#369 - Craig Hall - Founder & Chairman @ Hall Group

Chris Powers: Craig, thanks for joining me today. 

Craig Hall: My pleasure. 

Chris Powers: I thought a good place to start would be at one point in your career, you owned 72,000 apartments, and we just got done talking about you just built a project last year that got you kind of back into the apartment business. How did you get to 72,000 apartments? And then what was kind of the thinking to pivot away from those? 

Craig Hall: Well, I started in 1968 with a rooming house. And from there to three apartment buildings and from there to 72,000 apartments. I mean, not quite overnight, but over about 18 years or over, let's see, yeah, about 18 years to the high point. I'm sorry, that's not right. The high point was really the mid-80s, so more than that. Just added every year, and from the second building on, I had partners. In the mid-1980s, owning a lot of apartments was not a good idea. I wish I'd known that in the early 1980s or the late 1970s, but things changed. And when we came out of the 1980s, the early 1990s, I was ready to start a new chapter with rather big changes because I was just tired and had enough difficult challenging years. From 1986 to 1992-93, we and many others like us were in the survival business. And I'm glad to say we're still here. And you can look back and say woulda, coulda, shoulda, and maybe I should have kept our operations, certainly apartments are a great thing to be in today, although they have their momentary negatives, but at the longer run, it's a great area. But we chose to go in other directions. 

Chris Powers: Was there anything leading up to the 80s that in hindsight maybe was a hint that something like that was going to happen, or was everybody pretty much caught off guard? 

Craig Hall: Well, let's say hindsight's a lot easier than when you're in the middle of something. And there was a bit of, in hindsight, we were building too much of everything, not just apartments but office buildings, and there were a lot of buildings that weren't needed. Partly because of the tax laws, people’s sense of economics was not driven by supply and demand of the real estate asset, but it was driven by supply and demand of capital. And capital was abundant because of tax laws and just the general environment. In hindsight, you could look at demographics, you could look at things, and I like to think that I learned a lot from those times, but I don't know too many people, I can't think of anyone who sort of said, oh, I think the market's about to collapse, I'm going to sell out. Or after the fact said, gee, I sold out because. I don't remember anyone saying that. 

Chris Powers: Yeah. You said at lunch, you said the 80s or the Great Financial Crisis was like nothing close to what you experienced in the 80s. And then you just said there was like this seven year window of survival. And as today in the real estate industry, the last two and a half years haven't been the most fun years in the industry, but I wouldn't compare them to the Great Financial Crisis and certainly not to the 80s. 

Craig Hall: That's correct. 

Chris Powers: I mean, seven years of surviving, what are you doing every day for seven years? Like what do those years actually look like? 

Craig Hall: Well, long days, seven days in a week, and working with lenders who want to foreclose and cut your heart out, investors who you're telling the truth to, and by and large, really supportive. I had a great experience in humanity. People were very, very supportive and good. Lenders, not so much. Some were nicer than others. But it was day-to-day combat for a long time and great character building. 

Chris Powers: Is there anything structurally about today's world and everything we've learned over these cycles that you see that would make it hard for a 1980s type event to happen again just because of how the government and lenders will deal with things different than how they used to? 

Craig Hall: Absolutely. It's a very different time. One of the dominant lending sources of the time was savings and loans. They don't even exist anymore. In general, and there were good points to this, but in general, the whole idea of having a banker that you shake hands and you make a deal, those days are gone too. We're a different society in terms of how business is done. And some of that's unfortunate, but most of it's good. Most of it's important. Deals are much more carefully thought through in terms of the economics. It's been that way now for a number of years. I think it's a better world overall. 

Chris Powers: You're a lender in today's world. There's folks right now that, again, the last two and a half years haven't been great. You might have already said the answer, but if you're in a tough spot right now with a lender, what do you do? 

