Gerald Hines

Duration: 57mins:5secs
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Corrected Transcript

Interview with:  Gerald Hines    
Interviewed by:  Paul Hobby            
Date:  December 13, 2007

 


PH:     It is December 13, 2007, and we are in the Williams Tower, a great project of the Hines Company.  We are interviewing Gerald Hines for the Houston Oral History Project.  It is about 3:30 in the afternoon.  It is closer to 4 at this point.

GH:      3:40, 3:50.

PH:     Mr. Hines, can you just sort of orient the audience; again, the audience is probably people doing histories of Houston or school kids or whomever might see this or read the transcript - we can jump around and talk about your ideas and your projects but can you orient us a little bit in time with a linear history of where you were born, how you got to Houston, where you were formally educated, just whatever you want to do to give the audience some orientation in time and space about who you are?

GH:      Well, my parents came from Nova Scotia.  That was a long history but there was a Benjamin Hines from North Carolina that was an empire loyalist during the Revolution. He fought for the British and they immigrated all the way to Nova Scotia.  Lost about one-third of their people to American guerillas.  So, this guerilla, Canadian guerilla, returned.  My parents came in 1923 to Gary, Indiana.  My father was an electrical superintendent with Dominion Steel in Nova Scotia, and he came to Gary to build the largest steel mill in the world at that time.  I was brought up in Gary, Indiana.  Then went to Purdue before I was 18.  That was 1943.  I went in the service.  I spent 1 year at Purdue before I was 18 in mechanical engineering and then went in the service for a little over 2-1/2 years, and then returned in 1946 and finished my degree in mechanical engineering at Purdue University in 1948.  At that time, I interviewed with different engineering companies and I decided to go with American Blower Corporation.  They gave me a choice of going to Baltimore, Indianapolis or Houston.  I said, "I will take Houston."  I had 4 fraternity brothers, Sigma Chi's down here.  So, I came down here.  They were all at the YMCA.  After I got here, we got an apartment out on Childress Street in Houston.  So, we were there and that is how I got to Houston.

PH:     You did not stay with American Blower a very long time.  You ended up at Texas Engineering for a longer stint.  Talk about that.

GH:      Yes, I was with American Blower approximately 2 years and then was offered a partnership with Texas Engineering which Art Byrons, my partner, had been the dean of engineering at the University of New Mexico and had designed a lot of the mechanical systems for some of Jesse Jones' buildings and so forth.  And so, I learned a lot there.  I was a partner and we had quite a few manufacturers' accounts.  So, we did that. 
            My back door neighbor said he wanted to build a 5,000 square foot building and I said, "Let me build it."  So, that was a 3,000 square foot office, a 2,000 square foot warehouse and that was my first project I did on the side in addition to my engineering business.  And then, I kept getting additional opportunities and finally, after about . . . well, I also invested in that time in an automobile dealership in Alvin, Texas, and proceeded to lose all my $50,000 that I had saved.  Jim Lockwood, another fraternity brother working for Tennessee Gas, we would go down on weekends.  After 1 year, that did not work out.  So, I continued to build buildings and after I had enough cash flow to support my family, in 1957, I opened an office in what was being completed - the GE Building on Richmond Avenue at 4219, with a secretary, and that was it.  So, that was the start of our business.

PH:     The first building that you built on the side, where was that?

GH:      It was on Richmond Avenue.

PH:     Does the building still exist?

GH:      No, it does not exist today.  It was torn down.

PH:     O.K.  When you first moved to Houston in the late 1940s - you said late 1940s . . .

GH:      Yes, 1948.

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PH:     Who were the personalities in town?  Who were the businessmen?  Who were the doyens?  Who were the political leaders?

GH:      Well, Jesse Jones was extremely prominent then.  Gus Wortham.  The Browns.  Your parents, the Hobbys.  Judge Elkins.  I finally sat on the board of South Main State Bank.  I remember my first loan.  Judge Elkins said, "Gerry, I am going to give you that loan over there but I don't want any of those deeds of trust.  I just want your signature and you'd better damn sure pay!"

