Perfecting the Development Process with Carl Wright, Founder & President, Wright Partners

Carl Wright is the founder and president of Wright Partners, a real estate development firm focused on the development, ownership and management of retail, industrial and healthcare properties. The firm is the exclusive developer for Patient First for Philadelphia and New Jersey as well as a preferred developer for brands like AutoZone, CVS and National Tire and Battery. 

Carl founded Wright Partners in 1998 to combine his passions for real estate, engineering, and construction. As of this writing, Wright Partners is on track to complete its 100th development project. 

Apart from real estate, Carl is a third-degree blackbelt in Brazilian Jiu-Jitsu, an avid surfer, and an Ironman—having successfully completed a full Ironman race in Lake Placid, New York.

Carl is a graduate of the University of Delaware, and a licensed Professional Engineer in both Pennsylvania and New Jersey.

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Transcript

A.Y. Strauss: Welcome everyone to The Dealmakers Edge. Today, we're really excited to be joined by Carl Wright, founder and president of Wright Partners. Wright Partners is a real estate development firm focused on the development, ownership, and management of retail, industrial, and healthcare properties. And the firm is the exclusive developer for Patient First for Philadelphia and New Jersey, as well as a preferred developer for brands like AutoZone, CVS, and National Tire and Battery. Carl founded Wright Partners in 1998, behind his passions for real estate, engineering, and construction. And currently—what a major milestone, Carl—Wright Partners is on track to lead its 100th development project. Carl is a graduate at the University of Delaware, and a licensed professional engineer both Pennsylvania and New Jersey. Apart from real estate, Carl's a third degree black belt in Brazilian Jiu Jitsu, an avid surfer, and an Ironman—having successfully completed a full Ironman race in Lake Placid, New York. And as I was joking before, I really can't screw anything up cause you'll just come straight up, find me and I'll be in a pretzel. (laughs) So, I gotta be extra nice to you, Carl.  

Carl Wright: I'm honored to be here. 

A.Y. Strauss: Yeah. It's great you're here and I know you're a lot of fun and we're going to get your story out because the goal of this podcast is really to try to educate some young, up-and-coming professionals. And your background is very unique. So we can't wait to hear about it. Maybe you could take us back? I know you started the firm in 1998, but before that, you were also very involved in some other sort of pre-development type of roles, and maybe you could talk about how you got into the business, when you decided you're getting into the business, and those early days?

Carl Wright: Sure. Well, first of all, thank you so much, Aaron. I'm honored to be here. [] Your guest list that on your podcast is astounding and legendary and it's humbl[ing] to be here. So, thank you.

A.Y. Strauss: Of course.

Carl Wright: So I had started reading about real estate in high school. So there was kind of an intrigue about that. I just walked by a book that said, “How to get rich in real estate” or “How to make a million dollars in real estate,” and I was like, “well, how do you not read that book?” So I think [that’s] why I had this seed of information that I was like, “maybe someday if I can figure out this real estate [thing], that'd be great.” But I went to engineering school and then in 1991, I graduated and it was kind of a recession. So I went into the environmental business because that was where the jobs were. I was a civil engineer, but they weren’t really hiring so much. [] But it was luck, because I got into their construction division where we would build treatment plants around the country. And I got a chance to be, not just a construction manager, but actually a general contractor. Our people, our equipment rented [], but yes, it was just amazing. And because I'm in places like Nebraska and Albany and here at PA, no one else wanted to go. So I was able to maybe elevate myself a little faster than otherwise should have happened. So then I realized, “okay, I really do love real estate. I love, love, love construction. And I love engineering as well. So, what does that mean?” I was like, “well, I'd like to be a real estate developer.” I just didn't know how. So I took my civil engineering degree. Now it's a better market. And I got a job as an engineer where my clients were CVS Pharmacy, Lowe's Home Center, [and] some of the national home builders. And I got a chance to learn the business from the inside. And I had an amazing boss because he asked me, "Why do you want to join our company? I said, “well, in five years I'll be a developer full-time. And this is my transition from here to there.” He appreciated the honesty and five years later, I was in fact able to exit the engineering and do real estate full-time.

A.Y. Strauss: That's awesome. And you’re a guy that loves discipline and pain (laughs), you know, which is evident both in the fact that you developed a hundred deals and you've persevered in Brazilian Jui-jitsu. You sort of have this mental toughness and physical toughness. I think you really need to just get through blocking and tackling so many, so many projects and so many issues that pop up with the skill set you have, obviously.

