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PRUGH’S VIEW: Prolific JH Developer Talks Past, Prologue
JACKSON HOLE, WYO – Real estate broker Greg Prugh followed in his father’s footsteps even if his steps took him to Japan, Europe, San Francisco and Arizona. The prodigal son and Jackson native returned home a decade ago to open Prugh Real Estate in 2006.
We’ve always found the 39-year-old father of three to be extremely candid and knowledgeable when it comes to the bizarro world of Jackson Hole real estate. From his daring 810 West development to his current half-dozen East Jackson projects, Prugh has always been a visionary with his finger on the pulse of the market.
Buckle in and get set to take a wild ride around Jackson. What’s hot, what’s not, who’s building and who isn’t? Prugh takes on building regulations and weighs in on nearly every major development going on in Jackson right now.
Planet Jackson Hole: We are hearing the market is coming back here in Teton County, as far as real estate. What are you seeing?
Greg Prugh: We had our best year since ’07. Our most sales in volume since ’07. People said over and over that there was a lot of money on the sidelines. I guess no one thought the Dow was going to get over 15,000, or fifteen-six, or whatever it is today. And there is a direct relationship with real estate prices here. That’s why you are seeing a lot of these guys coming to town buying big properties. We’ve got a lot of energy guys buying. A $10 or $12 million home sold in Tucker Ranch the other day; a $15 million home sold in Crescent H the other day. Microsoft COO [Kevin Turner] buys a house in Teton Village.
I think we are in transition again. Interest rates are really low. People think it’s the right time to buy, and in many ways it is. There’s not a lot of inventory and prices are coming up. Yet the numbers still have to make sense. Can you afford $2,500 a month for a two bedroom?
PJH: So real estate in Jackson Hole is still a sound investment?
GP: Well, yes. But you have to be careful. Just look at ’08 and ’09. Some of that property was so overvalued. We sold a house for $950,000 in ’07. We sold that same house this year for $450,000.
We’ve made money, and we’ve lost money on projects.
PJH: What’s something you’ve lost on?
GP: Pine Box. We probably broke even or lost a little bit of money. You know why? Because we overpaid for the property in 2007.
PJH: Were you able to do all the buying you wanted to when the market was bottomed out?
GP: That’s kind of ironic because we bought some property. We also had some debt on some other ones we wanted to get rid of. It was challenging. It’s the first real cycle I’ve ever been through.
PJH: Building seems to be on the upswing now in some areas.
GP: People have been asking me what I think because we are doing some development downtown. Part of it is because it was the tail end of $200,000 lots in downtown Jackson this year. I don’t think you are going to see $200,000 lots again. But now, when you start building on lots bought for $500,000 or say $600,000, unless you are building it for yourself, that’s an awful lot of money, because it’s going to cost you six or seven or eight hundred [thousand] to build a house, and now you’re into it for one-five. That’s a lot of money for in-town.
There will be no more condo units downtown, or very few, that will be built. It takes seven years to approve it. That’s not what you want to be doing – building a condo [project] in downtown Jackson and finally selling the last unit so many years later. Do you know what that six percent on 10 or 15 million dollars is? You get killed.
PJH: Your signs have been popping up a lot in East Jackson on new residential buildings.
GP: We’re seeing a boom in development with by-right houses. We are building a home on Karns by-right. We built a three-plex on King and Kelly by-right. We are building a house on Broadway by-right. We are just taking what the normal zoning says and doing it. We are building three homes in the Gill Addition right now, by-right.
PJH: By-right development makes more sense now because local government is in the way?
GP: If the town is going to subsidize housing in East Jackson by putting up $1.65 million to buy land for affordable housing for rental property for a nonprofit, and the Housing Authority is going to build 70 units of housing over in the west part of town, yet there are no private developments going in downtown? Then we have a problem. And the problem is the numbers don’t work because we are giving up 25 percent for affordable housing. You can’t continue to go directly to the developers and say they need to give up part of their product.