PH:     And you did.

GH:      So, it was great to be in Houston.  They didn't want to know how many generations back you came from or whatever, it was an open society and it was terrific.

PH:     We all say that about Houston and I believe it to be true as well; that it is, you know, about the least provincial place on earth.  If you come here with a dream and some chutzpa, you know, there are lots of people that will let you try.  But I wonder - was the die cast by that group of characters that you just defined or did it precede them?  If so, you know, was it just a frontier town?  How did it get that way?

GH:      Well, I was impressed that Jesse Jones had built a building in New York, too.  I said, wow, that is something.  So, I was impressed by Mr. Jones and what he had done.  Then, there was a man named Silverman that built over the Foley's garage an office building and he was from New York.  I got to know Ben McGuire who was probably the foremost investment mortgage banker at that time in Houston.  I learned a lot from him on finance.  Of course, being an engineer, you had a lot of math so it didn't take long to accumulate the financial knowledge if you had mathematics.  And my slide rule, that was pretty good.  So, it was a city that was on the move.  The downtown was very barren at night.  So, it was the development of a suburban metropolitan area.  We did not have the density, I am sorry to say, and that is - we are going to pay for a long time in the future.

PH:     I want to come back to that point, well, let me get there.  You started your business in the early 1950s that became what is now Hines.  Did you start your business because you wanted to captain your own ship or was it to accumulate wealth or was it to execute a vision you had?  Why row your own boat?

GH:      Well, I came in contact with Walter Rolf and he helped me with a 40,000 square foot building that I had built on 11th Street, and he had been the Dean of Architecture at the University of Texas.  I became enthralled with the architecture and how he wanted to do things and why he wanted to do it, and that was a great experience in building that building on 11th Street.  It is still there today.  It was the best office warehouse, 10,000 square feet of office and 30,000 square feet of warehouse, which I competed with Tom Maybury at the time, who was a force in the Build A Suit office warehouse business.  From that, we got probably 8 or 10 jobs just because of the quality of that particular building.  I enjoyed . . . I met Knute Benson who had been a very famous builder in River Oaks houses and he was going into commercial.  I learned a lot from Knute Benson as a contractor.  He was a man with great integrity and he had David Harvey that worked for him as an estimator.  I finally made a proposition later on to employ David Harvey and we started Harvey Construction Company which helped in executing many of our projects.

PH:     So, was it the partnership or the exposure to Dean Rolf?  Was he the dean?

GH:      He was with an architectural firm in Houston - Goldman Rolf.  So, that piqued my interest in architecture and I started reading and studying and got involved, I guess, with Newhouse and Taylor - were doing a lot of work for us on Richmond Avenue.  And I loved my involvement in the buildings and the concepting of them, and I knew the whole mechanical systems and I knew structures.  So, I could interact with the architects and we could produce buildings that were visually attractive and yet, competitive.  So, that was a lot of fun for me.  I mean, I really enjoy building.

cue point

PH:     Well, that helps me because obviously, Hines has progressed and changed as a company and expanded greatly, and there are all sorts of issues there that if we had infinite time, I would explore about culture and reputation for integrity and professionalism but to say what sets Hines apart as a different kind of developer, it really is the emphasis on design.  So, that was early in the vision but not part of the original vision.  You weren't leaving the confines of mechanical engineering so you could express yourself architecturally?

GH:      No, it was fun for me.  And then, we developed a way of doing business that was extremely straight.  We told people we would do it - we would do it.  That was important to our culture and we have kept that.  It has cost us a lot of money at times but we have kept that.  And so, those 2 things - architecture and the way our people interact with our clients.

PH:     Well, again, going faster than we should but there is only so much time available; you know, Houston was your original canvass and we are all beneficiaries of the fact that you chose to paint on it.  Your primary partner in all that was Phillip Johnson.  And so, I want to spend a little bit of time talking about Phillip Johnson.  The first project, favorite?   Project, can you just talk about your relationship with Mr. Johnson?

