Gary Safady's working the crowd hard. Animated and tieless, he's manning the O&S Holdings booth at a jammed ICSC conference in New York, touting the attractions of his company's big new developments, Louisiana Riverwalk in Bossier City, La., and World Famous Bridge Street in Huntsville, Ala. It's just him and his director of leasing, Austin Bettar Jr. — no cadre of dark-suited staff members behind them, and not even a bowl of free candy for passersby.
That's the way the 37-year-old Safady wants it. “We've got the stealth factor going.”
Yet O&S is making some audacious moves for a stealth company. Construction is under way on Riverwalk, a 440,000-square-foot entertainment center on 50 acres of the Red River across from Shreveport — where tourism is getting as hot as the local food. Five hundred miles to the east, in underserved Huntsville, plans are being finalized for Bridge Street, a 100-acre mixed-use project that will feature 600,000 square feet of retail in a town center setting.
If those weren't enough for a company whose staff numbers fewer than a dozen, O&S also is developing a 300,000-square-foot power center called Foothill Crossing in Rancho Cucamonga, Calif., and is considering new venues — maybe even overseas. All of this is on top of some 80 smaller properties the Los Angeles company has developed in its 11-year history.
“I just never sleep,” says Safady (pronounced SAFF-adee), the company's managing partner. The evidence backs that up. He answers morning e-mails from the East Coast well before the sun rises over L.A.
In the crowded world of developers, O&S has found a niche. It has assembled a solid portfolio and is eyeing more opportunities, especially in the south and Midwest, and has created a reputation for getting things done. “We move quickly, our projects are a little more outside the box, and it's our own capital we're working with,” Safady says. “I don't think a lot of the larger mall developers would program things the way we do and go after the non-urban market we go after.”
And real estate isn't the company's only interest. Safady and his cousin and partner, Paul Orfalea, have joined with investor John Davis to start a venture capital fund with nearly $100 million in funding; one of its investments is in a line of retail food products called Deli Dashers. O&S has even developed a bowling and entertainment concept called Zodo's Bowling and Beyond that has debuted in California and will be part of Louisiana Riverwalk. “Living in L.A., you get a lot of ideas,” says Safady.
Safady's first exposure to real estate development was at the end of a hammer. While studying at Loyola Marymount University in Los Angeles, he went to work for a contractor as a carpenter's assistant and laborer, sometimes working eights hours a day in addition to his class work.
After graduation, he appraised commercial and retail properties for California's Curtis-Rosenthal, which led a few years later to a job handling real estate for the Kinko's copy chain in 30 states. In truth, Safady had a good connection at Kinko's — Paul Orfalea, his cousin, founded the company in 1970.
In the early 1990s, Safady realized that the work — finding promising sites where developers could build Kinko stores — could be done for his own benefit. He and Orfalea founded O&S and soon developed a few Kinko's sites on their own. (Orfalea eventually sold his majority stake in Kinko's and left the chain in 2000.) In a short time, they began developing properties for other tenants, and within a few years were building power centers.
In those early years, Safady approached development with an eye toward mastering the details. He acted as general contractor on his first project, “not because I wanted to save a buck but because I wanted to learn,” he says. “I got my lunch eaten on that job,” he quickly adds.
He took a lean approach to staffing that he's never abandoned. His staff is small and close, and he says his wife is his chief advisor on shopping experiences. He sees O&S's compact size as a marketing plus. “I want people to know they're not dealing with a huge bureaucracy,” he says.
Among O&S's projects in recent years are The Marketplace at Palmdale, a 550,000-square-foot power center in Palmdale, Calif., and the 77,000-square-foot Promenade Mall in Temecula, Calif. — typical of its undertakings until now. But the company is moving into a bigger league with its new projects.
O&S was approached in 2001 by Louisiana developer John Good Jr., who sought help developing a blighted riverfront parcel in Bossier City. The idea makes sense from a destination point of view: Five riverboat casinos are docked on the Red River, making Bossier City-Shreveport one of the state's biggest tourist draws. O&S agreed to a partnership.
When it opens late in 2004, the $150 million project will feature retail, entertainment and dining. Anchoring it will be a Bass Pro Shop, which has already opened, and a 14-screen Regal Cinemas. A 1,200-seat Branson, Mo.-style theater will round out the entertainment options.
The project has not been without snags. City officials, nervous about the amount of infrastructure improvements needed for the project, held out for an agreement that the city could seize up to $35 million in the developers' assets if the project isn't built.
“There have been concerns because we're spending a lot of our public dollars,” says Pam Glorioso, the city's project coordinator, “but O&S has been very cooperative and very understanding.” As for Safady himself, she adds, “We have no complaints at all. “He's a sharp, sharp guy, and he has good people on board. This kind of project takes somebody with vision.”
Bridge Street is equally sweeping. Located next to the world's fourth-largest science and technology research park, the project — complete with hotel and conference center, apartments, office space and lakes — is intended to exploit the region's lack of upscale retail, Safady says. “Huntsville is a very sexy, hip project,” he says, noting that the nearest high-end retail is 100 miles away.
Safady's background in retail site selection is especially valuable to prospective tenants, says Carl Cheaney, senior real estate manager of Houston-based Landry's Restaurants, a 300-restaurant seafood chain whose largest brand is Joe's Crab Shack. A Crab Shack is set to open in Riverwalk, and Landry's is talking with O&S about a presence in Foothill Crossing as well.
“He understands the nuances of the retail restaurant business and the mechanics of how corporate real estate acquisitions are made,” says Cheaney. “He knows that the right mix of tenants and the right grouping of tenants has a lot to do with their success. Gary is a very high-energy guy.” Cheaney also extends that description to Bettar, who joined O&S in 2001 from CB Richard Ellis, where he was a retail director in Los Angeles. “These guys put in a lot of hours,” Cheaney says.
Safady sees opportunity in the south and Midwest, though he is open to any area whose fundamentals make sense, including the northeast. “Bad areas get worse, mediocre areas stay stable or decline, but good areas only get better,” he says. “We have a large appetite domestically.”
And perhaps overseas as well. Safady says he's interested in exploring development opportunities in other parts of the world, including Europe, the Middle East and Asia. Such projects would likely be in partnership with local companies, he says, with O&S providing retail-development expertise that they might not have.
As the venture capital fund illustrates, Safady also sees opportunities beyond real estate. Indeed, he says it's possible he won't be in development by the time he's 60. “We specialize in opportunities,” he says. “That's really our mission statement.”
LEAN AND MEAN
In a competitive market, developing successful properties requires quick action and out-of-the-box concepts. It also requires a willingness to move into less-well-traveled areas and diversify.
O&S maintains a low profile and a lean staff that responds quickly. Self-funding allows flexibility, and the choice of non-urban markets offers an added edge. The company has expanded into venture capital and entertainment concepts.
O&S managing partner Gary Safady is young, energetic and patient, a developer who has assembled a good staff that gets things done.
O&S has developed some 80 projects, most of them small, in the past 11 years. It now is moving into a bigger arena with the $150 million Louisiana Riverwalk in Bossier City-Shreveport, La., and World Famous Bridge Street in Huntsville, Ala.