HOUSTON – (Realty News Report) – Native Houstonian Paul Layne has launched a new real estate investment firm after years of managing the largest master planned communities in the nation, including The Woodlands, a 28,000-acre development north of Houston.
Layne was a recent guest on THE RALPH BIVINS PROJECT, a podcast produced by Realty News Report. Below is an excerpt from his appearance.
Ralph Bivins: Today, our guest is Paul Layne of Paul Layne Partners, a newly launched firm based in Houston. It is primarily focused on Texas, but let’s see where it goes from here
Paul was formerly the CEO of The Howard Hughes Corp., which developed The Woodlands, Bridgeland and a 22,000-acre community called Summerlin, eight miles from the Las Vegas Strip. He has lots of experience in master planned communities and all that go into them. Paul, hundreds of thousands of people live in MPCs that you developed. Let’s start there. Let’s look at the master planned development business.
Paul Layne: It’s phenomenal to see the demand that’s been driven by Covid. When the phenomenon started about a year and a half ago, it really pushed home buyers to move out of apartments and small properties because they wanted more space. They knew they were going to be living and working 24/7 from their homes. And there were things about the properties they were living in that they didn’t like. So, they would go to Bridgeland or The Woodlands or to MPCs, where they found the interest rates were historically low. They discovered they could buy property with monthly payments that were not much more than what they were paying for their own apartments. This kind of demand was not just in Houston, but all over the country. MPCs like Bridgeland can’t fulfill the home sales as quickly as buyers want them. There are just too many buyers and the house lots can’t be completed in time. This has brought in a number of new developers who are acquiring small parcels of land, like 50 acres or 200 acres. They are putting in streets and infrastructure and selling the lots to builders. This has created a tremendous number of new homes in the suburbs.
Ralph Bivins: Significant lifestyle changes for people moving to suburban master planned communities.
Paul Layne: It will be interesting a year or two from now, when these people begin getting their HOA (home owners association) and property tax bills, whether they believe they made the right choice.
Ralph Bivins: The work-from-home idea has really had a big impact. Consider this. The Howard Hughes Corp. built Woodland Hills, which is in Willis, nearly 50 miles from downtown Houston. When people have an opportunity to work three days a week instead of five, they may figure that with the reduction in workdays, they can handle the longer commute. So, I might look a little farther outside the area – maybe Willis or Conroe – for a home. I don’t know where this will end.
Paul Layne: You’re bringing up a really good point. People around the country are picking a lifestyle rather than a commute time because they believe their employer will allow them to work from home – wherever that home is. I read that a tremendous number of people are leaving California and going to other places. Their attitude is, if I can work from anywhere, then I don’t want to pay taxes in California or New York or wherever. A paradigm shift is happening right now in the real estate business. A lot of people want to move to Texas because there is no state tax and it is not an expensive place, and it’s a friendly place. Houston is also an international city. I’m grateful I was born and raised here.
Ralph Bivins: When you were CEO of Howard Hughes Corp. and you had to go to New York City quite often, it’s not likely you experienced the same attitude from everybody on the streets of that city.
Paul Layne: You know, I was blessed to be the CEO of Howard Hughes Corp., which is a $5 billion company. At one point, we had 1,700 employees. I had the pleasure of working will Bill Ackman, the chairman of the board, who went on to become head of Pershing Square Capital Management. I learned a tremendous amount from him. I enjoyed working with him for nearly 10 years.
Now, I’m moving on to something new and exciting, after years of working for large, publicly traded companies. At Trizec, we spent 13 years building up the firm which we sold to Brookfield and Blackstone. I stayed with Brookfield for six years, then moved on to Howard Hughes. I’ve really, really been lucky – and blessed in my career – that the only times I changed jobs was when someone called me and convinced me to move somewhere else.
Ralph Bivins: David Weinreb , the former CEO of Howard Hughes Corp., convinced you to leave Brookfield and got you to go to The Woodlands and Howard Hughes.
Paul Layne: David did – and David remains a friend. He is a very persuasive individual, for sure.
Ralph Bivins: So now, you’ve just launched Layne Property Partners. You’ve got a few things under contract. Tell us about your vision.
Paul Layne: I wanted to – after I took a few months off and my wife and I traveled a little bit, though it was weird during COVID – and I played a lot of golf.
I realized I love transactions. The idea that we can put properties together in a way that makes sense. I treat investors’ money as if it is my own. I’m a co-investor. We are drilling down on submarkets right now in Houston. Whether we are focused on The Heights or Oak Forest, I see tremendous growth there. I see a real demand for apartment properties, both for millennials – people around the age of my six kids – and people of my age group. People want to live there; they can live in an apartment that’s reasonable priced. They come to a place where they can walk to restaurants and bars. Some of the properties are right across from hike and bike trails, places where you can enjoy your lifestyle.
I’m looking to grow our business. We’re going to start with multifamily uses. I studied multi-family development when I was at Howard Hughes. I went to Southern California and met with Irvine Co., one of the best – if not the best – real estate company in the country. I asked the president of Irvine: ‘What is the most profitable division?’ He told me, ‘Hands down, multifamily.”
Also, I have 40 years of experience with the office market, which is confused right now with the Covid. I started a self-storage business at Howard Hughes. I started an apartment development division at Howard Hughes. I built a big medical facility for M.D. Anderson, a 205,000 SF structure.
Ralph Bivins: As you evaluate investment opportunities now, what are you looking for?
Paul Layne: I’m looking for properties in areas where people want to live – whether they are 23 years old or 73 years old. I’m looking for comfortable, walkable properties available at reasonable rents, in locations where people can drive out of their submarkets and go to other places, like a baseball game. But then they return to places and generally stay within their submarkets.
Sept. 9, 2021 Realty News Report Copyright 2021
(Interview edited for clarity)
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon http://tiny.cc/4a2g6y
Houston 2020 Ebook version https://tinyurl.com/4xm7z8b5
File: Beyond The Woodlands – a Podcast with Paul Layne