By Cheryl Hall, The Dallas Morning News
Knight Ridder/Tribune Business News

Apr. 11, 2004 - FARMERS BRANCH, Texas -- Lewis Shaw is a developer who thinks like a businessman. He contends that's much more unusual than it sounds.

The 61-year-old owner and chief executive of Jackson-Shaw Co. builds with his own equity and financing and holds on to many of his properties -- a rarity in these days of merchant builders who build to quickly sell.

"I don't build with somebody else's MasterCard," says Mr. Shaw, who expects to begin projects worth $180 million across the country in the next 18 months. "My first priority is who will pay the rent, not who will buy the project. It's cash flow, not cashing out."

He calls his company the Fox & Jacobs of the light-industrial world. "They build essential homes. We build space that is essential for companies to do their business."

That often means low-rise office buildings with no parking garages or fancy lobbies and hotels with limited public areas and meeting rooms.

Mr. Shaw hates fighting competition, so he goes where others won't or can't.

"We have to have a location that's as close to a monopoly as we can get so that our pricing power is not eroded," he says at his headquarters on Alpha Road near the Dallas North Tollway.

For example, Jackson-Shaw is building a $100 million Renaissance hotel in Las Vegas that will feature a Starbucks but no casino.

When it's finished at the end of the year, Nevada's largest nongaming hotel will have a different draw to fill its 548 guest rooms -- a location that's 200 paces from the Las Vegas Convention Center.

"This is a business hotel for sellers on the convention floor," Mr. Shaw says. "They're not interested in going to casinos. And even if they are, the monorail is right out the front door."

Mr. Shaw bought the three acres for $7 million in 2000 before he lined up financing or a franchise agreement with Marriott International Inc., which owns the Renaissance brand.

His initial financing fell through after 9-11, putting the 15-story project on hold for nearly two years. Mr. Shaw anted several million dollars more to stay in the game.

He's convinced that it will pay off just as his first entry into the Las Vegas market has. Four years ago, Mr. Shaw built the 325-room Hampton Inn Tropicana next to the strip. Last year, the hotel enjoyed 85 percent occupancy.

"We recently built our own conference center so we can market to groups that are not usually Hampton Inn clients," he says. "It caters to groups of 200 who want to enjoy entertainment and nightlife that's within walking distance yet not have a two-hour line to check in."

Phillip Askew, managing director of NorthMarq Capital, a Minneapolis-based financial services company, has been financing Mr. Shaw's projects since 1979. "Lewis' defining strength is his ability to find the diamond in the rough [location] that's perfect for his product."

Says Mr. Shaw: "I don't want to join the crowd. I want to get there before it assembles. Proof of low demand for me is proof of opportunity."

Listening to Mr. Lewis can make your head swim.

"I classify Lewis as the most intelligent and creative person in the industrial real estate business," says Robert Lynn, chairman of the real estate brokerage company that bears his name. The 84-year-old has invested in numerous deals with Mr. Shaw.

"Lewis is a lone wolf avoiding the herd mentality yet fiercely loyal to his friends and partners," adds Mr. Lynn's son Tom, president of Robert Lynn Co. "You go into Lewis' library and see a wall full of books. Lewis has actually read all of them."

His best friend of 30 years, Charles Freeman, a partner in Briggs-Freeman Real Estate Brokerage, agrees. "His CD collection runs the gamut of soulful country-Western to opera to chanting monks. He's an amazing person, and what he's accomplished is just phenomenal."

Lewis W. Shaw II, who was reared in Dayton, Ohio, made his way to Texas A&M University in 1961.

His father, an orphan who grew up at the Buckner Children's Home in Dallas, was killed at a railroad crossing when Lewis was 4. Each summer, his mother shipped him down to his uncle in Aransas Pass.

"I'd always wanted to be a Texan," Mr. Shaw recalls. "But I get to A&M, and they're taking animal husbandry and poultry science, and I'm thinking, 'What the hell is this?' It was culture shock."

As was his participation in A&M's corps, although he calls it the best thing that ever happened to him.

"Everybody needs to have someone screaming in their face once in their lives," Mr. Shaw says.

After earning his liberal arts degree from Wittenberg University in Springfield, Ohio, in 1966, Mr. Shaw joined the Air Force and was a cryptologist and flight instructor for seven years.

His second attempt at becoming a Texan in 1973 took, although not in the fashion he expected.

Mr. Shaw came to Dallas to work in sales for IBM's office products division, but the corporate uniform of IBM didn't suit him any better than the Aggie one had.

"I showed up once in pants and a sports jacket. They made me go home and change," he says. "Eventually they said, 'Lewis, have you thought about doing something else with your life?'"

That "something else" surfaced one afternoon while he was driving on a dirt road north of Addison Airport to fly his antique stunt airplane. He passed a guy standing next to a biplane, drove back and introduced himself. The man was Jim Jackson, who'd been trying to track down Mr. Shaw for aerobatic lessons.

After Mr. Jackson learned how to fly upside down, the industrial real estate developer hired Mr. Lewis as his top salesman.

When Mr. Jackson died in a plane crash in 1976, Mr. Shaw bought the four-person company for a pittance but didn't tell anybody.

"I kept the name Jackson Cos. and kept ordering the materials from the same suppliers," he recalls. "About two years later, I said, 'You know Mr. Jackson died, and you've been doing business with me for two years.' I never had any problems with credit after that."

He changed the name to Jackson-Shaw, giving his friend top billing. The company grew exponentially until the late 1980s, when, like nearly everyone else in Texas real estate, Mr. Shaw got snared in the financial debacle.

Although lenders took over his nine hotels, Mr. Shaw continued to manage them along with 100 other hotel properties. In 1996, he and his partners took the hotel management company public.

Mr. Shaw has developed more than 30 million square feet of office, industrial, hotel and residential properties worth more than $1 billion. About $250 million of that is currently in his portfolio.

Much of that property looks like the photographs of low-rise buildings lining Mr. Shaw's conference wall. Frankly, they're not that special to look at -- slightly more upscale than industrial warehouses with better landscaping.

"Those are what I call multitenant industrial office buildings," Mr. Shaw says. "This space is too difficult for most pension funds and REITs to develop. It's more costly to build than warehouses, and it takes as much manpower to sign a 10,000- or 15,000-square-foot lease as it does a 100,000- or 200,000-square-foot one."

The two-story office building where Mr. Shaw has his headquarters is typical of what he calls essential space with a salable location. An artistic staircase is its "lobby." The "garage" consists of metal carports over surface parking spaces.

It's near the Galleria and Addison's Restaurant Row but away from the main traffic congestion. And it's hemmed in by light industrial and retail space, so there's little chance for similar office buildings to come in.

NorthMarq's Mr. Askew is the second-floor tenant. Most people think he's there because Mr. Shaw gave him a sweet deal.

Au contraire, Mr. Askew says.

"Our lease came up for renewal, and we could have gone to another building cheaper with a better finish-out, but we all decided to stay here because it's so convenient. These big facilities where you go 15 stories down the elevator to get to the parking garage are a hassle."

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