GH:      It was Johnson and Burgee.  Phillip is a very dominant person.  Just going back, we did the Willowick with Newhaus and Taylor.  That was our largest job before we did Shell.  That was a 16 story building and that was our calling card to try to build the Shell Building.  I had lost the Houston Natural Gas.  I had a commitment and then they changed managements and Bob Herring came in and he was a friend of Ken Schnitzer.  I had a building on Elgin and Main and had a letter of intent.  And Ken gave him a building much closer in downtown and much bigger and obviously, they took that at the same rental that I was quoting.  So, when Shell came along, I wanted to be sure to build that.  And we committed to build a 50 story building which was crazy.  I had met Bruce Graham, who was a really outstanding architect that had done a lot of things and later did Hancock and many of the major buildings in Chicago, and we went through and built One Shell which was a huge risk for us at the same time we were doing Galleria.  It was crazy, crazy, crazy.  We had a $6 million real estate net worth which means you could probably borrow $500,000 on it.  But we built that and that was really an important landmark for us, and out of that came a situation in which Pennzoil, with Baine Kerr as president and Hugh Litke as chairman, they liked Shell so much, they said, "Would you build us a building?"  Well, I asked Bruce Graham what he would do. 

Well, he came up with a building that was probably equivalent to a Sears building.  It was a group of tubes.  It was very sophisticated architecture and very meissen; not even meissen, very cold.  And I just felt that was not what Houston would like.  I thought Shell was great because it had a travertine marble, it was soft.  And so, I was working with Phillip Johnson out here on the Brochstein property which we were partners with the Brochsteins, on Post Oak Central, and Phillip and John had done 5 iterations of different designs.  We rejected 4 of them.  And he was on his fifth.  I said, "Well, you know, they may say he is a difficult man to work with but he has been very cooperative in working with us.  I am going to ask him what he would do on this block."  I said, "You know, Phillip, I really need a second major.  I've only got 35% leased."  He said, "Why not 2 buildings?"  I said, "Hell, no one has ever built 2 buildings on a Houston block."  He said, "Let me show you."  So, he drew the logo of NBC and there were 2 buildings trapezoids in counterpoint.  Well, I went through my math and so forth.  Two 36-story buildings were less cost than one 52- or 53-story building.  And the parking was tremendous.  Much more efficient.  So, we had less cost and that is how Pennzoil came about.  And I had to fire Bruce Graham with SOM.  He didn't speak to me for 2 years.  But you have to be true to what is your client and I think that is understanding what people want in the urban area that you are dealing with, and that was a good lesson to me.  I have told our people, "You can have relationships but your primary one is the people, is the community you are building in and not to any one individual," and that is how we got started with Phillip Johnson.

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PH:     Because he has described you more as a patron than as a developer - I would consider that high praise, as if you were a medician.  But then, he said something else about you that is harder to figure.  He said at one point in Vanity Fair - I think I am doing this from memory - that he described you as the most boring man alive.  I think I am quoting that accurately.

GH:      I would not doubt that.

PH:     There must be an inside joke there given that if anybody made Phillip Johnson, you did but why in the world would he say something like that?

GH:      Well, I did not participate in his architectural community.  He lived with people that talked very etherial and, to that extent, I was an engineer, and probably he always considered me an engineer, and they are kind of dull people.  But he was very expressive.  We would send them back to the boards many times because it didn't make sense and, amazingly, they would come up with different designs that did make sense. 

PH:     Well, I am smiling because I really was the recipient of a Phillip Johnson pitch and it is on my human highlight reel for all time.  I was on the Hermann board and he was talking about that lot that has now become the Mischer Building that he has built.

GH:      Which one?

PH:     Walt Mischer, Jr. has built a medical office building sort of right there between Fannin and Main, and it is just now leasing up.  It has sort of an interesting feature at the top.

GH:      Light is the top.  It is part of Hermann.

