Tyler Alley | DFW Strip Center Developer
@tyleralley24
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Following
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Statuses
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Dallas-Fort Worth Strip Center Developer. Competitive Advantage: Self-Perform Construction. Views are my own. Opinions, not advice.
DFW
Joined October 2010
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Send us removal request.
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Everything you need to know about this account (updated for new followers 🙏):
Who I am:
I run a family-owned development company focused on building strip centers in DFW.
Overall Strategy:
We self-perform GC/construction work, allowing us to reduce our basis and offer tenants…
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I once worked with someone who was a total rockstar.
He put in his 2 weeks notice and management scrambled to keep him.
Offered him 3x what he had been making to keep him.
His response:
“Wait, you’ve been underpaying me this much the whole time?!?”
I believe in overpaying employees.
Underpaying is a costly mistake.
Losing good people is stupid.
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Here's the best deal I've ever done.
Sadly, not a strip center. Just a good ole land flip.
But really, it's a story about taking bits of information publicly available and turning it into a deal.
A 🧵
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I tend to hate how real estate deals are pitched
Exec Summary
Property Description
Market Overview
Financial Analysis
25 pages of unnecessary fluff
Here's how I would prefer real estate deals be pitched to me👇
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We’re building a home for my parents right now.
I’m looking at the costs and I’m looking at comps and I’m starting to wonder why we don’t build high end residential homes.
Not to scale, just one off and sell.
Someone talk me out of this, please.
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@TripleNetInvest
Honestly - $1m a year to keep them from investing in stupid things might be worth it 😂
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It keeps happening.
Tenant A wants the space.
They send an LOI. I counter.
Before Tenant A responds again, Tenant B shows up.
I like Tenant B's offer better.
Tenant A's response still hasn't arrived.
I accept Tenant B's offer.
I then let Tenant A know that I got a…
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Here’s one of the best experiences I’ve had with a broker.
He sells strip centers here in DFW.
He had our property listed for sale.
Quickly brought us our first offer.
Direct deal which gets him the maximum commission.
Me: “That’s fine, let’s go ahead and accept it.”
Him:…
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Did a thread on how to pitch a real estate deal that got a lot of positive feedback.
Decided to share an example.
Here's how I'd pitch a deal that we bought in 2022
A 🧵
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The best broker I've ever worked with is in his 20s.
These are the 🔟 qualities that make him exceptional.
A🧵
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Sourcing Real Estate Deals - A Mega 🧵
This is for entrepreneurial shops, not institutional ones.
If you lack capital, if you lack a reputation, if no one ever gives you a first look...
Here are 7⃣ Strategies for Sourcing Real Estate Deals
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There's an extremely popular dessert spot here that was founded by a woman in her 20s.
I once asked the Landlord about the shop and he told me the story of how it came together.
The woman was young, had no capital, and very little proof of concept.
The capital/guarantee was…
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My Dad's birthday was a few days ago.
There are a lot of people on this app who built their whole career from nothing.
I'm not one of those.
That's my parent's story, not mine.
Any success I have will be 100% because of their sacrifices and support. A statement I say with an…
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I've never liked the concept of an 8% preferred return.
I think proceeds should be distributed as follows:
1st - LP gets their investment back
2nd - GP gets their investment back
3rd - LP / GP split profits by an agreed amount
The GP's split is a higher % than its…
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I won't install a grease trap.
Will offer to give a tenant $5-$10k to do it.
But won't install it.
Or I'll get blamed for everything related to it forever.
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You buy a Chick Fil A at a 4% cap.
Sales numbers are off the charts.
They have several years left and, more importantly, why would they ever leave? Look at these sales!
A few years later, CFA hires a new real estate employee.
They realize that CFA can make more across the…
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Real estate developers on this app:
“Kids should go to trade schools”
What I hear when I read that:
“Real Estate Developer wants construction costs to come down”
😂
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After every big win, I buy concert tickets for me and my mom.
Whenever I look back on my year, it’s always one of the highlight.
We had a good win earlier this year and I ended up taking her to see Adele in Vegas.
