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By John Millett ’21
Edited and condensed from an interview conducted on Tuesday, May 19, 2020.
Steven Shores ’00 is the President and CEO of RangeWater Real Estate, which he cofounded with Marc Pollack in 2006. RangeWater is a multifamily developer and property manager operating in the Sunbelt. Since its founding, RangeWater has acquired and/or developed more than 27,000 units across nine states representing $4.7B in cost. The firm currently has 22 projects representing 6,500 units under development as well as a property management portfolio spanning 43,000 units. Prior to founding RangeWater, Steven worked at Hines as the Manager of its Denver office and head of Acquisitions for the Southwestern US. While at Hines, he completed more than $700 million of developments and acquisitions. Steven holds an MBA from Columbia Business School and a BA from Davidson College.
Can you tell us more about your background? Did you always want to build a career in real estate?
I always wanted to be in real estate, but when I graduated from college, the real estate market was not so great. I needed to make some money, and I wanted to get more finance experience and so I went to work for Andersen Consulting initially. I worked there for four years, primarily focused on mergers and acquisitions where I tried to be involved with real estate as much as possible. I also got my real estate license and did other things on the side. After a few years, however, I felt like it was time to make the career transition, which is why I went to Columbia.
You graduated from CBS in 2000 and were running Hines’ Denver office within a couple of years. Could you talk about what drew you to Hines and what contributed to your success there?
When I graduated, I really wanted to work in development. As you probably know, there are a few development firms with excellent training programs, and Hines was one of them. I looked at private equity and principal investment groups, and even real estate banking, but that was more of a hedge against not getting a development job, and so when I was given an opportunity at Hines, it was an easy decision to join the team.
Originally, I was assigned to Hines’ Aspen resort development office, which was an area of the business that I was really interested in. Luckily for me in the long run, because I like where I have ended up, that did not pan out. The project fell through, and they offered to send me down to Denver. That’s the advantage of joining a big organization like Hines. They have a lot going on and multiple places to go.
As in most things in life, my success was the intersection of good preparation, opportunity, and luck. Andersen really prepared me well to work and manage opportunities and people of different generations. Those abilities coupled with my Columbia experience and the strong finance skills I developed during my MBA were noticed by the Hines executives. About two years after I moved to Denver, the guy who I worked for moved to a different part of the business and they turned over that office over to me.
What prompted you to start your own firm?
There were a couple of things there. One is that I just became more and more interested in the residential side of the business versus the office side. There was also an entrepreneurial itch that I think if I had never scratched, I would have always regretted it. I also had the confidence in myself to be able to do it.
So I moved back to Atlanta, which is where I had grown up, to join a local development firm as a partner. It became clear pretty quickly that the partnership was not going to work out as I imagined because our goals were different, and so I started to put together my own business plan about what I really wanted to do. Then I met Marc Pollack, who shared a similar view, and we had pretty complimentary skills, which is why we paired up and founded Pollack Shores in 2006.
Could you talk about your partnership with Marc Pollack and what each of you brought to the firm?
Marc was a longtime multifamily guy. He is twenty years my senior. He had done a lot of apartment projects, and he had pretty much financed his business through private capital syndication or small investors. Marc had done a few institutional things, but he was very much a deal junkie. I brought more of what I would call an institutional pedigree, relationships with institutions, and a structure and process for growing an organization and deploying large sums of capital.
We paired together well because I helped organize, structure, capitalize and run the business while getting deals done, while he more did deals and capitalized the business secondarily. We both did everything, but I would spend 30% of my time on deals and 70% on the other items and vice versa. It was a great partnership. We taught each other a lot during our years together.
During your virtual talk with the REA, you highlighted the importance of quality institutional partners to RangeWater’s growth. Could you talk about how you approached those relationships and what you and Marc focused on when building them?
One of things that I brought to the partnership was a way of looking at projects and structuring them to deploy repetitive large sums of capital. The institutional world is not one that really likes to do one-off deals. They like to see a structure where they can put out a lot of capital and not have to reinvent the wheel with a new deal and a new joint venture every time. So we started with some good frameworks with our investors and we just continued project after project after project.
We also made significant investments in back office and support to present and report on things in an institutional manner at the beginning. Multifamily was less institutional and less of a tracked asset class when we started the business, and probably a lot of other startups did not invest as much money in that infrastructure, but we felt like our aspirations would demand it and the investors that we were going to target would demand that level of reporting and quality control.
I think I said this when I was talking to the REA, but Marc and I also both spent a lot of time picking our partners carefully. By that I mean, we would find people whom we liked to work with and who liked to work with us, and we would do a lot of repeat business with them which is important.
Tying into the reporting and quality control, could you talk about how technology has changed how you do business?
Technology has definitely changed how we do business. For everything we do, we are constantly evolving and adapting to the latest technologies, whether its research or AI or new tools for underwriting and evaluating opportunities.
And on the proptech side there is a whole world of things at the property level that are technology driven from utility optimization and how we process service and maintenance requests to resident experience enhancements.
