um, like where, where we're headed, um. What I mean are, are what, what's the, [01:23:00] what are the biggest headwinds first?
[01:23:01] Cameron Clark: What are the biggest challenges? Yeah. Um, for you, for specialized right now today. And I wanna talk about like what, what the, what the goal
[01:23:08] Jeremy Hudson: is. Sure. Um, I mean, headwind wise right now, um, you know, it is, this is a, even though Northwest Targets are generally is still a great market, um, it is a tough environment.
[01:23:19] Jeremy Hudson: Uh, you know, construction costs are still very high, uh, and they're not gonna go down. Um, interest rates are still high. They're not quite as high as they were last year, but they're still high.
[01:23:28] Cameron Clark: Mm-hmm.
[01:23:29] Jeremy Hudson: And I'm not sure if they're gonna go down anytime soon. Um, but yet on the demand side, you know, we're in a weaker market than we've seen in a really long time.
[01:23:37] Jeremy Hudson: Um, part of that is, is, um, part of that is, is due to kind of national trends. And part of that is due to, in some, in some cases, we've delivered probably more so on the multi than the single family. A lot of product. Um, and I say we, I don't mean us, I mean the market.
[01:23:56] Nick Beyer: Mm-hmm.
[01:23:57] Jeremy Hudson: Uh, particularly in Benton County.
[01:23:58] Jeremy Hudson: Um, and so, [01:24:00] I mean, uh, you don't see it near as much in Fayetteville, but if you go to Benton County and you're looking for an apartment for rent, you'll very quickly find out that you can get, you know, multiple months free of rent. Well, we haven't seen that in a long, long time.
[01:24:13] Nick Beyer: Hmm.
[01:24:14] Jeremy Hudson: And so we're in an interesting environment where interest isn't getting any cheaper.
[01:24:18] Jeremy Hudson: Construction isn't getting any cheaper, but yet rent growth is stagnant, or in some cases even negative in certain submarkets. Hmm. And so that's gonna be really tough to underwrite new deals. Um, so I think you're gonna see, um, it's already been happening for the last year or two, um, but I think we'll see continued, you know, um, fewer new starts, uh, particularly on the multifamily side in certain submarkets.
[01:24:43] Jeremy Hudson: Um, I. So, you know, um, even though, uh, the types of projects that we do and the places that we do them are different than the vast majority of that project, still the macro, um, you know, the, the macro [01:25:00] economics of, of rents and rent growth sure. Will affect our ability to underwrite. So that's, that's the hardest thing that we're dealing with right now is just, it's, uh, we're in a different market than we've seen in a long time when it comes to rent and rent growth.
[01:25:13] Jeremy Hudson: Uh, and there's some, there's some good to that, um, because there were some crazy rent growth. Yeah. But it makes, it makes projects more challenging, um, you know, to get going. Um, and I think we will continue to see, we haven't seen it like a lot of the country has seen it, but there are, you know, there are, um, I don't know if distress is the right, maybe a little bit too strong of a word, but there are definitely deals, um, you know, that are having to be repositioned, recapitalized.
[01:25:42] Jeremy Hudson: And so there's a lot of opportunity out there for capital other than just new construction.
[01:25:47] Nick Beyer: Mm.
[01:25:48] Jeremy Hudson: Um, that, you know, may have more opportunity and or less risk. And so I think you'll see that that's gonna make the multifamily and kinda larger scale projects a little bit harder. Um, sure. You know, over the coming years [01:26:00]
[01:26:00] Cameron Clark: and, uh, for the coming years, like, do you, do you have a focus like geographically for where y'all are trying to be predominantly?
[01:26:08] Jeremy Hudson: Yeah. I mean, yeah. I mean, pretty much we're, we're gonna be focused in our four major downtowns. I mean, um, the, the way I think about it is we either want to be, uh, or not one, we we're either going to be building where there's already a meaningful place or we're gonna be building at the scale that we can create a meaningful place.
[01:26:26] Jeremy Hudson: Mm-hmm. And so, um, or the way that we talk about it is like, um, you know, we want, we want to, let's see, um, you know, uh, how do I say that? It's been a minute since I've said it, you know? Um. I can't think of the, the way I talk about the neighborhoods. But, um, yeah, I mean that, that's, that's kind of our mo is like, we wanna be building in a great neighborhood or we're gonna be creating a great neighborhood.
[01:26:51] Jeremy Hudson: Um, creating a great neighborhood is actually, I mean, that's a whole different scale. It's a whole different, you know, um, set of risks and, and, [01:27:00] and, you know, timeframes and, um, but, um, pretty much I think everything you'll see that we're working on is either gonna be in one of our existing downtowns or it's gonna be in, in a, in a project the scale of Markham or the scale of Drake farms where we're creating a new neighborhood.
