Douglas Elliman Sets Sights on First Houston, Dallas to Follow
Real estate in Texas might be slowing down, but a slowdown in Texas is like tapping the breaks on the Autobahn — you’re still traversing a hot market. And the most recent company to set the Lone Star State in its sights is Douglas Elliman, who announced a joint venture with Houston-based Sudhoff Companies Monday morning.
The move will create Douglas Elliman Texas, and will join the New York City-based luxury brokerage with Sudhoff Companies, which will give the fledgling Texas venture an immediate boost to the tune of an 85 percent market share of Houston’s new development market for condos and $500 million in current new development with $1.4 billion coming to market in the next year.
Last year, Sudhoff Companies had the highest sales volume for new construction homes in the Houston area at just shy of $500 million in sales volume. Combined with Douglas Elliman, the two account for $28.6 billion in sales nationwide last year.
Current projects on the market include Giorgetti Houston, The River Oaks, The Sophie, and The Revere, as well as a luxury condominium project, The Hawthorne.
“Like Los Angeles, Houston is experiencing a vertical living phenomenon, and because many of our clients in Colorado, California and Florida hail from Houston, we felt the time was right for a strategic move to Texas,” Howard M. Lorber, executive chairman of Douglas Elliman Realty, said in a press release. “It was important to find a company whose integrated approach to real estate development mirrored that of Douglas Elliman, and we have found a true partner in Sudhoff Companies.”
Jacob Sudhoff will now be CEO of the newly formed Douglas Elliman Texas, while business partner Catherine Lee, also will have an integral (but unspecified in the press release) role in the new company, which will be based in Houston.
But Dallas brokers, don’t sit back and get too comfortable — Elliman may be starting in Houston, but they already have boots on the ground in Dallas, and it won’t be long before they’re firmly planted here, Sudhoff said Monday afternoon.
“Our existing company was in Houston and we focused on the development marketing side of things to condominiums,” Sudhoff said. “We’ve had a majority market share of that but we had been looking at expanding into Dallas and Austin for quite some time.”
In fact, Sudhoff said his executive vice president, Mike Reddell, is originally from Dallas, and has been commuting to Houston every week for the past five years.
“So he is now setting up shop in Dallas and he’s no longer commuting every week — he will be opening our Dallas office,” Sudhoff said. “He is from Dallas, and he knows Dallas extremely well.”
If Reddell’s name sounds familiar, it’s because before joining Sudhoff, he was at Briggs Freeman.
Sudhoff said he’d been looking for a way to expand into the Austin and Dallas markets for a while, but wanted to make sure he had the right infrastructure in place to do so.
“The great thing for us is that we had a really amazing platform here in Houston with our development marketing side of things,” he said. “And I have been wanting to take that to Dallas and Austin, but I really felt like I needed the infrastructure behind me — the resources, the technology, and kind of the branding that really went along with it.”
That desire for expansion is one of the reasons he ultimately decided to approach Douglas Elliman. “We went after a national brand. We looked at all of them, and we felt like Elliman really fit our company the best with the alignment of interests, as well as how our companies were built,” he said.
Eyes on Dallas
How long has Sudhoff had his eye on Dallas? Let’s just say more than a year, easily.
“I was actually working on this before even Compass announced they were going to Dallas (Ed: Compass announced it would open a Dallas office in January 2018),” he said. “So I believed in Dallas before those announcements and we knew that we wanted to be in that market. We know that there is no other brand like ours and or a firm that has the same type of resources and backing and, I guess you could say, bandwidth.”
“I feel like we’re able to bring something that’s unique to Dallas and that I think Dallas really can benefit from,” he added. “And we can be a value add not only for the agents but also for the clients, and for the consumer as well.”
Corporate relocations will continue to drive the rental market in Texas — and in North Texas especially, as Toyota, Uber, and other companies pick up and move. And people moving from California or other higher-priced areas have more money to spend, but also want to spend some time getting to know the city they’ve moved to, and decide where to put down more permanent roots.
“What we find — especially when people move from the coasts or internationally into Texas — they usually will want to rent first. And they kind of get to know the city and also get to know if they like Texas or not.”