COVID-19 seems likely to have a far-reaching impact on how people live. Could you talk about how it has impacted the properties you manage as well as how you might design projects going forward?
We are still very much right in the middle of it. Our team is having to figure out how to lease and manage properties where people can’t just walk into our office and tour a unit. Trying to figure out how people move in and out of apartments is difficult. We also manage communities in 14 different states. All the rules and regulations are different depending on state and jurisdiction, and trying to train our people on what they are allowed and not allowed to do has been difficult. But that is not going to be forever.
I do think that some things are going to change permanently post COVID-19. The response to leasing online and the use of our technology tools has been positive. What that does both operationally and going forward on how we design and interact with our customers will be interesting and I think there will be some changes there.
Remote work has really impacted not only how our communities operate, but really how we think about design going forward. We never designed a 300-unit apartment community with the thought that nobody would ever leave—that they would live there and work there the entire time. I don’t think that the world is going to end up at that extreme, but even if you say that people are going to be working from home more often or more days per week, the locations we pick to develop will be less dependent on people commuting into the central business district every day, which can drive us to better quality of life locations.
From a community design standpoint, I think we will have more shared spaces that are smaller and could allow somebody to host a small meeting. We used to have business centers ten or fifteen years ago where people would come and use one of our computers. Those fell by the wayside, but I think they may come back in the form of shared conference space or teleconferencing equipment that would allow tenants to host something or jump on a presentation where you video or teleconference it around the world. We need to design our communities to be able to have that capability and for our residents to be able to use it as well as potentially to provide the support that someone may need in a remote work environment whether its copiers and printers or some kind of package delivery or mailing.
I think the other impact to this is on our retail. A lot of the properties that we build are mixed-use and have retail in the base, and the financial structure of the retail leases is going to be different going forward. Even the credit tenants that you thought were credit are nowadays some of the ones that are not paying their rents.
Our desire to create a sense of community everywhere we live and to have it be authentic means we do not like building cookie-cutter developments. We like each of them to have their own personality, and a lot of times that may mean that we are underwriting and investing in, and really being the capital provider for, these entrepreneurs who are going to be coming in and opening their restaurant or their coffee shop or their bakery. We have not really done that in the past, but I believe that is going to be important to do going forward.
Keying in on your comment about community, it was a consistent theme during your session with the REA. Could you elaborate on how you have approached creating it across your projects?
We put a lot of thought into what I would call the thesis or brand of each of our communities and how people want to live their lives there. It starts from the very beginning with how we design it and how we brand it and extends to how we staff it and program it and how we run things.
Giving each community a different name allows us to position each project authentically within its local community and to develop a unique identity, and you can really see this highlighted online even before visiting the community itself. The people who end up living there and being our residents and the people on our team who work there all evoke that personality and live it daily. We are very active in creating that sense of community which we think leads to more satisfied tenants, higher retention rates and so on.
Creating community is also everybody’s responsibility, whether you are a property manager, a maintenance technician, an analyst underwriting deals, an interior design consultant or a construction manager. People can choose to live anywhere and pick any four walls to live between. It is what happens outside those walls that make it special and we really charge everyone that comes in contact with the asset at any time with thinking about that.
Earlier this year, Pollack Shores and Matrix Residential rebranded as RangeWater. What was the impetus for the merger? Does this reflect tighter operational integration going forward?
Marc and I always owned both companies. We had one as our investment/development arm and one as our property-management arm, and we decided to rebrand and bring those together. We chose a totally new name as Marc was retiring and I was taking over ownership to create a fresh start as one company with a unified mission: to create fulfilling experiences.
I think the rebranding has been great. It has been reinvigorating for our team and for our story in the marketplace. We have evolved so much since we began as a two-man startup. The rebranding and integration of all sides of our business model has also set the stage for growing a company that becomes evergreen and also created a structure that has multiple owners and ownership opportunities for employees working here.
As RangeWater approaches its 15th anniversary, where do you see the firm going in the next 15 years?
Continued growth and expansion and continued creative evolution of the business we are in. We are not going to change our core business, which I would call multifamily community creation. This year we hit number ten on the NMHC ranking of top developers and number 35 for top property management firms, and our goal would be to grow the business to be in the top five on those lists.
We are active in the Sunbelt now, and I see us expanding a little bit further into growth markets. I do not necessarily see us growing into California or into the northeast, though I’ve learned to never say never. I could see us pushing up into the Mid-Atlantic and the Rocky Mountain West and further northwest.
What advice would you give to CBS students pursuing a career in real estate?
My advice would be if you are looking for a job or looking to start your own business, it is important to be at a place that invests in you and wants to see you grow and succeed. And if you are going to start a business, partner with somebody who shares your common view of the world and shares your values. It is not worth going somewhere to work for someone who does not have a vested interest in your success.
John Millett ’21 is the Co-VP for Trips of the Real Estate Association. Prior to attending Columbia Business School, John spent four years working at Kynikos Associates, an equities hedge fund, as a Research Analyst covering the TMT and Consumer sectors. He graduated from the University of North Carolina at Chapel Hill with degrees in Business and History. He is interning this summer at Drake Real Estate Partners.