I don’t mind the process, but it’s just that it takes you nine months to figure out if you MIGHT be able to build your building, and it takes you a year or two to build it and three years later you realize the market’s not there. That’s tough. Maybe there’s a way to streamline some of that. You need to have more opportunity to walk in and pull a building permit for something that is interesting.
PJH: A lot of developers seem to be champing at the bit while we are beginning the upswing, but they are waiting on the new Comp Plan’s LDRs to be finalized. Are we missing the boat here?
GP: People want to know what they can do. One of the problems is we’ve been waiting six years for a comprehensive plan. The comprehensive plan is done. I love it. Great. How does that affect us today? No one knows. We are doing LDRs now in the north part of town, but how long is it going to take to trickle down into eight different zoning districts? Years. My prediction is it will be so long we are going to be rewriting the Comp Plan again. That’s why we are just going ahead and building properties by-right.
You can’t say, ‘Hey, by the way, for the next five years we are going to rewrite this Comp Plan and get something very similar to what we had 20 years ago. You put everybody on notice that sometime maybe in the future you will have some new regulations. Because then everybody waits. And they finally get tired of waiting.
And we can’t just say we are having a moratorium. We have, like, three moratoriums going right now. A moratorium just means you don’t want to make a decision. Why don’t you just say you don’t want to make a decision? Because that’s essentially what you are doing. Your job is to make those decisions.
PJH: What do you suggest?
GP: What we need to do is go back and say [developments] need to be super flexible. We don’t know what it’s going to be. We don’t know what town’s going to be. Do you think we knew this [Persephone] was going to be a coffee shop? And the ??? Idaho Building was going to be a new rug merchant? Or the old glass blower’s was going to be the highest-end restaurant in town, 20 years later over at Crabtree corner? That Fred’s Market was going to be a real estate company and the old real estate company was going to be a wine bar? You need to have flexibility.
Here’s an example. Two years ago, I went to the town and said, ‘Let’s change AR zoning for two years. Give me two years and let’s experiment with AR zoning. Let’s take a vacation from all the regulations, keep setbacks the same, heights are the same, but say we can we can subdivide it and play with it and see what it looks like after two years.’ And on the third reading of that ordinance, at the last meeting, one councilman said no who had previously said yes. It would have been over by now and we would have at least seen the results of the experiment. Today, we are no closer than we were before.
A few years ago, they asked me, ‘How can you guarantee product won’t be bought for second homes?’ I said, ‘Make them smaller.’ People who have second homes probably aren’t buying one or two bedrooms in town.
They asked, ‘What else would you do. I said, ‘Well, you can’t just deed restrict everything in town.’ Ask the Housing Trust and the Housing Authority how often they qualify and regulate the houses that are under their purview. I would guess if you had 800 units, which I think we are pretty close to now, if they shook loose five percent of them a year for people that no longer qualified or they left town or whatever, I think they could create 40 new units a year without building them.
PJH: You’ve been a proponent of live-work spaces downtown.
GP: What do you do for people who want to live here? I worry the most about the property in between affordable housing and $700,000. There is not a lot of that. And there is very little new construction in town. We want to see people move back into town and raise their family in town. Shoot, I’m building a house in the Gill Addition because I want to be close to the school, three blocks from downtown. I know a lot of people want that. But there’s not a lot of available property.
Some people argue against creating more density. Well, that’s where we are headed. It’s crazy. I want to see more places for people to live and work in downtown Jackson. Aside from Teton Village and the Aspens, it’s got to be the town.
PJH: If the old guard has a problem with density, they loathe new design. Your 810 West (Stephen Dynia Architects) launched a new wave of architecture in Jackson that rankled some. You don’t build log houses. Your materials and style lean toward urban contemporary. You broke the seal in Jackson.
GP: There are a lot of great architects in town right now. Steve and I have done a bunch of projects together. Carney did the project over at Daisy Bush, which was great. Nona Yehia did a project over on King and Kelly. I think there’s a lot of opportunity for younger architects to get involved in the valley. We’re ready for better space.
