Executive Q&A: Greg Johnson
By Leslie Helm May 15, 2014
Gregory K. Johnson, who was raised in the New York City suburbs and studied civil engineering at Bucknell University in Pennsylvania, took a circuitous route to his current job as president of Wright Runstad & Company, which is engaged in an ambitious $2.3 billion project to create a new urban center in Bellevue. Seattle-based Wright Runstad develops, acquires, manages and leases commercial and mixed-use properties throughout the Pacific Northwest.
ARMY: After college, I did six months of active-duty training in the Army, then joined the reserves. [He retired much later as a lieutenant colonel.] It was a tremendous experience. As an officer, you get more responsibility early on than you would anywhere else. You quickly learn that giving orders alone doesnt make things happen. I recently met an officer worried about finding a job. I told him: You have the skills you need. You know how to create an environment where everybody is contributing. Its about respect and trust and good communication. Thats why the military is so effective.
CAREER: After the Army, I worked in San Francisco for a small engineering company that did structural and mechanical stuff involving buildings. I wanted to get into real estate development, the creation process, so I got an M.B.A. at Wharton. Later, I worked for a Canadian developer in Oakland. They went out of business after three years. That was 1991, when they were closing bases everywhere. I worked for the Army and with local communities on the transitions. The Presidio in San Francisco was turned into a national park and a public-private corporation was created to run it. Lucasfilm rents space [for its campus] there, and the money helps pay to keep up the park.
INVESTMENT: In 1994, I joined the Singapore Investment Corporation, a sovereign wealth fund, and spent eight years helping them invest in real estate. Thats when I met Walt Ingram and Jon Runstad, who asked me to join their firm. At first I said no. I was living in San Francisco and had young kids. But the more I learned about the company and its people, the more I respected them.
WRIGHT RUNSTAD: 2001 was a tough time to be in real estate. Two of our projects were canceled. We did OK because we did private-public partnerships to build office buildings for the state of Washington and others. We would float 100 percent tax-free debt to pay for the building. At the end of 30 years, the government entity would own it. We would deliver the project at a 20 to 30 percent savings. In the recent downturn, we did that with Husky Stadium. UW thought it would cost $300 million, but our price [before additions] was $225 million. We cut costs by putting the football operations functions, such as coaches offices and training rooms, under the stands instead of in a separate building. Now it helps to recruit new players. Theres a recruiting lounge at the end of the stadium with a glass-walled room that looks out over the stadium, down the field and over the lake to the mountains. We also put in a 30,000-square-foot sports medicine clinic for UW Medicine. Having the clinic in the stadium where the athletes are gives the clinic a competitive advantage.
SPRING DISTRICT: When completed, this development will have 5.3 million square feet of residential and office space, compared to 8 million in downtown Bellevue and 30 million in downtown Seattle. A light rail station to be completed in 2023 will take you west to downtown Bellevue in four minutes and east to the Microsoft campus in Redmond in seven minutes. Its a rare instance where the city did the policy work to support the infrastructure investment before the infrastructure investment was made. It will take 15 to 20 years to finish, so it will bridge two economic cycles.
APARTMENTS: In September, Security Properties will start construction of a 316-unit apartment complex there. Weve urged them to build more large apartments to attract families that will be interested in Bellevues terrific school district. Microsoft has a huge driver-training program for [foreign-born] employees they hire who dont know how to drive. If theres a place where they can hop on the train to go to work, it will mimic the environments many of them are coming from. There is value in not owning a car, and we can make that option available on the Eastside.
URBAN: The next step is to add a brew pub and Capitol Hill-style retail. Early-adopter restaurants and retailers will like the area because you dont have industrial to mixed-use development happening anywhere else on the Eastside. People want to walk around a neighborhood with texture and diversity in architectural styles and people on the street. You get energy from that. There is also this sustainability angle of, Hey, dont tear it down. Reuse it. Weve designed small blocks so there are more corners that allow more retailers to have two sides and more crosswalks where people stop and take in whats going on. Cars also slow down at intersections, so that promotes walkability. When you drive by, youll feel like, Gosh, I would rather be walking and experiencing this.
OFFICES: Before we start construction on the office buildings, we need financing, and banks want space pre-leased before they lend. So were looking for the next company thats going to need a couple hundred thousand square feet. Companies jam people into a space as long as they can because stepping up to a much larger office is expensive. But we think there are dozens of companies out there that could take 200,000 square feet. There are new businesses like Zulily, which has taken close to 300,000 square foot in our building at 2601 Elliott. And since Microsoft has something like 15 million square feet, if it grows by 1 percent growth, thats 150,000 [additional] square feet.
NEW DEVELOPMENT: Between now and 2030, the Puget Sound region is going to add about one million people. Without places like Spring District, the region wont have space for businesses and people. If South Lake Union wasnt available for Amazon.com, where would they have gone? They might have gone to Austin, Texas, or somewhere else. We have a virtuous cycle where smart people want to live here, companies expand or move here to hire them, and the companies attract more creative people. You also have a constant infusion of creative people at the university. Its really important that this virtuous cycle not get disrupted.
CONCERNS: If we [Seattle] were to back away from transportation investments, that would worry me. If we dont expand seats in the university system, get our police force settled down and improve K-12 education, that would worry me. There will always be economic disruptions, and if you dont have get these foundational elements right, a downturn could be more of a body blow.