I’ve always struggled with the “I thought I’d be happier in…
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For more context,
This may seem like a post about me complaining about an obviously good problem to have
But it's really about how my delicate little soul needs to be liked by everyone 😂
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Hope you guys like me just as much as a real-life person (or at least a face) instead of a ✏️
👋
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@dtmorgan18
Blows my mind that people leave CA for Dallas
Can’t imagine that first summer here
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If I ever need to find a new submarket to build strip centers in, I'll sometimes just go on Zillow and sort by "New Construction" and poke around.
New homes often have limited commercial around.
Easy way to figure out which submarkets are growing.
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Adopted a 13 yr old dog a few years back.
Thought we’d have him for 6 months.
Will be turning 17 soon 🙏🙏🙏
Love him to death, but starting to worry about quality of life.
And the bills are adding up.
At what point did you decide it was time?
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"How much money am I willing to spend to determine if the deal works?"
A question I ask myself constantly.
Let's say I find a site that I like.
I know the market rents, I know the tenant demand, and I know the numbers work.
But there are things that I don't know.
I don't…
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One thing I love about this app is that it really rewards good content.
The best way to get new followers is by having one of the larger accounts bump you, and they don't do that without you providing value or being funny/interesting.
The first big account to do this for me…
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One of my favorite questions to other real estate GPs:
"If you had to make one argument against the asset class you invest in, what would it be? What keeps you up at night?"
If I were asked that question about my new construction strip centers, I'd say the following:
In…
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Ran into
@Josh_Widjaja
today.
Josh (on the right) is a senior at SMU looking to get into retail development.
Talked for a bit and then Josh asked if he could shadow me at my meetings today.
Loved the idea. Brought him around with me all day.
All it took from him was to ask.
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I once told the CEO of an architecture firm here that I was thinking about raising a real estate fund.
After a few questions, she asked if she could invest.
Turns out, she’d been wanting to invest in some real estate deals for some time.
In fact - she said that between her and…
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Probably time to further introduce myself properly - thanks to all of my new followers. Has been fun so far.
My name is Tyler and I'm a strip center developer in DFW.
Came up in the private equity world - worked for a fund manager that invests in class A office. Incredible…
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Building your first retail strip center?
👉Don't break up the storefront with columns👈
❌With columns: Have to plan tenant sizes carefully so as to not force a tenant to be right behind a column
✅Without columns: Tenants can put their demising walls almost anywhere and their…
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One day, not sure there will be anything I miss more
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Here's a site plan that a seller had put together for their site.
I'm actually now friends with this seller, so don't want this to come off as me dunking on him. He learns quick!
But I'm going to walk you through all the things I hate about this site plan. 🧵
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“We can’t make deals pencil.”
All I’ve heard for 18 months.
Trying something new this year at ICSC.
Will be leaving one of these flyers with everyone we talk to.
We’ll see if it works 😂
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💥 Retail Ground Leases 💥
Seven things we consider when evaluating doing a ground lease with a tenant.
1⃣ At the end, we get a free building...right??
Not so fast on this one.
At first glance, a ground lease is simple.
👉We lease the land for annual payments.
👉The tenant…
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I have a little one at home.
Networking via this app instead of drinks/travel/conferences means I can miss fewer bedtimes.
Very thankful for it.
(Also great for short people and introverts based on meeting many of you, but we won’t tell anyone that 😂)
Sincerely,
5’7” Tyler
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🤔 Should we put in a Drive Thru? 🤔
On almost every new construction strip center, this is a question.
They are in high demand. They get higher rent. And they open up parking.
But it's not a slam dunk to do one.
Here's how we think about the question 👇
The problem with a…
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When I think about taking outside capital, I can never get this one line an older asset manager in the field once told me:
"If we spent less time documenting, and more time executing and thinking about our deals, we'd probably make a lot more money."
Have heard
@gas_biz
talk…
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ICSC thoughts
-Unanchored multi-tenant strip center land (very good sites, but not the top of the market) are penciling for other folks (not us) around $15 PSF in DFW. Makes me want to target $18-22 PSF sites.
-Tenants are more worried about construction costs than rents.…
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Depth of 10k sf New Construction Strip Center
65' - A+
70' - A
75' - B-
80' - D
>80' - F
Deeper space = less storefront frontage for tenant
Less storefront = higher sqft requirement for tenant
Higher sqft requirement = reduction in PSF rent they are willing to pay (that extra…
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I've never raised a dime of capital
But it comes up every so often.
