A Number-Crunching Success

  • San Jose Mercury News
  • September 19, 1985
  • Chris Kraul

David Martin makes it big in real estate development - by age 30

If you subscribe to the theory that Silicon Valley real estate development is becoming a game dominated by finance types, then the meteoric rise of David Martin is a case in point.

At the ripe old age of 30, the Alabama native has amassed an ownership interest in about 1.8 million square feet of office and industrial buildings in the East Bay and Silicon Valley.

More than half of those buildings have been developed since early 1983, when Martin formed Martin Co., a Danville based real estate firm that builds projects almost exclusively in partnership with big industrial partners. So far, his partners have invaded the Church of England, Aetna Realty Investors Inc., and Paine Webber Inc.

The remainder is the ownership interest Martin retains from his two years ending in 1983 as a partner in CPS brokerage and development firm in Pleasanton.

Martin said construction companies were the dominant players in Silicon Valley real estate development 20 years ago. Then cane the brokerage and marketing experts who could make deals. Now, the number crunchers who speak the same language as institutional investors are pre-eminent, he said. He fits in the last category, he said.

Martin’s relationships in the world of finance – most of them formed while he was head of Union Bank’s real estate loan office on San Jose – are most responsible for his success in real estate development, he said in an interview Wednesday.

“Lenders are more than lenders now. They control the development industry. Prudential Insurance and New England Life are two of the biggest developers in Silicon Valley these days. You have to be able to work with them to be successful,” Martin said.

As Union Bank’s real estate loan chief for Silicon Valley projects from 1979 to 1981, Martin typically made short-term loans to developers and then helped those clients line up long-term permanent loans with the institutions.

Martin opened up Union’s San Jose office in 1980 and started the bank along the way to becoming Silicon Valley’s largest construction lender with a portfolio that today totals $650 million, he said.

When Martin was assigned the area by Union in 1979, fresh from receiving a master’s degree in business from Golden Gate University, Bank of America was king of the construction-loan roost. At the time, Union had an active portfolio of just $7 million in loans in Santa Clara County.

How did “a 25 year-old-kid with a southern accent dressed in a seersucker suit,” as he described himself, convince developers to switch from entrenched Bank of America to Union, a lender few local developers were familiar with?

“We just kept knocking on doors until we got the opportunity to perform,” martin said.

That opportunity came when Devcon Construction Inc., one of the valley’s largest industrial developers, hit a snag on a credit agreement with BofA. Martin’s ability to get a multimillion-dollar credit agreement packaged and approved in two weeks won Devcon over.

“We had been approached by Union a number of times. He was the first person with persistence enough to stay with it. We gave him a challenge and he met it. He must have done the same thing with a number of developers or Union would not have penetrated the market the way it did,” said a former Devcon official who had dealings with Martin.

Martin’s wrestling of Devon away from Bank of America was the first in a series of new clients for Union.

Union Bank has proved a spawning ground for young real estate developers. Ex-Union Bank officers Walt Kaczmarek, Mike Wilson and Toby Taylor all work at Martin Co. Scott Trobbe, Don Kinne and Bob Granum, also former Bay Area union officers, are working at Bay Area Development firms.

The Martin Co. currently has 1 million square feet under development in the East Bay and Silicon Valley. The largest project totaling 225,000 square feet planned for Emeryville.

With so much of Silicon Valley over built with electronics buildings, Martin said in the near future his company will concentrate on in-fill projects, developing property closer to the valley’s established core.

Developers of projects in places like Sunnyvale and Mountain View are not having to cut rents to attract tenants as are those in the eastern parts of the valley, Martin said.