Craig Hall: Well, first of all, I've always believed that honesty and dealing with problems directly is the best policy. As a lender, we look for borrowers to add value. And you can add value by hopefully putting some capital back in and clearly you can add value by managing the property and managing it well. And our goal as a lender, we're a private lender, we don't look to take an asset back. We've gotten some… these days, it used to be that people file bankruptcy and stuff. Today, the way the loans are worked and the way the paperwork is today, most people just hand you the keys. And sometimes we say, gee, you know what, we really don't want the keys. We don't have that kind of thing happen too often. So, the last two and a half years have been difficult, but as you were implying, nowhere near as difficult as the Great Financial Crisis in 2007, ’08, ’09. And that was nothing compared to the 1980s. The 1980s for real estate, not for everything, but for real estate was a depression, I think based on my reading of history, arguably worse than the 30s. It was a really, really horrible, tough time. 

Chris Powers: And that was basically, the tipping point for that was the tax law changed. Wasn't it a tax law change? What was the tipping point? 

Craig Hall: The tipping point was- that was just insult on injury. That came after the problem had started. So the problem was simply way, way, way too much supply compared to demand. And there were buildings, for instance, in Dallas on the tollway that they called see-through buildings because they never had any tenants for years and years and years. You could just see right through them. But in 1986, at the end of the year, as sort of insult on injury, Congress abruptly changed the tax laws in a way that was very adverse to real estate. But that was sort of after the fact and we were in a crisis before that. 

Chris Powers: Okay, so going back, 80s end, you decide to basically divest of the apartment business. Did you already have a plan for what was next, or did you just kind of think I'm going to get out of apartments and figure out what's next? 

Craig Hall: Well, first of all, let me say, I've had partners in every one of those properties, and I felt like- I think in hindsight, maybe I shouldn't have felt that way. The partners were very supportive, but I felt like I didn't want that responsibility again. So I just wasn't- and maybe I was also tired of apartments. But so, I just decided over time, not like in one year, it took many, many years to sell that many apartment buildings that we had left. Then I just opportunistically looked for other areas of real estate, and I've also done a lot of non-real estate things. Like in the Great Financial Crisis time, I owned a large software business, and I knew we were going to need liquidity, so I got my software business up and ready to sell, and I sold it in 2008 and that got a good hunk of cash to… And today, I always have lots of cash. I just think cash is an important thing for anybody in real estate. 

Chris Powers: You don't really- the inflation going up doesn't bother you? Holding cash against an inflationary environment doesn't bother you? 

Craig Hall: No, no. I think having cash among other things is just a really good idea. 

Chris Powers: What was that software business? 

Craig Hall: We sold the main part of the business to Oracle. We were the largest document software company for insurance companies in the United States. 

Chris Powers: Did you start it or did you buy it? 

Craig Hall: No, actually I had a small software company that I bought, and a really smart young man, Patrick Grant, ran it, a great guy, great friend to this day. And Patrick owned part of it and we owned most of it. And one day, I told Patrick, we need to either buy another company or sell because we're just not going anywhere. And he made a list of companies, and one of them was a public company. Turns out I knew the chairman and he's a great guy, and I called and it turned out that it worked out for everybody. So we took that, we made an offer, bought that company, took it private, and then we bought 12 or 13 more companies, molded them all together, and grew it. And when I saw the need for some money, we decided to sell it. 

Chris Powers: Okay, we're going to go back again though. I asked you at lunch, I said, who are your partners today? And you said, I made a decision, and you just said it again, that you kind of wanted to grow out of your own cash and be your own partner. How did you come to that decision? Because I think a lot of people listening, like that's the dream in some ways. 

Craig Hall: Well, we have investors who loan money to us, but we didn't want to have anything where somebody thought they're going to get an IRR of X and we couldn't deliver. And I don't want people to invest in things they don't understand. Ironically, today we're doing a little bit of what we did years ago, mostly because we have a group of people through the wine business that, in 2009, we have a wine club, and in 2009, we raised some money through the wine club people. And then a handful of years later, I went to say, I want to buy everybody out. And I thought they were going to lynch me. They were so mad. We have a partners meeting every year, and it's like a great time to see five or six hundred people that I don't see every day every year. And they're wonderful people. And so anyway, so from that, we do little bits and pieces. But I don't have any partners in the normal sense, and I don't have anything I'm worried about, somebody else is counting on me on. Anybody who's counting on me, I know when they're getting a specific number, and I got it covered. 