PH:     Right.  Walt and I were both on the Hermann board and we were thinking about developing a tower on that site and we took a presentation from him and it was truly priceless.  So, he was an aesthete but he was quite a salesman when he wanted to be.

GH:      Oh boy.

PH:     He was quite a salesman.  I could just click off a number of the names of projects you have done here in Houston and to the extent that any of them step out in your mind as something you would want to mention or a favorite building or a least favorite building or something you wish you had done differently?  One Shell Plaza, we talked about.  One Post Oak Central, Pennzoil Place we have talked about.  Republic Bank Center.  Texas Commerce Tower.  Transco Tower.  The renovation of 1111 Louisiana.  Moores School of Music.  Museum of Fine Arts.  Audrey Jones Beck.  And the Toyota Center, which I had forgotten that you were involved in that.  Do any of those projects bring memories to light?

GH:      Well, I think, Texas Commerce Tower was very significant because it is the tallest building we have ever built - 75 stories with I.M. Pei - and that was significant.  We had a mini-competition with a number of architects and Pei's model was exactly what we built.  It was very interesting to work with Pei and we since worked with Harry Cobb, his partner who has been very interesting to work with.  A completely different type of architecture than Pei.  And Republic was a very difficult development process because we had to build over the Western Union building and we couldn't get possession so we built over it.  And that involved all kinds of potential problems but it worked out and turned out to be . . . it gets the highest rents of any building downtown.

PH:     It is a great building.

GH:      So, that was very interesting.

PH:     Would you rather do . . . the Galleria, of course, is a signature for you and here, you had the footprint to create an environment and you have an improvement district and you can create a certain esthetic through the intersections and the signs and blah, blah, blah.  Would you rather do one of those blank slate sort of things or do you like the urban infill and the challenges of close range politics and . . .

GH:      I think we enjoy both.  We did, in Barcelona, this Diagonal Mar which was a huge project, and I think that I enjoyed that.  It was a multiuse.  We had an almost one million square foot shopping center.  We had 3, 4 hotels, one million square feet of office, and I think 1,500 to 2,000 residential units, a lake.  It was really quite interesting.  I think these multiuse projects are extremely hard to do, to interpret the market position of where you are trying to build.  We are looking at one right now today in Birmingham, England and in downtown.  Again, it is difficult.  We are looking at one in Shanghai.  These are very difficult projects to conceive and concept.  So, it is challenging.  It is not 1,2.  It is not where someone can build an office building . . . everybody can build an office building but you have to hit the market right and so forth.  So, I enjoyed both.  The infill projects are a little easier to do than the multiuse.  The multiuse are very high risk and your interpretation of the market and the demand take a lot of experience and understanding.  And then you may miss it.

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PH:     Well, I want to talk about European cities and comparing and contrasting.  You spend a lot of time in Europe these days but first of all, let me sort of just finish up the checklist in Houston.  What is your favorite building here?

GH:      I am not sure there is a favorite building but the ones that when you are really on the line like One Shell, Galleria and Pennzoil, they were all very monumental in our career.

PH:     It is hard to separate the building from the project.

GH:      It is hard to separate those 3.

PH:     What about other people's work here?  Stuff that is going on now?  Stuff that you wish you had built?  Other work that you admire in Houston?

GH:      Well, I think, you know, the downtown has developed very well.  Schnitzer built that building next to the One Shell.  I think it is a nice addition to the urban core.  I think that on the east side of Main Street, they have done a good job.  I think the development over to the stadiums is terrific.  I think the importance of residential, like Marvy Finger is doing, is so important to have a life downtown.  And when we deal with, say, the planners in Berlin, they want 25% of the building area to be residential.  Mr. Stemmens.  And I asked him, I said, "Why?  It doesn't make sense, Mr. Stemmens."  He said, "Gerry, I'll tell you.  When we can reduce our police force by 35% to 40% because we have people on the street at night, that is the reason."