Have spoken to a few potential partners over the years and have had individuals who've asked.
Going to share a collection of thoughts on the topic.
A 🧵
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I've been asked a few times if I'm worried about creating competitors with my posts.
My response:
If you actually listen to what I'm saying and do the same math...
Your conclusion should be to never even consider trying to build these until land prices come down 😂
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"Distressed"...."Capitulation"..."Forced Seller"
Used to be all that I looked for.
Now those words make me cringe.
A story of what changed my perspective on this 👇
I got a call from a broker several years back
"Tyler, I've got a deal for you, but it's gotta be quick. Can…
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Few things I love more than arguing that Texas is better than California.
In the hopes that Californians keep moving here in droves.
So that my property values keep improving.
And so that I can finally afford to move to California.
😉
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Here's a story of how I lit some money on 🔥
10 acres. Tenants Galore. Couldn't Close.
Follow along 👇
Backstory
The seller chopped down these trees by using a loophole in the city code.
The city was furious.
Ever pissed off an entire local government?
Good luck building…
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Have always wanted to list my house for $100k on Zillow, decline all offers, and then see if the tax office will lower my property value because of it. 😂
Anyways, happy Texas tax day everyone to all who celebrate.
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If it’s helpful at all to those reading my posts,
My end goal with this account is to one day become a professor
With the hope that this can serve as a resume of sorts
Not sure anyone will care, but figured since it’s coming up more and more, I’d share my underlying agenda.
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Don’t tell anyone at Park House
But anyone could’ve made money in real estate in Dallas the last 10 years.
All you had to do was close your eyes, spin around, throw a rock, and buy wherever it landed.
Honestly curious what bad habits I developed.
Will probably show up soon.
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I'm going to counter
@realEstateTrent
with an example here.
Houston office fundamentals plummeted in 2014 as oil prices fell.
Vacancies rose. Rents declined. The spread between value-added and new construction began to grow.
So what happened to the downtown new construction…
Great illustration as to why it doesn’t make sense to build small strip centers anymore.
Tyler has many advantages, yet it still costs him $430 a foot to build.
I’d guess over 90% of strips in America can be bought under $430 a foot.
No new meaningful supply, indefinitely.
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Construction costs not declining as much as I had hoped.
Land pricing not declining as much as I had hoped.
Rent increasing more than I expected.
Small sample size - wondering if others are seeing the same. Thanks in advance for the feedback.
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Not sure if I'd choose my college because of this
But if you plan to be in real estate
Going to school in the same city you plan to work long-term seems to have considerable advantages.
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Dumpster Diligence! 🚮 (2023-1-30)
A mistake you only make once.
Every city has different rules and different agreements on this.
Important reminders 👇
🗑️ Tenant mix matters - Restaurants produce so much trash. Others not so much.
🗑️ Overflowing dumpster is like bad…
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Everything you need to know about this account (trying this again!):
Who I am:
I run a family-owned strip center development company
Overall Strategy:
We self-perform GC/construction work, allowing us to reduce our basis and offer tenants lower new construction rents
Strategy…
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1
40
How I'm negotiating an LOI from a national tenant:
Step 1: Setup call with the tenant's construction team
👉 Biggest reason - this is where we shine and will make tenants like us and want to work with us.
Sooner we get the construction/operations team on our sides, the better…
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Lessons to be learned here?
👉 Incentivize those who can move the needle
👉 Structure high upside, low downside deals
👉 If we have a thesis, don't be shy about going for it
👉 Constantly consume information - we never know what will trigger an idea
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My favorite spot in Dallas:
The Wild Detectives
Bookstore
Coffee Shop
Bar
Event Venue
No WiFi on the Weekends
First place I took my wife when I was trying to convince her to move to Dallas.
Wish I could buy it and sign them to a $1 rent 99 year lease so they never leave.
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The most underrated story in DFW real estate?
Google the following:
"Mckinney, TX Airport Commerical Flights"
I'm on record as being less bullish on growth north.
This is the event that changes my mind.
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@realEstateTrent
Would've gone reputable buyer if you said $4.75m
10% is probably worth the risk unless there's an urgency to sell
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The best part of real estate is that all the numbers are made up.
Construction Costs. Cap Rates. Market Rents.
Get multiple bids/offers and you'll get a range of outcomes.