Chris Powers: Okay, going back, can you describe what Frisco was like and maybe paint a picture what the city looked like and what your vision for it was the time that you bought your first piece of land up there? 

Craig Hall: We bought, actually, and this kind of conflicts a little bit with what I was describing in the 1980s, but we did very little in the 1980s on offense. We were mostly on defense. But you’d have to know me, my personality is I can’t be 100% on defense. So we did buy five or six parcels of land as land investments in Frisco. And we sold all of them but one which is where we have Hall Park today. And we bought that in 1989 and didn't build anything on it until 1997. And even when we built the first building, there was just a dirt road with potholes. You either had to have a four-wheel drive vehicle or a helicopter to get to our property. And we built a 100,000 square foot four-story office building, had this great grand opening, four or five people came, we had a bowl full of shrimp, and that was that. And six months later, it was full, and a few million square feet later, now we've got about three million square feet. 

Chris Powers: But were people like, you're crazy, you're literally building an office building in the middle of a goat pasture? 

Craig Hall: Oh, absolutely, absolutely. And they were right. And I've been crazy before, but it's okay. Yes, I know a lot of people, both behind my back and to my face, said you were crazy. Yes, that's true. 

Chris Powers: Okay. But you have Dallas, you have probably 200 sites where you could have built an office building and you were… Give me the timeline of Frisco. So like when did Frisco start happening? Was it happening in the 80s? 

Craig Hall: Well, it depends on how you define happening. They had, when I came there, they had 5,600 people as residents. And today, it's like 235,000. So a lot happened in that time. Look, I say that I got lucky, and I think luck is part of being born an American and living in this country. But I was lucky in Frisco as well. I'd like to tell you I'm that smart, but I'm not. 

Chris Powers: And you said, okay, we're going to build this building, and it's going to be overflow for some corporate users that want a quicker commute to work. Like, what was the thesis in the 80s? Obviously, you could take the 50-year view of this is going to be the next great city of America, but at the time, what was the demand? 

Craig Hall: It was pretty similar to what you're saying in the sense that it was local businesses that were by necessity not able to have an office near to where they lived or wanted to be. And it wasn't that big of a building. It's not like we built millions of square feet at once. Over time, what happened, and kind of coincidentally, I saw the city manager, the former city manager yesterday at a lunch in George Purifoy. And he and I were debating. He came I guess a little after I did, but over time, he was there for 35 plus years. And Wes Pierson is the current city manager. They're both terrific individuals. The mayors and the city council members, those folks have made that city. And I've just been lucky to be a part of it, the overall network there, but it's just been an incredible experience. Coming from a person who has, I've worked in a lot of cities in all of the United States. Our wine business, of course, is headquartered in California. You don't get lucky like this all the time, but Frisco is just a great, great place. 

Chris Powers: Is there something that, besides location, which was important, is there something you saw that they did that you wish would be a blueprint for other folks to do, assuming a location similar? 

Craig Hall: Yeah, they work positively with businesses. And if anything, selfishly, I could fault that they're doing too many things and there's going to be a ton of competition there, but that's life. But it's not like I'm the only one that they're working with. They're working with a ton of… they brought the PGA in, they have the Cowboys. They believe in the quality of their schools. They believe in getting a tax base that can help pay for a good environment for their citizens. And this weekend coming up, we're opening a park that I built. I donated the land to the city. The city has a non-profit that's going to run it, similar to Klyde Warren Park in downtown Dallas, which Jody and Sheila Grant, close friends of mine, did and I asked them to help me, and they did. I feel like giving back to the city of Frisco is just a privilege. 