PH:     How about that?  That is interesting.  Well, compare and contrast Houston to other cities.  Again, you spend a lot of time in Europe these days.  My sense of it, for right or wrong, is that the urban planning part of Hines is really led by you as the thought leader in Europe and Hines in the U.S. is a scaled, very beautiful - I don't want to call it a property management business but . . .

GH:      We are doing some pretty big land positions now.

PH:     Well, like I say, I have wildly oversimplified it but if the urban planning opportunity is in Europe, why are you attracted to that?  Why do you think Houston is going to pay a big price for developing except for in the automobile?

GH:      Well, I think that as energy concerns escalate, sprawl development is a huge user of energy, and when you can combine a multiuse project, the savings in energy is huge.  You can talk about doing a Leeds Building.  It is miniscule in relation to the energy that you can save in bringing people together in multidense, high density, higher density uses next to office.  The things that are being developed in the Middle East are some very interesting -- even though they sit on a bunch of oil -- in Abu Dhabi, some of the things that are being done there, on Saadiyat Island, are going to be fabulous.  I mean, they are going to have the Louvre, they are going to have the Guggenheim, they are going to have a performing arts center that is bigger than ours, and all this with public transportation.  That is the thing that we've got to add to Houston is our public transportation.  No, we will never reach the levels of public transportation of a Paris or London because the time has passed.  We can't afford the cost of the subways and that type of rail system.  We can do auxiliary as we have done on Main Street.  But the time has passed on the other for us.

PH:     Well, you were early to the sustainability thing.  Of course, that is a matter of great public trendiness today but you were early there.  Was it the engineering side, the practical side of your brain that took you there?  You do have an active outdoorsman as part of your persona as well.  Are you trying to save the planet or are you trying to save the city?

GH:      I try to save money.  And so, what we did on Shell . . . when you grow up in the Midwest, we used to have what they called gravity feed furnaces.  They would be big pieces of duct work, that your heating would come up into your building from a basement and it was very low pressure drops.  So, we took . . . Skidmore wanted to do our building 11 foot 4.  We took it up to 13 foot 4 inches floor to floor.  So, we had a huge furred area from 9 feet to 13 feet 4, and that provided enough space that we could put low pressure duct work.  So what we did when Shell, we found out, changed one-third of their space.  We designed duct work that was just like stove pipe.  You put it together, and a janitor could do it, and you would tape the ends and it was not tight duct work that was costing huge amounts of money.  We reduced their moving costs to one-third, to 25% of what it was, and that is why we got the job.  So, I knew that I could take the pressure drop down, I could reduce the pressure drop on all my runs three-quarters of what it was by using bigger duct work and it was lower cost to renovate.  So, we reduced our fan horsepower and we reduced the cost of operations so we could compete with other tenants because we could show them how much money they could save on their utilities and so forth.  So, I wasn't trying to save the planet, I was just trying to get another job.

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PH:     O.K., that's fair.  Obviously there are some unique cities out there that will never approximate Houston's situation.  You know Venice is Venice and you would not want to be Venice.  But of the places that you travel to, where are the places we can learn from and import the best ideas to Houston to make it better and make it more friendly to mass transit and shortening commutes, mixed use and the things you have mentioned?

GH:      Well, I think the German cities . . . the rebuilding of Berlin . . . we went to Berlin in 1993 when the Wall came down.  They did an outstanding job of building their city, rebuilding the city.  I think Paris has done a great job.  Milan is trying.  We are working in Milan.  So, I think the Germans are far ahead of us in terms of energy conservation.  I think there is a lot to be learned there.  Spain is trying to. 

PH:     So, most of it has to do with sustainability and reducing commutes and energy costs?

GH:      Reducing commutes, that is the big one.

PH:     Houston, it seems to me, has, for the first time and maybe this is just an urban maturity curve that we are finally on . . . started to pay more attention to quality of life and esthetics.  If Houston could once be defined as some concrete is good, more concrete is better, we are learning now is Houston moving in a way that is agreeable with you?  Is it too slow?