I think people now embrace materials on the exterior of buildings that have very little maintenance. I think we are seeing a lot more metal around town because metal doesn’t require maintenance. This building we are doing on Broadway is all corrugated white metal because metal doesn’t require any maintenance. I just want to see better design and less maintenance and a smarter use of space.
PJH: What do you have on the back burner now?
GP: Think about the area over by the Brew Pub. They are talking about a Marriott – a nearly 50-foot building. Vertical Harvest is around there. They’ve got a trailer park, Center for the Arts, and some AR mixed in. That’s a super transitional neighborhood.
Let me ask you something. How long have you lived here?
PJH: Seventeen years.
GP: You think it’s changed that much?
PJH: Yeah, maybe slowly enough that you don’t notice it. Like a frog boiling in water. Then one day you’re dead.
GP: Hmm. When I started in East Jackson we had a heck of a time bringing people over there. We told them, ‘This is the future of town. You are going to see all kinds of different homes built over here.’ Now 25 new homes have popped up in East Jackson. It’s a different world. I can’t buy lots over in East Jackson now because they don’t exist.
Over and over they should measure a project on whether it is going to create something that wasn’t there before; something that creates an opportunity to live and work in Jackson. If you can’t answer yes to that, then we have to have another conversation.
PRUGH ON PROJECTS
PJH: McCabe Corner hole-in-the-ground. Will it ever happen?
GP: Absolutely. I think S.R. Mills is doing a great job getting that place up to grade and finishing it off so people aren’t looking at a quarter of an acre of vast nothing. That will probably be a hotel. That’s what I hear. Whether or not that is the best use of the property, well, I wasn’t quite sure having all apartments, before, on the first and second floor was the best use. I always thought having commercial on the first floor with apartments on second and third is probably the best thing. It’s nice to have lights on on the first floor.
PJH: Woods Hotel renovation.
GP: Darwiche. I give them huge cojones. They just bought that liquor license for Stage Stop [from Cadillac]. But to build a two-story parking garage underground – there’s a lot of risk in that. You ever heard of a two-story underground parking garage in Jackson Hole? That’s real money. I don’t know how the numbers work. They are smart guys but, gosh, that’s an undertaking.
PJH: And another hotel, Joe Rice’s Marriott.
GP: Right, Joe Rice talking about the Marriott, and then there’s the one across from the parking garage, you know, Jay Varley’s property? Carney’s doing the architecture, and that’s coming through the process.
PJH: And another hotel. Jay Varley is finally cooking something up at the old Western Motel.
GP: Jay Varley’s hole-in-the-ground. That hole has been there since I was 16. That’s 23 years ago. I guess he is going to sell to that group out of Portland. Jay has not built anything in town. He’s only made a hole-in-the-ground. And I like Jay. I think he was a visionary in the ’80s – amassing property downtown like that took a lot of vision. But now you’ve got to do something with it, let’s go.
PJH: The Forest Service property on Cache is now in play – 10 acres.
GP: Jerry’s [Johnson] got it under contract. Maybe it becomes some commercial, maybe it’s a hotel. Maybe it becomes all residential, which I think would be interesting. I think it would have to be some kind of commercial use. Ten million [dollars] for 10 acres doesn’t sound like a lot of money, but there’s a lot that has to happen to make it work.
Jerry’s a pretty smart guy. He’s taken the Log Cabin and made it … Well, he’s anchored the north part of town. If he could get a hold of all that area between there and Dairy Queen, it would create a really interesting entrance to town. He’s done amazing things there and I mean that. Within the regulations. Think about that. He put the trailers in because it was a previous KOA. It had previous trailers onsite and those things are considered personal property. He operated within the regulations that were afforded him at that time. That’s amazing.
You should probably interview Jamie McKay because he’s tried to stay within the regulations but he and the county don’t see eye-to-eye.
PJH: We did. (Download the June 15, 2011, edition at www.planetjh.com)