Chris Powers: It's a big park. From a real estate perspective, what does it do for, it's obviously a great gift to the city, but from a real estate person's view, what does that do for Hall Park? 

Craig Hall: Well, I think Hall Park, like anything today, let me back up, in 2016-17, I began to think that office parks were going to go by way of malls, meaning that they were going to become troubled and passe in most cases. And so I decided I needed to either sell or to reimagine our overall. We gave some money to the toll way. We had call it 162 acres. And I hired a lot of smart consultants and other folks. By 2020, we had plans to redo the property to become a mixed-use property with a lot of great amenities for anyone who worked or we were going to build housing, anyone who lived there. Then, of course, the pandemic hit. Literally, I had two buildings that I had emptied out with the idea that I was going to tear them down. One was only 12 years old, and one was 14 years old. And in the spring of 2020, I decided to go ahead and tear those down, but not start the new building because I didn't know if the world was going to end or if this was it. Just, I don't know how you felt during the pandemic, but I certainly didn't have visibility for my next business deal. So ultimately, I joked to myself and people at the company here that we ended up paying for three sets of plans. I got real conservative and I downscaled everything, and then I finally went to a middle scale, and that's actually what we're completing right now, which we just completed a 19 story luxury high-rise apartments. We're completing a new 400,000 square foot office building, a bunch of retail, the park, and then a hotel and 60 beautiful suites. And believe it or not, that's the medium version. The bigger version before the pandemic was even bigger than that. But anyway, we'll see. How's the park going to effect? I think it's all about all amenities. It's about parks, it's about restaurants, it's about conference space the hotel provides. And so if you're an office tenant, you want to be wherever you can recruit and retain employees. And that's really what we're trying to do is help our overall symbiotic relationship between all the various parts of the mixed-use community. 

Chris Powers: Was it a difficult decision to be able to tear down two buildings that weren't even 15 years old or was that a no-brainer? 

Craig Hall: I would guess it should be difficult. It seemed like the thing to do. I don't know. I've always sort of marched to my own drum. But yeah, that wasn't that hard. 

Chris Powers: Was that just to get land back that you needed to do all this density?

Craig Hall: Exactly. Yeah… The lenders didn't think it was too funny. No, we had to pay off the loan. It's also, in 2020, sort of a gutty thing to do. 

Chris Powers: It was super gutty. What was the point in going back in your recollection that you kind of had a- the coast was clear, like you could get back to making more long term decisions? Was there an inflection? 

Craig Hall: Has that changed? It's clear now? 

Chris Powers: It's clearer because I'll tell you, I'm with you. Those first few weeks and months were, if you got to see me during that period, probably the worst of my career. 

Craig Hall: No, look, I think we're still, as a country, understanding the ramifications of the pandemic and what we did to get through the pandemic, how it's affected money supply, how it's affected inflation, interest rates, work from home, all those things. Some of the things that I thought might happen have happened much faster on steroids and technology adoption. So, we've lived through interesting times, and we still are. 

Chris Powers: Okay. Is there anything that you think about because of the transformation that we've had that maybe you're a little further in your thinking than the average person? Like is there anything that interests you about the way the world's shaping up right now that may not be obvious to other people? Like do you have a bet? 

Craig Hall: Well, I have a bet which is that I'm willing to loan more than most people on apartments for new construction right now because my bet is that in 2026 and ’27, we're going to have a shortage of apartments. Today we're overbuilt in a number of markets, and many people invested in apartments are disappointed now because rates went up that they didn't expect, interest rates, and so the construction loan went crazy on them, and property insurance went up, and property taxes in some areas is up, and then they have this added burden that too many people had the same idea and built apartments. And so, a number of markets are temporarily overbuilt. But construction is so down because there's so few lenders making loans. So my bet is, as a lender, to look through all that and to be a little bit, not a little bit, to be more aggressive than most lenders. And I'm loaning our money, and we have the ability to back it. We borrow against our loans, but we have a substantial credit and we're thoughtful about what we do, but we're also not a regulated business, and our regulator is doing things we believe in carefully and prudently and at the same time as being a good partner to our developers. 