GH:      I think it is moving . . . I like the light rail system on Main because you have the huge employment base at the Medical Center and downtown, and if you can build density which they are building out there, I think you can only improve the situation.  And so, having lines like we have on Main, transit lines, and then building a lot of housing along those so people don't have to use their cars, they can jump on to the transit system, get to their work . . . so, we have to take a look at where do we have land masses that we can create higher density housing and then bring people in.  That is what is going to help us a lot.  So, we should look at where we can get land mass because you had it out on South Main.  It just happened to be available because no one wanted to build out there.  There wasn't anything to build.  Just a stadium out there.

PH:     Well, a former student of yours and a good friend of mine, Tom Bacon, you know, one time sort of laid out the midtown for me and said, "Houston has more opportunity and more flexibility than any other major city in America because of more private ownership," because he had colored the government buildings and the nonprofit buildings that are never going to turn over in terms of ownership.  But there is actually quite a bit of opportunity because we do have a distribution of our permanent assets, the things that aren't going to change, and there is a lot of opportunity to change beneath them.  So, I am sure you taught him that.  Favorite city in the world and Houston doesn't count for this purpose because obviously . . .

GH:      Well, next to Houston, of course, I love London.  I think it is a great city.  I have educated 2 children there.  We live 2 blocks from Kensington Gardens, 1-1/2 blocks from Holland Park, 3/4 of a block from Kent High Street.  You can't have anything that is more convenient than that.  So, we walk.  It is a village and I love the village atmosphere of walking.

PH:     Talk a little bit about the company and the evolution of the company, where it has been and where it is going.

GH:      Well, we have grown organically.  We try to grow organically with our own people.  We don't do almost any lateral hiring, so we grow within our own organization which is a culture that we have established and the people know our culture.  It is amazing . . . well, let's go to China or let's go . . . like David Lawrence, "Why aren't we in China?  I'll go."  And all these people raise their hand.  We look at the capability.  O.K., he can go.  Yogin Harra (sp?), a German, has been with us and he said, "I have been going to Abu Dhabi.  I think we ought to open an office there," so we did about 6 months ago.  So, we've got the very adventuresome people that seem to take us into areas where we haven't been, that make sense and the cultures, but we just have great people.  Most of our people that run our operations have been with us for 25 to 30 years.  When you are in the hands of people that you know they have got the culture down pat and it works but it is a slow process and we turned down, the other day, a major project in Vietnam because we just didn't have the people to go there.  So, we are limited by our trained people.  And since we are not a public company, we don't have to grow at 15% next year or anything. [end of side 1]

GH:      Jeff and I don't need another pair of skis, so I think that we are comfortable in the way we are private . . . I think a lot of our investors like the fact that we are private because we don't reveal any of their confidential data.  I think that, you know, we've got an awful lot of markets to penetrate that we are in right now and growing those, that is a big job in itself.

cue point

PH:     How do you and Jeff divide responsibilities?

GH:      Well, Jeff is the CEO and I am the chairman.  I chat with Jeff on things but he runs it.  I help Michael Topham who runs Europe and Stamen I will help also.  He is involved in Poland, Russia, India and Turkey.  So, that is a pretty big . . .

PH:     I don't see how he does that.  He always gets back for Sunday school but I don't know how he does that.  There must be 2 or 3 Stamens out there, I think.

GH:      Well, he doesn't get jet lag like I do.  I couldn't travel the way he does.  Some people seem to be able to do it.

PH:     Well, you do have great people in every respect.  Has Louis Sklar fully retired at this point?

GH:      Well, he is retired but he comes in sometimes 1 or 2 days a week.  He is available.  We don't let them retire.  They've got so much experience that we want . . . people will come back and chat with him about how to do things.  So, it is a lot of experience.  We don't let these guys go.

PH:     I am a big fan of Mr. Sklar's and I have worked some with his son, Michael, who is every bit the gentleman that his father is.  Let's see David, anything obvious that you wanted to talk about that I have not? 