Why is this a good thing?
Because there are always outliers.
Just takes some over-the-top effort to…
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Still laughing at Dallas getting the World Cup Final.
Someone from France is going to be looking for trains to the game and is gonna find out that not only are there no trains, but they also have to pay $800 to park a mile from the stadium and walk in the Texas July heat.
😂😂
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Tenant Allowance for DFW Strip Centers
For new construction cold dark shell, this is what I view as a reasonable place to end up with a tenant.
All of the below assumes a 10-year lease.
If it were a shorter term, I'd start at the same 10-year spot and then adjust to keep the…
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⭐️ Lengthy Due Diligence Period ⭐️
The single easiest way to enter the real estate world with very little capital imo:
Find a property that can be bought with a lengthy DD period and then add significant value during that time period.
This time period can be used to:
👉 land a…
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1
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✍️ Negotiating Retail Leases – Some Thoughts
While this may seem counterintuitive, when negotiating a lease, each $1 of additional rent is not created equal.
In fact, each year of term, each square footage of space, and each parking spot are not created equal.
There are all…
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Dallas Love Field is such a joy
6:00 am flight today
Woke up at 5 am
Showered by 5:10
Leave by 5:15
Arrived at 5:30
Through security 5:35
At my gate at 5:38
Grab a snack 5:40
Back to gate 5:43
Just in time to board C48 😂
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We don't use superintendents on our projects.
Instead, we are on-site every single day.
Going to explain why this works for us and why it probably doesn't work for others.
👇👇👇
Why it Works
1⃣ Incentives
Someone with ownership in a deal simply views every decision…
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Sewer Lines in Retail Centers
When we build new construction centers, the depth of the sewer line is always a key site work issue.
But it’s also important inside the building.
🟥 Red line is sewer line we put in
🟩 Green line is installed by tenant
🟨 Yellow X is, for…
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It’s pretty funny being on this app posting about my real estate career when every real estate developer (including myself) is always a few bad decisions away from blowing up.
😂
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Why I get nervous about holding long-term in Dallas:
Customers seem to prefer what's shiny and new,
And then get bored very quickly and start going to the next new thing,
Which can pop up at any time,
Because there is endless land to build on.
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Looks like we may lose a pre-lease tenant at the 1-yard line.
Would've taken us to 100% pre-leased.
An hour after receiving the news, another tenant called our leasing broker asking if they could lease the remaining space.
Retail leasing activity continues to surprise me.
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Sale-Leaseback
Is a concept that I think burns more people in real estate than anything else.
Nothing from a tenant signals to me:
“I don’t want to be here long-term”
More than:
“I want to sell the building”
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Finally got some
@ForesiteCRE
gear!
Couldn’t be repping a better brokerage firm.
Thanks to
@bethanyjbabcock
!
If you’re in the retail space, highly recommend her team in Central Texas.
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The message from national tenants is clear.
Solve their construction cost problem
And they’ll pay a much higher rent.
TI and Landlord work are the needle movers today in retail.
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Appreciate the DMs asking for examples of our projects. Adding 4 of them here.
Some designs I didn't love, but we've gotten better at those as we've gone along.
Favorite Design: In Profile Photo
Least Favorite Design: Bottom Left (mid-Covid, very few brick options)
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$27 PSF NNN vs. $40 PSF NNN
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I give all my tenants my cell phone number.
I tell them they can call me anytime and I’d rather them call or text me if they’re unsure about something.
Better than them being mad at me and not realizing it.
Is this unusual?
Have been surprised how rarely they call.
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The 80/20 rule
Maybe the most important rule in real estate.
Bad deals aren’t just bad because they lose money.
They take up SO much time.
They force us to keep more money on the balance sheet.
And they cause an immense amount of stress.
Avoiding the deal that make up 20%…
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Funny thing I've heard many times:
Many fitness tenants will simply pull up a map, search "Orange Theory", and look for nearby locations.
They admit to themselves that OT has better market research than they do.
And use it to their advantage.
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Me, real estate developer:
"Can you believe that they think NNNs are going to be $9.50 PSF? Taxes alone are going to be $7 PSF!"
My wife, a therapist after seeing trauma victims all day:
"Wow, that seems really challenging."