Carl Wright: I think that's a common thread of all your guests, [and] of all my peers. There's a certain, I don't want to say “relentless[ness]” because that's overly complimentary of myself, but like just a determination to figure it out, to keep going. And also sometimes, that'll run you down the wrong path. And so you do have to step back and say, “All right, am I running East looking for a sunset? And is this a project we need to bail on?” Because sometimes that hard headed go mentality, we'll figure it out. We'll sometimes send you down the wrong path. And sometimes it has for me. So that's a lesson learned moving forward. But yes, I think that the relentlessness is what you need to be successful in real estate development and probably most [other industries].

A.Y. Strauss: Yeah, and I know at this point, you know, Project 100—and I'm sure and I know every project's different. We've talked about that offline—that there's no such thing as an easy project. But I imagine with the experience and the team and the infrastructure and the relationships you have today, it's certainly, if not easier, it's more nuanced and polished as opposed to the first couple. So, maybe someone listening to this is getting started and they're like you. Maybe they're in engineering, maybe they're a professional, maybe they're in i-banking, who knows? And they want to go be a developer. Maybe you can start by describing those early deals. You had to raise capital. You had to believe in yourself. And at a certain point, no one's going to make the jump for you. How do you actually do that? 

Carl Wright: Yeah, I mean, maybe I can be more helpful than say Bruce Eichner or RXR—some of your other interviews where they're like doing mind-blowing projects that only super humans can do. I'm more attainable for the wide masses of your listeners. So the first project was actually, it was a residential subdivision. And what I did…and you can option it, meaning you can put it under agreement and then close when you get approvals. And in this case, when you line up a home builder as well. So I put a hundred acres under agreement in Westchester, Pennsylvania, and had an amazing seller who believed in me, and hung in there for the two years it took to get the approvals. And then once it was approved, I had a national home buyer lined up. And the way the transaction worked—and you but most people don't—is I didn't even have to take title. The home builder took title and just wrote me … wired me the difference between my purchase price and their purchase price, which was a significant amount of money, especially for me being still part-time employed with my engineering. And that allowed me to exit. The other thing to being an engineer and doing hundreds and hundreds of site plans for CVS Pharmacy. When CVS found a site, they would just send it to me. And I was their third party site plan guy. [] I would figure out the zoning, the drive through, the loading setbacks, and I would figure out if it could be a subdivision, if it could be a CVS Pharmacy. And I use that to identify potential CVS Pharmacy projects. Now for your listener, they probably wouldn't have the advantage of doing 500 site plans, but it is attainable to find a site that a user wants—a Chipotle, a Starbucks, CVS—and hire a team and figure it out. And that's how we got started. So we started doing CVS pharmacies which led into AutoZones—we've done 40 of those—and that led into other things as well. 

A.Y. Strauss: Fantastic. And you had to build the firm from scratch too. So you had to build the operational infrastructure. You had to hire people to assist you and to find people that believed in you. But I guess, having the relationships with the tenants really is magic. That's where the magic happens. It happens at conferences like ICSC or perhaps where we met—good networking at that event we met in Florida. There's nothing you can’t achieve if you're able to weave it all together. But I think a lot of people don't have that engineering background like you do. [They] don't have the site plan approval background. They're not hyper-technical and they're very reliant on their third-party professionals and that can be stressful. But I guess it was a really, really great thing to have that working knowledge and those relationships to launch. And that's a good investment of your time and energy.

Carl Wright: Yeah. And that's how we built the firm. We decided, “what's our edge if we have one?” It would be [that] we come at things from a technical perspective, meaning I'm a professional engineer and the leadership … we have two other 25 year plus professional engineer. We have a soon-to-be-licensed architect on staff. And our thought process is that the dealmaking, we can figure that out. The finance is relatively simple math, we can figure that out. [For] legal, hire an amazing attorney like yourself and it's easy. But the actual building of the building, building of the site, estimating your cost accurately, we found that having a technical team was helpful.

A.Y. Strauss: Absolutely. Another question where you touched on two things. One was having that edge and, you know, The Dealmakers’ Edge is the name of the podcast. We try to touch also on the psychological aspect of managing your real estate career. And I think you've been blessed by having some hobbies like we've touched on. And you're obviously really into physical achievement, and physical and mental is a very fine line. Maybe we could talk about how having the passions that you have has helped you either power through different times and projects, or maybe they're two separate buckets and on the real estate side, you manage your mind in a different way because there's a lot of doubt and worry, especially you go through a market like `23 where people start to throw their hands up in the air and say, “You know, maybe it was a mistake, you know, in `21 or `22”. So how do you have the perseverance and the relentlessness that you've had to bring over all these projects? 