Chris Powers: Do you care about product type or geography? Are you going one way or the other? 

Craig Hall: We do. We definitely do. We stay away from certain markets just because sometimes fear of the environment. And we love Texas. We'll do things all over Texas. But we do things all over the country. We do things in California. And we're not a real fan of New York. Although we're looking at a deal right now in New York, so never say never. We are primarily in hotels and apartments. We never did an office building, but now I'm looking at some office buildings because it's so capital starved, I think we can do things that make sense for us. So, we are beginning to look at that, just like we didn't used to do apartments, now we are. But we've done them years ago. We started that, the lending business started in 1995 for us. And it's kind of, right now, I finished up 700 million of construction for us, so it's not like we're not busy in development. But I'm going to really slow that down, and I'm really emphasizing our lending business. 

Chris Powers: Okay. You mentioned we'll lend in Texas, you mentioned we'll lend in California. To most listeners, especially in the real estate world, that's like two different regulatory environments, environmental, maybe… 

Craig Hall: I'll loan more in Texas than California. No, no, you're not wrong. California… 

Chris Powers: How do you underwrite California is kind of my question. 

Craig Hall: No, you're right. It's certainly a concern in some regards. My wife was native of California and loves California. And we have our wine business there. She would totally be upset with my saying anything at all negative. But the sentiment of what you're saying I agree with. But I think Chicago, New York, those scare me even more, New Orleans. There are certain places that are just really hard and really scary. California is still such a beautiful place and the right properties in the right locations are going to do very well.

Chris Powers: Yeah, you just underwrite longer timelines, I would imagine. 

Craig Hall: We don't loan as much. Our view is more aggressive in Texas than anywhere. 

Chris Powers: Any one market in Texas that you love more than others? Obviously DFW is pretty good. 

Craig Hall: Actually, I love all of Texas. But I mean, I guess if I had to pick one, our home here, anywhere in DFW is great, but it's all pretty exciting. 

Chris Powers: We're going to get to the wine business in a second because I know nothing about it. But I asked you earlier, I said, we're talking about multifamily, and you said, yeah, we might get back into it. I said, cool, how do you come up with that decision? And how does this come to be? And I want to start with, you said, well, we have two planning meetings a year at the company where we will set things in motion. So, I thought maybe an interesting question would just be what happens at those planning meetings, how important are they, and what are your goals for those meetings for the company? 

Craig Hall: Well, our planning meeting structure is basically the department heads and senior management put together a rather exhaustive set of kind of reviewing the past and looking to the future and accomplishing our goals. The goals are established more by the top couple people. Right now, we have four senior managers. We've hired two relatively recently. And so the four of us will really kind of set the goals and that will be done before a planning meeting. The actual preparation for the meeting probably starts maybe five or six weeks out, and the actual meeting is maybe half of the whole process, and the preparation is the other half. And then at the end of the meeting, we have a nice wine happy hour and some dinner and we're all good. 

Chris Powers: Is it one day or is it multiple days? 

Craig Hall: Right now, what we do is we have one day for the lending business group and one day for the development and asset management group together. 

Chris Powers: Are you ever surprised coming out of those meetings? You do six weeks of planning and then stuff comes up over two days and you... 

Craig Hall: Not really because we have, just maybe we have too many meetings, but every Monday morning, we have a kind of all-hands senior group, like 45, 50 people. We have several meetings. There's not a lot of surprises, no. 

Chris Powers: I have to ask you, what day do you do the big all-hands meeting? Is it a certain day of the week? 

Craig Hall: I think it varies. Yeah, I don't remember. 

Chris Powers: Okay. I'm debating right now if we do ours on Monday or later in the week, and I can't figure out which is better. So, I didn't know if you had something there. 

Craig Hall: Nope. Can't help you. 