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I'm based in DFW and always looking to make more real-life connections with the people I'm meeting on here
DM me if you ever want to meet up or do a call
Been enjoying the video calls/phone calls with the folks I've met so far
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If we're honest about the risk, 90% of people should only be executing the following real estate playbook:
Step 1: Get a W-2 job.
Step 2: Do everything you can to move up and get a higher salary, while saving as much as you can.
Step 3: Buy things all-cash or use very limited…
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Lease Escalations
$30 PSF, 10-year lease, 2% escalations = $328 PSF
$30 PSF, 10-year lease, Yr 6 10% bump = $315 PSF
$31 PSF, 10-year lease, Yr 6 10% bump = $326 PSF
I like to convert negotiated items to rent.
Easier to grasp impact.
(and yes, you can NPV if you'd like)
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Tomorrow will be 1 month since my first X/Twitter post
Been blown away by the kindness & support of other accounts on here.
Was going through my emails today and realized I have had or have scheduled about 20 meetings/calls with folks I've met on here already.
I'm based in…
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Tenant LOI: "$35 PSF Rent"
Landlord Counter: "Uhh, that's not close. Can you do $50 PSF Rent?"
Tenant Response: "Hmmm.....ok, that's fine."
😂
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Two months into
#retwit
tomorrow
Question I most get asked when I tell other people about this is "isn't Twitter a dumpster fire?"
Always surprises them when I tell them how nice and supportive everyone has been.
Think it's in large part because the larger accounts like…
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Post about my best deal ever - 150k views
Post about my worst deal ever - 4k views
Appreciate you all only caring about my good side 😂
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Real Estate Development
Everyone tells you about how exciting and dynamic it is
No one tells you it's like 95% checklists 😂
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I don't know what to call this thread.
Bit of a self-obsession medley.
Anyway, here are my most popular posts (according to you) and my best posts (according to me!)
👇👇👇👇👇👇👇
Who Am I posts
What we do:
How I got here:
Why…
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We don’t hire GCs
But if we did
Think I’d do it in two steps:
1) Hire a third party architect for conceptual design
2) Hand the conceptual design to a Design Build contractor and have them handle it from there
The liability protection from Design Build is very underrated imo
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Look at the pad to the left.
Ideal site for us. We’d normally have to build that fire lane, curb cut, etc.
But on this one, we basically get it for free.
Save on construction costs and land costs. And sidewalk already in!
❤️❤️❤️
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To all my Twitter friends
Apparently
@jandreini1
has the record for views for this podcast
So please all tune in so we can crush him!!
I was joined in studio by
@tyleralley24
so he could teach me how he builds stripmalls better than everyone else.
We go through the entire cycle:
Acquisition- working with economic developers
Design- the optimal strip center depth
Financing- with lots of tangents
Construction- so…
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Real Estate Development Storytime
We'll call this story "Sometimes you do everything right and still end up screwed."
A bit wordy, but you get the point.
A Thread 🧵
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Spending time with brokers is important.
Spending time at City Hall might be just as (if not more) important.
Decisions made publicly at P&Z, at City Council, and at the ballot box drastically affect values.
Here's an example. Pretty short story.
A city in DFW was a dry…
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Have had more and more individuals come by the site looking for work.
We talk a lot about how GCs and subs can struggle
But seeing individuals searching and not finding work may the toughest one for me to see.
So much respect for those folks.
Hope the downturn never comes.
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Hard to Believe the Current Strip Mall Market
Leasing Demand > Available Supply
New Construction Largely Paused
And the strangest part:
This is happening in TEXAS where the developable land never ends
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Ideal Depth of a Strip Center Site:
Breakdown front to back:
-15' Landscape Buffer (usually 10'-30')
-20' parking (18' + 2' for overhang)
-24' fire lane
-20' parking (18' + 2' for overhang)
-12-15' sidewalk (for patio, could be bigger)
-60-70' building
-6' back sidewalk (8' if…
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Seems like a good time to remind everyone what deals we're looking for. DM me if you want to connect.
Product: Land/Pad Sites for Retail Strip Centers
Location: DFW (45 minutes from downtown or Legacy West is a good reference point)
Size: 1-10 acres, but our preference is…
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1
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I'd give up 1031 Exchanges forever if Bonus Depreciation was allowed to stay permanently.
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