[01:27:19] Jeremy Hudson: Yeah. Um, and, you know, things to do besides just a place to live.
[01:27:23] Cameron Clark: And talk about like what, what, I mean obviously Drake, Drake is coming. Maybe, maybe that's the one that one talk about, but maybe something that people don't know that's coming, coming online and or, and then yeah, maybe fill in some details on what's going on with Drake.
[01:27:36] Jeremy Hudson: I mean, uh, Drake's definitely the main thing I would, I would be thinking about and talking about. I mean, um, we haven't really gone public with that project either. That will be happening soon. Um, but I mean, we will have apartments for rent and Drake and people by the end of the summer will be living there, which, you know, that kind of snuck up on us, you know, I mean, we've been working on that project for a long time.
[01:27:59] Jeremy Hudson: [01:28:00] But, um, you know, uh, the first phase is fully under construction and if you drive up Greg, you can, you can't miss it. Um, and, uh, that is, uh, you know, kind of, I shouldn't say classic, but a good example of, of, you know, the types of things that we'll gonna be working on, where we have apartment construction, we have town home construction, um, all, you know, in a really strategic location, both, you know, Trailside, um, but also next to the second largest employer and, you know, right next to the second largest employer in the, in the county.
[01:28:32] Jeremy Hudson: And you know, just north of, or yeah, just north of the university, which of course is the first, first largest. So located really close to jobs. Located, easily accessible to I 49. Crazy easy, accessible to I 49. Um, but yet, you know, still in the heart, you know, right at, at the, what we're gonna call the, I think the front porch of Fayetteville, um, you know, super visible.
[01:28:55] Jeremy Hudson: Um, and we're building about 22,000 square feet of restaurant [01:29:00] and, and creative, creative office there. Um, that'll be opening as well. Our, it'll be finished construction, uh, around the end of the year and some fun things coming there. Um, and that project's just gonna, you know, knock on wood, hopefully it's just gonna keep going.
[01:29:14] Jeremy Hudson: Yeah. We're, we're already starting the second phase of infrastructure. Um, and you know, there there's going to be, um, all different types of housing. There'll be obviously a lot of apartments, um, town homes, um, but also single family. Mm-hmm. And some cottage, uh, office space, medical office space, and uh, also, you know, retail and commercial space.
[01:29:37] Jeremy Hudson: That's a, you know, that's a, the way I talk about that project, it'll take more than one decade and hopefully less than two.
[01:29:46] Cameron Clark: What a long-term outlook. That's amazing. That's
[01:29:48] Jeremy Hudson: awesome.
[01:29:48] Cameron Clark: Um, people need to hear that.
[01:29:50] Jeremy Hudson: Yeah.
[01:29:50] Cameron Clark: Um, well do you, I was gonna just kinda start wrapping up. Was there anything, uh, so I mean, this, this conversation's been great.
[01:29:56] Cameron Clark: The, in, in wrapping up here, there's a couple [01:30:00] questions we ask every guests at the end.
[01:30:01] Jeremy Hudson: Mm-hmm.
[01:30:01] Cameron Clark: And I think more in particular, you know, we ask why build a business in northwest Arkansas, but why keep developing in northwest Arkansas?
[01:30:10] Jeremy Hudson: Yeah.
[01:30:10] Cameron Clark: Why the, just strategic focus on the four main downtowns here.
[01:30:14] Jeremy Hudson: Yeah.
[01:30:15] Cameron Clark: Why?
[01:30:17] Jeremy Hudson: Yeah. Um, well try to, to not be redundant. Hopefully. I mean, why? I mean, there's a few answers. I mean. Northwest Arkansas is a really great place, um, you know, to, to build business or to build real estate. Um, you know, we, we have some economic advantages, um, obviously with, with the combination of, of the job growth and the quality of life.
[01:30:42] Jeremy Hudson: Uh, and certainly, you know, major anchors, uh, including the University of Arkansas. Um, and, you know, there's, it's, for me, it's the combination of, um, really great people, um, really great economic situation, you know, better than most.
[01:30:58] Nick Beyer: Mm-hmm.
[01:30:58] Jeremy Hudson: Um, you know, [01:31:00] economic, you know, opportunity. But then also it's my home, right?
[01:31:03] Jeremy Hudson: I mean, I live here and so I'm getting to, to invest and build and curate, um, you know, the places that, that I'm gonna call home. And hopefully the places that, you know, friends and family are gonna call home. And so. Um, I know that there will be a time where we also, you know, work other places with other people that think like we do about where they live.
[01:31:25] Cameron Clark: Mm-hmm.