“That’s really why with Elliman we focus on the rental side as well because we feel that it’s it’s a conduit for the sale side — not only for our condominium side but also our traditional resell side as well,” he added. “And so that’s why the rental buildings are going to be something that we’re really going to be focused on.”
“We are very good at it.”
And given how much luxury multifamily goes up in North Texas each year, it makes sense that Douglas Elliman Texas would want a piece of that. Sudhoff said that the way Elliman does business in New York will come in handy in Texas, too.
“And so one thing that that is coming to Dallas and Texas is the bifurcation between leasing rentals and management. For example, there’s a project there called the McKenzie in Dallas, where they’re doing this — and it’s not that common in Dallas nor in Texas, but it’s becoming more common.”
“So for example, in New York City, Elliman represents Graystar on a project, and Elliman is doing the leasing, while Graystar owns and manages the project,” he explained. “And that is something you’re’ going to start seeing more a lot more growth in, and that’s a line of business that we are going after strong, because we are very good at it.”
“We believe that we are assisting people in investing in real estate rather than selling them real estate.”
Sudhoff said that he is excited to see what the technology and research Douglas Elliman is known for can do for the Texas market. Elliman is known for its in-depth research of not just company-wide data, but ancillary data that can be helpful to Realtors and homebuyers looking to pin down a good neighborhood, or even why one listing is superior to another in the same area.
“Research is the backbone of Elliman because we believe that we are assisting people in investing in real estate rather than selling them real estate,” Sudhoff said.
Because of that focus on research, Sudhoff said he’s hit the ground running on building their platform, adding additional researchers to what he already has, and utilizing the tools Elliman already provides. And a lot of the technology used to drill down into submarkets, he said, actually comes from the retail sector.
“The technology that we’re implementing is technology that’s being used in retail,” he said. “And retail technology is just the best. It’s amazing how they trach the consumers and what type of products to put in stores based on the demographic round that store — and so that is the type of technology we’re using right now.”
But there’s another component to the research, Sudhoff said. “We call it benchmarking, and it’s through our planning and design department,” he explained. Architects and designers come into each market, and conduct comparisons of each building.
“They literally go building by building and do a side by side comparison,” he explained. “And they go back all the way to the services, amenities, finishes, the programming, pricing — everything, and then they do side by side comparisons.”
Those comparisons then help guide decision-making and even educate developers on the differences in various projects, but it’s also handy for consumers, Sudhoff said, who want to know the difference between one building and another.
“We believe in Texas — 100 percent, wholeheartedly.”
“We’ve all heard murmurs about a recession, or a slowdown in Texas real estate — even that Wall Street Journal piece a few months ago that basically called Dallas the ‘canary in the coal mine.’ Is there any trepidation about entering new markets in Texas at this time for you all?” we asked Sudhoff.
“Not at all actually — for Texas, we’re looking at it as a long term investment and a long term play,” he said. “We believe in Texas —100 percent, wholeheartedly.”
“I live in Houston. I’m from Corpus Christi,” he continued. “I have to say that you know Texas is an amazing state, and even though we might have our bumps in the road, we never have the cliffs.”
“In Houston, we just had one of our best quarters ever and recorded in the real estate industry, and Dallas has been in a big building boom And so Dallas it’s just you know you guys were in a big building boom for quite some time, but for us as a real estate company coming into the Dallas market, we don’t look at this as a sprint — we look at it as a marathon. And so that’s why we’re going to be very methodical very selective on exactly how we come in.”
And Sudhoff is also confident that there’s a niche for Douglas Elliman Texas in Dallas, too.
“We’re not trying to be everything to everyone. We are you know we have our different kind of lines of business which include traditional development marketing that is condos and rentals,” he said. “I feel that Dallas is his prime. And I think Dallas will really benefit from having the exposure from an international basis that Elliman can provide as well as national — and really hitting that affluent demographic that Elliman is known for.”
With the addition of Douglas Elliman Texas, Douglas Elliman will have 120 offices with more than 7,000 Realtors in the U.S.