For a guy who says he had no real purpose in life after graduating from Marquette University, Gerry Neugent has done all right for himself, and for Knapp Properties, where he was named president and CEO last year.

Few would dispute that Greater Des Moines, too, has benefited from a steady hand working for many years in the background of signature development deals.

Neugent was the first recipient of the Great Western Bank Commercial Real Estate Professional of the Year award, which was presented April 22 at the Business Record’s 2015 CRE 
Trends & Issues Forum.

In nominating Neugent, Knapp Chairman William Knapp II said, “One cannot look too far in any direction in central Iowa without seeing the handiwork of Gerry Neugent.”

Businessman Jim Cownie said, “Through his position with Knapp Properties, Gerry has been a leader in commercial real estate for more than 20 years. Before that, he was one of the finest commercial real estate lawyers in Iowa, with most of the major commercial real estate developers as clients.”

It’s probably not surprising that Neugent “really enjoys” real estate. His parents moved to Des Moines from Wisconsin while he was still attending Marquette. He followed them to Des Moines to attend Drake University Law School. His dad told him that at least he could enjoy free rent for a year or so while he attended classes.

Happenstance led him to consider law. While mulling over what to do with the rest of his life after college, he took the LSATs with some buddies. He found he was suited for the law.

His early mentor was the late Bill Wimer, whom he worked with at the Wimer, Hudson, Flynn and Neugent law firm after graduating from law school in 1976. He moved on to the Belin, Harris, Lamson, McCormick firm in 1989, where he was a partner. He liked that job too and really wasn’t looking for a change when he was offered the job of president and chief operating officer at Knapp Properties in 1993.

“It was kind of like what (founder) Bill (Knapp) says, that the time to sell is when you don’t want to sell, but somebody wants to buy,” Neugent said. “That’s the way I was about coming over here. I was happy at Belin. I worked with excellent partners and I had good friends. It was kind of an adventure for me to change.”

So it has worked out. Neugent is the chairman this year of the Greater Des Moines Partnership and, for the time being, he is the sole director of the Iowa Events Center Hotel Corp., the nonprofit that will build, own and operate a convention center hotel planned for downtown Des Moines. Knapp Properties recently received the Better Business Bureau of Iowa’s Business Integrity Award, which Neugent viewed as recognition that the company is trustworthy, honest and does what it says it will do. I sat down with Neugent to talk about a wide range of topics, from his early days at Knapp to some of the issues facing the real estate and development market today.

Why real estate law?
I always joke that I was a real estate lawyer because the firm I worked with had real estate clients. If I had tax clients, I would have been a tax lawyer. I really enjoyed real estate. I worked for a firm, Bill Wimer was my mentor in that firm, and he did a lot of real estate work, represented Iowa Realty, primarily in the real estate area, and that’s where I had an interest and I really enjoyed it.

What was the first big deal you were involved in?
Back then everything was big to me. I did a lot of work with Iowa Realty on a lot of developments. One of the big developments was Country Club with Bill II in Clive. Bill Knapp was starting to make a presence downtown, (he) bought the Savery, some of those acquisitions were interesting.

Has Bill Knapp ever walked up to you and said, “Now, kid, there are some things you need to know about the business”?
No, but he certainly shares his philosophy about business and real estate freely, and I think you can talk to people who are very successful in the real estate field and a lot of them have gone through Iowa Realty Commercial when Bill owned it, and a lot of them learned a lot from him. I know Richard Hurd has told me from time to time that he learned a lot working at Iowa Realty for Bill. He has a great sense of long-term strategy with real estate and a great sense of analyzing deal by deal without going deep into the weeds. He just has a wonderful ability to analyze this stuff.

Knapp Properties seems to hang on to land for a long time. Do you ever just buy something to flip it?
Sometimes. We bought a couple pieces of land to just do single-family development, where we’re selling the lots, just in the last two years. We’re doing a plat off of Hickman Road in Urbandale just west of 142nd Street called Allerton Park, and that we just acquired a year and half ago and finished the improvements late in the fall, and houses are being built there now. And we bought a piece in the city of Ankeny, just in the fall, and we’re starting to get the utilities and the first plat done. So we’re buying it, adding some value to the land, and selling it to builders.

You seemed a little bored because of lack of activity during the recession.
Being a mature company, we were in a good position. Our financings were in good shape. We were not overleveraged; we were in a good financial position. It’s great to be busy again, and I think that’s true of everybody in our business.

You didn’t waste any time getting into the single-family market after the recession.
During that recession there were a lot of foreclosed lots, and we didn’t buy any of those. There were people who did, who could buy them cheap and resell them for a profit, and they still would be cheaper than developing. As those started to be consumed, we decided to start the plat in Waukee. And we had done a pretty good plat before the recession up in Urbandale at Timberline Village. We had sold most of those, but the last ones took a while before the economy bounced back. It seems to take a little bit longer now to develop lots. It’s pricey. The key is the velocity of being able to sell them.

Is there anything in the market that worries you?
Not too much. There still is not a full inventory of single-family lots that the cities would like to see. I’m not saying it’s a shortage, but there is not an abundance, for sure. It takes a little bit longer to develop and it’s costing a lot to develop. If you can get a lot ready, there seems to be a lot of interest if you’re in the right areas. … The multifamily market, that’s an area we would watch before we start another project. Downtown continues to have record low vacancies, but in certain areas (such as West Des Moines near Jordan Creek Town Center) the concentration has built up pretty quickly. We are working with a company to build some units in Grimes. 