Chris Powers: Those two planning meetings has that been something constant in the company for a while? 

Craig Hall: Many years. Yeah. 

Chris Powers: Cool. Okay. Let's go into the wine business for a little bit. How did you get into the wine business? 

Craig Hall: It's a very simple thing. It's called a happy wife, happy life. My wife comes from San Francisco, Berkeley area, and her father had a vineyard in Mendocino. One thing led to another, and that vineyard went to another family member, and she and I decided we would look for a great, fabulous vineyard. And we did, and we bought our first property in 1995, and then I bought a whole bunch of properties because I didn't really understand it's a hard business. And she didn't really want to own the world, but I just thought, go big or go home. Anyway, so it's interesting, it's fun. It's fun to do something else. 

Chris Powers: Okay. How does the business work? How do you make money in it? 

Craig Hall: Oh, wait a minute. You're supposed to make money? 

Chris Powers: Oh, I knew you were going to say that. Is it a labor of love or how do most people treat it? Maybe the answer isn't like how do you make money, it is how do you treat these assets? Like, how do most people think about them? I'm sure there's a lot of people that have gotten into it the way you have to some degree. 

Craig Hall: Well, maybe this gives me an opportunity to talk about a subject that concerns me in both real estate and wine, and that is consolidation. The truth is over my lifetime in business, there's been a huge number of industries, including the ones that I've mentioned that I'm in, that are getting fewer and fewer hands getting bigger and bigger. And in the wine business, there's a handful of companies that control the vast part of the business. We're a large minnow. There's 12,000 little guys that have 20% of the business and 6 or 8 big guys that have 80% of the business. We're one of the minnows. It's an interesting, fun business, and we do fine at it. The demographics are challenging today, things are changing. But one of the things, you don't try to be all things to all people. We have a plan and stick to our plan. And we do a lot of… we may be, arguably, I don't know of anyone larger, the largest direct-to-consumer high-end winery in the country. We do a pretty substantial amount of direct sales all over the United States. And then we have business outside of the United States as well. 

Chris Powers: Did you guys come up with the plan that you wanted to do direct to consumer before most people, or why are you all the largest?

Craig Hall: I think we were early, and we bought a very large, one of the oldest permitted wineries that was built in 1985 right on Highway 29, which is kind of the Rodeo Drive of Napa Valley. And so that property sees many tens of thousands of people a year. And that kind of led to relationships with people and a large wine club. And then now we have six tasting rooms, which all gives us a wide range of context. 

Chris Powers: How much of the focus is on sell more wine versus grow more grapes out of the land that we have? Is it more about efficiency on the ground or about selling? Or do you think about it that way? 

Craig Hall: Yeah, I was going to say I'm not sure it's either of those. Right now, it's always been about making great wine. It's about quality. I think people who, at our level of the wine business, we're not trying to just do volume. We're trying to do quality, and that's by far the most important thing. 

Chris Powers: Okay. So maybe the question would just be, to get better at quality over time, do you have some type of scientist or somebody that's looking at the soil and how you grow and all the things of the production? 

Craig Hall: The answer is yes. First of all, there's two areas of quality. One is the quality in the wine itself. For that, we do have vineyard experts. We use all kinds of satellite photos. We use all kinds of things, and we tear out vineyards and redo them with the latest viniculture knowledge. For wine making, we were one of the first, we have an optical sorter. There's now other wineries that do. But literally, we have a machine that kind of takes the grapes, and the winemaker will take 200 grapes of a certain batch that comes in and say, Mr. Machine, I want you to find other grapes that are like these 200. And after that, the machine will take that batch of grapes that comes in and get rid of everything that doesn't fit those 200. And that's just a beginning. And yeah, we have a team of… it is a very scientific thing. Wine making, also, longevity is important. Our wine making team's been together for 20 plus years, and we have, coincidentally, it happens to be all ladies and they're really brilliant. And we're blessed with a really good group of people. That is fun. It's a challenging business because you start with farming, which you can't control all that. We had the fires in 2017, 2020. And then you go to manufacturing, the factory that makes the- takes the grapes and makes the wine, and then eventually, it doesn't sell itself. You would think you do a good job, it should all sell itself, but no, it's fun. 