[01:31:25] Jeremy Hudson: Um, but, uh, you know, there's just, there's, you know, uh, there sometimes there's challenges when you're working in your own home and some people don't, um, always agree that, that what you're doing is good work, but for the most part, part it's really, it's really satisfying to get, to make your own community better.
[01:31:41] Cameron Clark: Hmm, man. And how do you define success?
[01:31:47] Jeremy Hudson: Yeah. Um, so success to me, I mean, there's a lot of layers to that I think, but, um, uh, early in my career I started reading Jim Collins and [01:32:00] he has this thing called a hedgehog concept, which has been, you know, talked about and adapted different ways. And, um, my version of that, or I shouldn't say my version of that, the version of that that I, you know, that I use is.
[01:32:14] Jeremy Hudson: Um, I like, like success to me is where the intersection of where my talents lie and where, uh, my passions are, the things that I enjoy doing. Uh, and then where value can be created. Um, and that obviously can be economic value to, you know, um, for some people. And, and that is a, certainly a factor for us, but it's also more than just economic value.
[01:32:38] Jeremy Hudson: I think it's where, you know, um, you know, that could apply to nonprofit work. Uh, um, but at the end of the day, I think about that as if I'm serving and if I'm, if I'm taking my talents, I'm taking things that I enjoy doing, and then I'm serving my community, uh, in a way that is creating value, whatever that means.
[01:32:59] Jeremy Hudson: Hopefully. [01:33:00] Usually that also comes with economic value. Like, if I can get those three things to intersect, like, I think that's success. Um, and, uh, you know, that should be fulfilling and it should be. You know, fairly resilient. Um, and, and, uh, you know, and a benefit. Yeah.
[01:33:19] Nick Beyer: That's awesome. Well, one of the things we do at the end of every episode is we kind of highlight the three main things that Cameron and I learn from you today.
[01:33:26] Nick Beyer: And as people listen to this, if they're growing a business, if they're working inside of a business, if they're trying to start a business, um, some of the things we think they'll learn too. And I think the, the clearest word that I would take as a summary from our time with you is purposeful.
[01:33:40] Cameron Clark: Mm-hmm.
[01:33:41] Nick Beyer: And I think you, you captured it really well.
[01:33:43] Nick Beyer: You just said it's really satisfying to make your community better. Mm-hmm. And that, that seems to be the purpose, you know, a view as a, as a co-founder and then of specialize. That's what y'all are trying to do. And, uh, I think just each place that I've been to, I haven't been to all your projects, but each place that I have been [01:34:00] to.
[01:34:00] Nick Beyer: Um, each project, even seeing the tenant selection in some of these, it's, it's very purposeful and, um, I think, I think every developer wants to say that. I think it's a lot harder to deliver on that Yeah. Than it is to say that. And so I think a lot of people can, can learn that, um, from, from our time with you.
[01:34:17] Nick Beyer: And then I think the next one would, would be vision and, uh, just having a vision for, um, what you want for even people who live at your properties. And you talked a lot about the health stuff in the very beginning and kind of weaved it in throughout the, the episode. But, um, there's just a clear vision to what you're trying to accomplish at each project.
[01:34:36] Nick Beyer: And I think it's, you know, you, you come here and we're, we're walking up and you can just see that there was a vision when you see the sign for South Yard even coming off the road, like there was a lot of vision that went into that. Mm-hmm. Um, and just hearing you talk about, we both grew up here passing that co-op, it kind of looked abandoned and just gone for a while.
[01:34:55] Nick Beyer: And, uh, it takes a lot of vision to take something like that. [01:35:00] Turn it into what, what we're sitting at now. So really, really cool. And then I think the last piece is this word community. And I think, again, it's probably something every developer aspires to, but mm-hmm. You look at some of the, the projects, I mean, Markham Hill, like hearing you talk through that, going up there.
[01:35:18] Nick Beyer: I mean, there's just a sense of community there and it's just getting started. Mm-hmm. And so, um, yeah, I think those are some of the words that would, would really capture our time together. And we're thankful to learn from you and thanks for spending some time with us this afternoon. You bet. Thank you. So
[01:35:32] Cameron Clark: thanks
[01:35:32] Jeremy Hudson: man.
[01:35:33] Jeremy Hudson: Thanks.
[01:35:33] Cameron Clark: Yeah. Thank you for listening to this episode of NWA Founders, where we sit down with founders, owners and builders driving growth here in northwest Arkansas. For recommendations are to connect with us, reach out at nwa, founders@gmail.com. Lastly, if you enjoyed this episode, then please consider leaving a rating, a review, and sending it to someone who you think would benefit from it.
[01:35:54] Cameron Clark: We'll see you in the next [01:36:00] episode.