What are the sleeper development areas?
I think there are areas that are going to really come back strong. Pleasant Hill has been a little bit slow but they have a lot of nice land, they have a great high school. There has not been a lot building permits, but there is a lot of pent-up demand. And I think Altoona is a similar city. Everybody knows West Des Moines, Urbandale, Clive, Ankeny are hot. Polk City has had a steady number of building permits and decently priced houses. It just didn’t have the huge numbers where you put in 200 or 300 lots.

Do you see a shift away from a desire for single-family houses?
It appears to me that the young people – that makes me sound really old – it seems to me that younger employees today have no hesitation about changing jobs, just like employers have no hesitation in changing employees. But they have no fear of it, and I think if they want to pick up and leave to go to another town or another part of the state, they don’t want to be saddled with selling their townhouse that they might have bought with a 90 percent mortgage.

You are involved in the 420 Court project, but you don’t seem to be involved in a lot of commercial projects. Why?
We’ve built some medical clinics. We’re working with some partners to build a small two- or three-bay retail area in Grimes. But when it comes to office, no one is really building a speculative office. The office market here, with the low rates, you just couldn’t justify new construction. The cost of capital has been so low, the rents have not had the upward pressure, especially when we’ve had incidences of large vacancies like when Nationwide built all of their spaces and Wells Fargo built all of theirs. To build a speculative office, rent is just not going to be in line with the cost. We’re assuming there is going to be some rent inflation. If you have a vacancy, and tenants will only pay you “X,” you will take it. But vacancy is getting smaller, that’s just supply and demand. If you’re a 2,000- or 3,000-foot user and you could move in anywhere, you could get a heck of a deal. But right now there are not a lot of large spaces. If you’re a 30,000-foot tenant, you’re not going to drive that kind of a bargain because there are just not that many big spaces available. I think when the cost of money goes up, it’s going to have to have an impact.

Is the office market cyclical?
In Des Moines’ case it wasn’t from overbuilding any speculative space. If you look at a market our size in the last 10 years, the companies that used to be rental properties that built their own buildings – Wellmark, Wells Fargo built downtown and Jordan Creek, Nationwide built those beautiful buildings downtown, it goes on and on, Rain and Hail, that’s what created our vacancy, and that’s a mixed blessing. But our market has done a good job of backfilling. West Des Moines vacancy has come down quite a bit. Downtown still has some vacancies, but we are seeing more interest downtown.

Do you focus your activity in a specific area of Greater Des Moines?
We have a pretty broad view. We own land in the four corners of the county and city area, and Warren and Dallas (counties), Madison County. Bill Knapp had a great sense of strategy and long-term holding, and when you have a lot of land you have to look at which areas are going to be more active than others. The one area that has intrigued us and that has been a little bit slow to develop is along the (Iowa Highway 5) bypass. 

How important is the Events Center hotel?
From working with Bill and other business leaders with Des Moines Redevelopment, this was the No. 1 priority (for us), and for the city and the county. There are a lot of great hotels downtown, but they are not adjacent (to the Iowa Events Center), and to be the kind of city we want to be and to maximize this events center, we have to have an attached hotel that is a convention center hotel with those amenities. 

You’re a private business guy. If you were competing against the public incentives, would you be a little resentful?
I’ve talked to hotel owners who think it is going to hurt their business, not on convention weekends but on other weekends. But in talking to Paul Rottenberg, who is the chairman of the Convention and Visitors Bureau, to interpret what he said, he said they are going to feel it while this think ramps up. But in the long run, it is going to help all of the hotels. He used the analogy of the downtown independent restaurants, when all of these national chain restaurants went out to Jordan Creek. But the market rose and they are back. We think the rising tide will help all of the hotels. But this is a hotel that is necessary for us to be the next-level city.

With properties in the hotel area, doesn’t Knapp Properties stand to gain from the development?
Yeah. That development is going to help that whole small neighborhood.

Does Knapp Properties consider developing in other cities?
We own properties in other cities … but we have never done any development outside of the area. Bill might have done a little bit years ago in Florida. But he’s always had the philosophy of having hands-on access to redevelop.

Do you share that attitude?
I think so. We could look at other things, but we’re pretty small in terms of numbers of people. We’d have to make a commitment to do it. But we’ve never foreclosed the idea of doing something like that. We have a lot of opportunities. We usually deploy our capital in central Iowa.

Would you change the business model at Knapp Properties in any way?
Bill II and I have always been of the same mind that we have a lot of land, a lot of inventory that we can concentrate on here. It’s our primary focus. But we’ve also talked about whether the opportunity came up, would we go to Phoenix or do something like that? Probably not. Would we go to Grinnell? Would we go to Ames? We used to have properties in Ames and Iowa City. We would look at those opportunities. Right now, Des Moines is such a great economic engine …. if you’re in Iowa, this is the place to be. We don’t have these wild swings. The charge Bill II and I have is to continue going forward. … For 18 years I practiced law, primarily in real estate, and the lawyers in Des Moines were incredibly honest and easy to work with and trustworthy. And when I went into business, I found that people in the real estate business in Des Moines are the same way. I can’t think of anybody who I wouldn’t trust to do business with. Some people from time to time have financial problems, which is a different thing, but we have a wonderful community here, and it makes it easy to do business.

Do you ever wake up in the morning and say, “I’m a pretty powerful guy?”
I have a friend who says I have a lot of reflected glory, from Bill Knapp. … I certainly consider myself lucky.