Chris Powers: Okay. You mentioned consolidation. If I was to say, if we were to do this in 10 years, what will have changed about the wine industry in 10 years? 

Craig Hall: I think it will be more of the same. I think at both the producer level, distributor level, high consolidation, the retail level less so, meaning there's more grocery, but there's still a lot of consolidation in grocery stores as well. It's sort of the way of the world. I mean, we're seeing it in real estate. I mean, companies in commercial real estate are much bigger than they used to be, CBREs, JLLs, and so on. Look, they have great talent, they're a lot of friends. But still, there comes a point where it squeezes out and makes it harder for entrepreneurship. And I really believe our country was founded by and is served well by new people having a level playing field as I call it, having an ability to start a business and to grow. I think it's a fundamental part of the American dream. And so I fear how do you make those things balanced? And that worries me. 

Chris Powers: You've actually put a lot of thought into it. To the extent you want to share, how do you see that? How do we get to a level playing field? 

Craig Hall: I do think public policy has to make it a priority. And I think there are things that can be done to help make it a priority. It's interesting, startups and entrepreneurship arguably has been in trouble for a few decades, and then you get to the pandemic, and new businesses went way up out of necessity. And people weren't working and then they realized, oh, I'm going to start selling some little thing I'm going to make, which is kind of interesting to see that happen. I do think that public policy is necessary to create a fertile ground for new startups, and every business isn't going to be and doesn't need to be a high-tech home run. Let's have a lot of singles. A lot of people owning a small business is not a bad thing, it's a good thing. 

Chris Powers: So that would be by way of maybe government grants or almost like a Shark Tank type situation with your best idea. 

Craig Hall: Yeah, I think Shark Tank's good. I think there's a lot of good things. There's a non-profit, American Center for Entrepreneurship that just released a press release today on a thing that I talked to them about a while back about having a national entrepreneurship corps similar to the Peace Corps. And the idea would be to have the government help organize and pay for students when they graduate from university, spending two years helping rural areas, poor areas start where people want to start a business but don't have the know-how or the skills, helping them raise money, helping them get ready for a shark tank.  

Chris Powers: Okay. Let's just focus a little bit on the current real estate market. To the extent you can share opinions, facts, how are you feeling about where we are in this market? Interest rates started going up almost two and a half years ago. It's definitely slowed down transaction volume, which may or may not be a big deal to you, you tend to hold. But like how are you thinking and leading the team now and how do you think about the next few years ahead of us? 

Craig Hall: Clearly, new construction is way down, which is going to mean in markets particularly like apartments where I think there's an innate shortage and a high demand, that in call it 2026, ’27, ’28, there will be a time when there's not nearly enough completions compared to needs. Office, a little more difficult, but I think because office is so capital starved right now, we may see Class A, AAA, the best buildings not being built as fast as we need them in a couple, three years as well. I'm clearly negative on B and C office space. I think it's going to be a train wreck for a number of years. I think the market has dramatically changed, and it's a material change, demand for office. So, it depends on the sectors, and I'm not by any means an expert in industrial or a number of areas. I think hotels are in pretty good balance. Again, the lack of construction provides some opportunity. So, we're leaning in as a lender. We're going to continue as a lender to be very active in construction in particular, but we also will be doing some bridge loans. There's a lot of properties that need refinancing right now. And for a variety of reasons, a lot of banks are pretty constrained. They're not having real estate move off their books. Regulators are not a fan of having a whole lot more real estate put on their books right now. So I think the next few years, and it's hard to look out beyond that. The other thing I can't say right now is whether demand… Are we going to have a recession? Maybe. How bad? I don't think bad, but how much is it going to affect office demand or doubling up for apartments? I don't think it's going to be dramatic. But then again, I've been surprised we have not had more of a downturn sooner. And I think the reason was we had a lot of excess money supply from the pandemic. 