Carl Wright: Yeah, well, thank you. Well, the hobbies certainly keep you humble. In wrestling or submission wrestling or … I was doing mixed martial arts … there's a lot of failure, a lot of losses, a lot of mistakes, and you're immediately punished for them. But that gives you immediate feedback to “all right, next time I won’t do that. Next time I will make a better decision in that situation and move forward.” And as far as like the triathlon, it's like, I wanted to quit 19 different times. I didn't even know how to quit. It's like, you're just out there on a bike, you know, like, how do you quit? I don't even know how to quit. Like some people say, “I don't know how to quit” like they're bragging. I didn't know how to quit. 

A.Y. Strauss: (laughs) You can't just leave the bike there! You can't just leave it, you have to get it out. (laughs)

Carl Wright: I'm eaten by a bear. I was doing the freaking work. (laughs) So, but you know, I really wanted to quit, but I didn't. And I kept going and I finished. So I think that's the lesson learned and the same applies to real estate. There's so many setbacks. I really admire the overconfident developer because I don't know how they do it. I have so many setbacks, so many mistakes I've made. And we just try to learn from them and get better. And it reminds me of my hobbies where it's just, you make a mistake or just sometimes an outcome goes against you, and then you just learn from it, iterate. Hopefully we capture it. We have a mistakes log in our system, so we try and write down the mistakes we make and then what system we're going to improve to make sure that doesn't happen again. We have checklists for everything. So we try to just add the checklist each time we make a mistake, which is often. 

A.Y. Strauss: That's great. That's really, really good to have both of those personal, professional tracks overlap in a way that's really healthy and that drives a lot of your success too. So you're nearing completion of your hundredth—if I could say that correctly—development project. What do you want to do the next five years? Are you going to continue down this track? You're going to try to get to 200? Is it more slow and steady? What do you … what are you thinking of?

Carl Wright: You know, what does Sam Zell say? “Don't chase money, chase freedom”. I would like to have more peace of mind. In other words, I want to make sure each project we do, while being ambitious, we can live with the downside. We can live with the worst possible outcome, so that I enjoy life a little more professionally. You know, I love what I do, but those times when we've gotten over our skis a little bit or picked the project that was maybe not an A+ project. The stress that came with that, I'd like to avoid moving forward. The lower cap rates went, the smarter I got. Well, it works the other way too. So cap rates need to go the other direction and everything gets a little harder. So I'm gonna be really selective about it … and I would do more industrial. Love, love, love the industrial world. And we're doing small-scale shopping centers, 30,000 square feet. We're doing a few of those. I love those. And I love my clients. I love AutoZone. And as long as they’ll let me. We’ve done almost 40 of them, as I mentioned. So I hope to do 40 more because we really love that their team and how they treat us and hopefully we do a good job for them. 

A.Y. Strauss: That's terrific. Maybe we'll talk about the market a little bit. I guess the positive element of development is if you have the tenant in hand, a lot of its derisked, although “derisked” is in quotations given that there's always risk in all these deals. And also given the time horizon … every developer goes under contract, and has the thing built usually in an entirely different economic environment. So, how are you capitalizing your deals? Is it with like a steady stream of investors? Is a lot of it self-capitalization at this point? How are the conversations going with lenders today versus even a year ago? And I know retail as an asset class overall has been doing fabulous. Hopefully you've been getting the benefit of that.

Carl Wright: Yeah, very, very, very fortunate. So we capitalize our project with local lenders: First Trust Bank, Republic Bank, a few others, who have stuck with us through the uncertainty that's been the last couple of years. Even though many lenders have pulled back, our lenders have hung in there. And then, we have one primary investor. His name is Lynn and I just tell him how much to send. He doesn't even ask about the deal. [] Everything's a handshake. We've been working together for 20 years. I met him, maybe 15 … I met him because one of my first CVS projects I bought from him. He was a landowner. He had him in the warehouse and I knocked on the door on the warehouse. I said, "Can I buy some land?" And we ended up buying his corner and put a CVS Pharmacy there and we still own it. And we just became friends. So that's my capital structure. So it saves me a lot of time running around and there's no pitch decks. There's no PowerPoint presentations. There's no meeting or prospecting. And we use our own money, of course, as well. And in combination thereof, we're able to capitalize the project. Now, our first industrial deal, that was a $40 million project. That was a different story. My local lenders, [this was] too small for them. We hired a great broker, but after 50 banks, and then it was right. We financed it last year, late last year. So you can imagine what that was like. (“Wow”) Yeah, it was really … our banks were failing and it was hard. Well, you only have to go one for 50 and we did. And now that project's 75 percent complete.

A.Y. Strauss: That's terrific. Are you finding the lending world is opening up with the regionals now more than say six, twelve months ago?