GH:      I think you've covered it, Paul.

PH:      This is sort of a trite question but talk about new urbanism.  You know, that means a lot of different things to a lot of people.

GH:      I am not sure what you mean by urbanism.  What is your definition of urbanism?

PH:     Oh, when I say new urbanism, I mean the Andres Duany sort of density -- narrow streets, return to community through architecture.

GH:      Well, I think some projects can take that.  We are doing a project in Spain and we employed a planner to do that.  I think it depends on the project and where it is going to be.  It takes a special type of group to do it and I think we are going to do it there.  So, we have looked at it.  I think you have to be very careful because people are very much in love with their automobile.  And so, you have got to give them some kind of . . . you can't dictate too rigidly how people are going to live and you've got to give some flexibility in your planning for that.  But you can get into a lot of traps in deciding this is the social way we are going to do it.

PH:     Well, that sort of gets to one of my final questions:  You used a phrase with reference to China that I like a lot and it is called a "command society;" you know, this is a society that does not brook a lot of dissent and so the trains run on time and things get done and they are obviously . . .

GH:      The infrastructure gets put in on time, too.

PH:     Yes, there is a lot that gets lost along the way in terms of human rights and individual expression, however, things get done, but you also said that China is repeating our mistakes about the automobile.

GH:      Well, they are laying subway lines in Shanghai and Beijing, are really outstanding.  And they are laying their development out on these mass transit routes.  We are at the end of one that also has the university that they say will be equivalent to Stanford, their leading research university.  And we are going to be building about 4.5 million square feet out there.  What amazed me when I was there -- I was there in 1980, 1995, and 2 weeks ago.  The difference in each of those increments was unbelievably big.  Louis Sklar and I went in 1980 and we won the World Trade Center against the French and the Japanese.  The public officials at that time were very, very Communist era.  Went back in 1995 - it was changing rapidly.  When I went back today, this last 2 weeks, the quality of the public officials was so outstanding, I mean, you just were bowled over with what they were doing for their people, and they get a lot of bad press in America, I think.  And if you look at the total circle of what they are doing for their people -- the education, the upward mobility -- I mean, no one has done what they have done in the time that they have done it.  And yes, there may be a problem in publications and freedom of the press but they speak out in . . . it is amazing how they take on the public officials over there and how adroit these people are.  I mean, this one man who was head of the Communist party in 60% of Shanghai, had been to Georgetown.  He was a lawyer.  I mean, he could have run for president.  But the quality and the top people graduating from the schools are either going into government or they are going into starting their own business.  And it is amazing.

cue point

PH:     Well, I can't wait to go.  Is there anything I haven't touched on that you would like to discuss?

GH:      The Galleria started with our development.  Howard Horn came to me and said, "Well, George Lister is not moving this project along with Allied Stores and we think we can get it done."  Jack Trotter came in, "Why don't you come in and help us, Gerry, get this done?"  So, I went up to Allied Stores and negotiated the deal and we built it and I remember having dinner with the chairman and he had a few drinks and he said, "Here's to Mr. Nobody."

PH:     How's that?
GH:      So, that was my introduction to the retail world.  So, when the tract came up across the street, Eddie . . . ran Houston First.  I will remember his name, but Eddie . . . he came to me and said, "Gerry, we'd like to have a branch here.  Now, I bought this whole corner.  Now, I will work on a deal with you and you see if you can get the other tracts of ground."  Of course, we did and accumulated them and I got a group of investors like John and Charles Duncan, the Fingers, Vannie Cook from the Valley, and Ed Randall, and they were investors with me.  I was way over my head.  We started the design of this and I wanted to build 4 levels of the shopping center.  Well, I then went after Nieman Marcus and gave them a hell of a deal to come in because they were going to go on the other side of Main Street on the other side, the Loop in Bob Smith's property and I gave them the land and induced them to come along, sold Stanley Marcus himself.

PH:     You gave him the land?

GH:      I gave him the land.