Chris Powers: So, if I'm reading between the tea leaves, does you being a lender right now mean that prices aren't where you'd like to see them yet before you're back on the equity development side? 

Craig Hall: No, we're also going to be developing, but we're currently developing $700 million of construction. It is the largest we've ever done. And the reason we did it was in order to change Frisco from an office park to a mixed-use, we felt we needed to do a lot of things at one time. That's pretty much behind us now, but we are planning the next apartment building there. We're planning the next office building there. We're planning more retail there. So, I would expect in 2025, we'll break ground on at least one, but hopefully two or three buildings. 

Chris Powers: Okay. You're your own partner. So, to some extent, you're constrained by the capital that you have, which is plentiful, but you could do any type of deal across the country basically. What types of deals are you looking for now? Are you even looking for new deals, their geographies, somebody's listening to this and they're thinking, what might Craig be interested in, how do you think about what you'll be interested in the next ten years of new stuff? 

Craig Hall: Well, short, short term, I can see an answer easier than ten years. Ten years, I am looking at how do I turn the company over to others and how do I reframe it. It may very well be that others will use other people's money more than I am today and go into other areas and things and use the platform we have. But we recently, as I said, have hired some senior management with the idea that my president right now has been with me 44 years, and he's probably not going to stay forever, and I'm probably going to become an executive chairman at some point. I don't have a timetable. I worry that every so often, that they may get, there may be a palace coup here, and the group may come together and say, you’re no longer needed, boss, you're fired. But so far, that hasn't happened. So I'm not leaving right away, but I'm planning. So if you look at 10 years, I will not be the CEO in 10 years. 

Chris Powers: Is that hard to say? 

Craig Hall: Well, I guess so. I could change my mind, but that's my current thinking, is I won't be. 

Chris Powers: Yeah. But in the interim, let's just go back three or four years, what types of deals are you looking to do right now? What would be interesting to you? 

Craig Hall: Right now, I really want to continue to build out Frisco. We may be doing a lot of lending, I hope, and we may end up buying some office loans from some banks we know or banks we don't even know that are on their books that are troubled because we have the ability to if necessary take ownership of a partially built building and finish it, fix it up, or lease it. We have teams of people that can do those things. So we'll see what opportunities are out there, but we're looking. 

Chris Powers: If I asked you the question, what's the biggest mistake you think you've made in your career? 

Craig Hall: We don't have enough time. Too many. 

Chris Powers: Okay. Fair enough. Let's end it on the arts. Like even being in this office building is incredible. It's clearly very important to you and your wife. What's important about art? 

Craig Hall: Well, I came to art because my mother was an art teacher and an artist. A few things in the room we're talking in were hers. 

Chris Powers: The lemon tree? 

Craig Hall: No, that one's a different story. I'll tell you that story in a minute if you want, but behind you, those are two pieces that she did. So art's always been important to me. And when I first started to use art in buildings, I did it not because I thought it was a good business thing, but because I thought it just looked nice and I liked it and I thought maybe it'll be meaningful to somebody. Now I would tell you it's a good business thing. I think it's both the right thing to do and it's good for, it makes people want to move into that building, makes people want to hang out and be in a space that has art. So, the lemon tree is a different story. 

Chris Powers: What's the lemon tree story? 

Craig Hall: So when I was 24 years old, I bought a property that was highly vacant and it was called Nob in the Lake. It was in 1974, and there was an embargo, and our energy prices went shooting through the roof, and this property was sort of in the middle of nowhere. It was between Ann Arbor and Detroit. So it was highly vacant. And everybody said I bought a lemon. I changed the name to Lemon Tree. It turned out all right. It was a good deal. 

Chris Powers: Craig, thank you for joining me today. 

Craig Hall: My pleasure. 

Chris Powers: This was a pleasure. 

Craig Hall: Thank you.