Carl Wright: I don't sense the fear that I sensed a year ago. You know, when lenders were like, “are you okay?” And I can see that they're having other portfolio problems. Like now we're doing great. Obviously, we prefer lower interest rates than higher ones, but we know we'll be all right. You know we're still profitable. Not as profitable as we'd hoped, but you know, still profitable. So I’m not feeling the nervousness from our lenders the way I was in 2023. So, I'm hoping that continues. 

A.Y. Strauss: Yeah. A lot of that's about psychology; the appetite for deals itself. How about markets? You've been in a number of States all over. Any specific markets you think you'll be focusing on more in the next year or two, or is it sort of wherever these end users need to be?

Carl Wright: Well, [in] AutoZone's case, wherever they send us. They just gave us a project in upstate New York two weeks ago. We're looking at stuff down in North Carolina. We're looking at something in Tennessee for them. So wherever they send us, and as you mentioned earlier, there's a lot of risks there because I have a tenant. I know the costs, and there's some approval risk. Sometimes you don't get approved, and you lose your down money, and you lose your engineering money but that's relatively … you can swallow that pill. And then as far as industrial, we want to stay within our core area. The tristate area, which to us is Penn State-New Jersey-Delaware. And we want to do more industrial for sure, moving forward. 

A.Y. Strauss: That's great. So, it's onward and upward [to] continue the same path you've always done. Perhaps leaning more into industrial, which is obviously a super-hot asset class as the more years. And perhaps gaining more peace of mind in the project management of these development deals, which is very hard.

Carl Wright: Very hard. 

A.Y. Strauss: But it's also very hard to find people who've done a hundred development deals too. So if you've managed to do that, Carl, I'd bet on you and be very confident you'll figure out a way to continue to evolve. Let me ask you this: maybe somebody is buying their first few development deals. Maybe they have a background in architecture or maybe they're a land use lawyer, or maybe they have something that ties to development and they're looking to take down their first few deals. And they meet you for coffee and they're just trying to pick your brain. What are you telling this individual beyond what we've already sort of covered in broad brush strokes here?

Carl Wright: Obsess over learning. It's all out there. Thanks to podcasts like yours and also the amazing books that are out there. I mean, I've read every real estate biography or real estate book about a project that I know of. The only ones I haven't read are the ones I don't know about. For instance, “How to lose $200 million”. You can learn a lot from that book. And I [] just read the book. I will just listen to your podcast. I'll go through the transcript and I will print that out just [be]cause sometimes I'm working out or who knows what I'm doing. And your podcast is so informative and I'm like… [] That's not actionable. So I'll print out the podcast and I'll put away my takeaways and I'll summarize it and I'll post it for others to see. So my advice would be [that] the information is out there. There are legendary real estate developers who have summarized their life's work in a book or their most challenging project in a book and it's right there for you to learn from because you can do trial and error—and we do trial and error—but I really prefer to learn from others so that I learn from their errors and I add that into our systems so that hopefully I have [learned]. That's our preference. Our preference is to learn from others’ mistakes, but unfortunately, we do both. 

A.Y. Strauss: Oh, that's terrific and great advice. And I think they would appreciate that because it's true. If you listen to some of the other podcast guests we've had, they certainly are very bright and very talented and your background is very unique, but, they're always learning and they're always thinking how can they take a lesson from somebody else and avoid the pain of making a mistake if some information is available. Anything else, Carl, you wish I would have asked you, but I did not address? Or any other topics you feel like we should cover while we're still chatting here?

Carl Wright: The only other thing I would add is, I've been studying the psychology of human misjudgment more.  So [] if I would have known this when I was younger, I would have made a lot less mistakes, which is study all the tendencies we have to run down the wrong direction. The loss aversion bias, the sunk cost bias, the confirmation bias. So I wish I had known that when I was younger, like there was a quote that I love that says "There's more fiction that has been written in Excel than in Word.” And that's not because anybody's trying to be deceptive. It's just, we want to believe this project's going to work. We want to believe these costs are going to come in lower than really we know. And so, I would just leave [you with] that: study your biases and try and confront reality. 

A.Y. Strauss: Really well said, Carl. All your points, really well taken. I'm sure people will learn a ton from this. Your development experience and background and track record also [are] first rate, first class. And the fact that you really combined your personal [and] professional [life] really nicely together. Very inspirational. So I took away a lot. I'm sure others will too. And you know, can't wait to hear from you again after you've done 150 and 200 projects, hopefully with many more successes. And with that, I guess we'll wrap it up. 

Carl Wright: Thank you so much. It was a true honor. And I always appreciate talking to you, whether online or offline. 

A.Y. Strauss: Amazing.