PH:     You are kidding?

GH:      Oh, yes.  I wanted it badly.

PH:     I guess you did.

GH:      So then, I took the concept.  I got Gyo Obata involved and I had 2 . . . Neuhaus and Taylor did a concept and then Gyo Obata  did one and I chose Gyo Obata .  He was doing the Neiman Marcus store as the architect and I liked his concepts of internal - how you found your way internally.  And that is why we had the skylight because people could always orient themselves interiorly if they had light or a strong architectural element.  And then, I said, you know, the rents on the lower floor -- I looked at Gulfgate at the time -- were terrible.  They were 25% of what they were on the main level and I said, I've got to come up with something.  And Gyo said, "Why not an ice-skating rink?"  I said, "Hell, no one has put an ice-skating rink in the middle of a mall before."  There was one up in Washington that was off by itself.  And I calculated what the . . . because they didn't want to pay the extra cost of refrigeration that you would have in an open mall.  I started calculating, I said, "Oh hell, that's not too bad.  I am going to go that way."  So, we put the ice-skating in the middle and I hoped that it would generate traffic, which it did, and the lower level achieved rents equal to our main level because we had people promenading.  People love to watch other people.  But before that, I took it to the ULI.  They had these sessions where you could bring your project and be criticized.

PH:     ULI being Urban Land Institute.

GH:      Urban Land Institute.  And I took mine up there.  I knew it was a big risk, you know.  What if they say some bad things?  Well, I took it anyway.  I only had one major department store and that was Neiman Marcus.  Well, they said, "Gerry, 4 levels of retail.  It just isn't going to work.  You don't even have a second major."  Well, so then, I didn't get enough financing to have 4 levels but I had it in the structure going up.  So, I said, maybe some day I will do that 4th level.  And so, they criticized me and they got back to Stanley Marcus and they said, "Well, I hear you got a pretty bad review."  I said, "Yes, I did, but I've got a bunch of tenants here.  I got Tiffany's.  I am making progress."  "Fine, we will go ahead."  We went forward and we did lease out the mall.  Bob Kyme (sp?) who had been with Foleys headed up the retail area and we leased it, and then we got Lord & Taylor and we did get a second major.  And then I came back, I still had the structure in for that 4th level.  So, I came back and I said, "I am going to put a health club up there because I've got this column space that is just great.  I can do 10 tennis courts up there."  So, I came back to my partners and I said, "I think we are going to do this.  I think we've got a market for it.  I've got Club Corp that will lease it."  And Ed Randall said, "Boy, thank God he doesn't like golf."

PH:     Well, the rest is history.  Thank you, David, for T'ing that up.

GH:      And then, we kept acquiring the land.  That was very difficult.  Mike Halbouty had a piece of land that we were cutting out around him as he sat there with his building and we finally made a deal where we would move him over to the Halbouty Center which was a 5 story building and give him a partnership interest in that and buy his land, and give him an interest in the Galleria to get him.  So, we made a lot of deals and with the Toladas on the corner, whoa, we had all kinds of different legal positions in land.  I learned about all the different legal positions you could have.

PH:     Well, this uptown district is quite an achievement.

GH:      Well, then Louis took over and evolved the, you might say, association and created some unity.  So, it worked out.  But after that, that is when I decided I came so close - I don't know how close I came to not making it but I said, "In the future, I would rather own 25% of a well financed structured deal than 100% of one that is 95% mortgaged."  So, we have followed that ever since.

PH:     You've got to sleep at night.

GH:      I like to sleep at night.  I didn't sleep much during those periods.

PH:     Well, congratulations and thank you on behalf of all of Houston because you have been the light that has shown us the way in terms of design.

GH:      Well, there will be a lot of other good buildings.  I think that maybe we created a competition that elevated what others had to do and I think the built in environment is something that we have to live with for a long time.  I think competition is good.

PH:     Well, no question about it - you've raised the game for everybody.  Thank you, again, for your time.

GH:      O.K.