In this episode of The Distribution by Juniper Square, Brandon Sedloff talked with Larry Heard, CEO of the Transwestern family of companies, which operates in 33 cities with 2,200+ employees and over 322 million square feet of real estate. Its development company has produced over 150 projects nationwide, while the investment arm holds $7.3 billion in AUM.
In their conversation, Heard shared how his firm has navigated five economic cycles, the benefits of what he calls the “operator model,” and how people-first leadership helps Transwestern thrive.
We saw value in what we call the operator model of real estate. We've done everything you need to do in most of these projects.
This operator model has defined Transwestern since the mid-1980s. When the Houston real estate market hit a crisis, Transwestern was solely focused on development. With projects on hold, managing, leasing, and handling dispositions for institutional owners in need.
Transwestern’s operator model has its roots in the firm’s history. When the mid-1980s real estate crisis hit Houston, Transwestern was a purely development-only model. With projects on hold, Transwestern adapted by moving into services, providing “management, leasing and disposition sales for institutional owners who had a lot of problems.” Today, services today are the “backbone of the firm, giving us the local market insights that you really need.” In 2012, Transwestern parlayed insights from those two practices into a third company—the investment firm.
Transwestern’s operator-driven investment approach follows a clear principle: “Invest in what you know.”
We ended up growing the company dramatically during a difficult period. But we had to be very nimble and comfortable with pivoting our entire company.
Real estate has undergone five major economic cycles since the 1980s, and Heard has navigated them all. Nimbleness, close attention to market shifts, and transparency are his watchwords. “There's a different catalyst to every downturn,” Heard noted. “Do not pull punches. Our people are smart. If you don’t tell them what’s going on, they’re going to have an opinion and may even think it’s worse than it really is.”
And yet, every crisis presents opportunities to learn and ultimately flourish. Recalling the 1980s, Heard remarked: “Even though it was a very difficult period, in hindsight that [difficulty] is what helped develop our characters, build our fortitude and enhance our culture.”
One of the benefits of being a national privately held company is you have plenty of time to pour into your people.
Transwestern doesn’t just say, “People are our best asset”—they prove it. Whenever faced with challenging times, Heard’s management team made bold choices that underscored this belief. For instance, rather than resorting to layoffs, they opted for across-the-board salary reductions, including at the management level. This decision allowed the firm to cut costs immediately while preserving its most valuable asset: its people.
When the markets came back, leadership made salary restorations a top priority. “We had our entire team on the field ready to play,” Heard remarked.