Entrepreneur Lane Gaddy was 27 when he made his first big investment in El Paso, partnering with other young investors to buy a tired, 11-story building on the Westside in 2010.
Since then, Gaddy has quickly made his mark on the city.
The entrepreneur is bringing new life to Downtown, leading a private sector effort to remake some of the city’s most iconic buildings.
The historic Martin Building, at the corner of Stanton and Mills, has been restored and converted into 40 apartments – the first such apartments to open Downtown in years, if not decades.
On the other side of the block, Gaddy’s investment group recently completed a new building, turning a surface parking lot into modern office and retail space. Farther down on Mesa, Gaddy has invested in a new restaurant set to open in January.
Nearby, construction recently began on the historic Bassett Tower. If all goes according to plan, the 15-story tower will reopen as an Aloft-brand hotel next summer. Gaddy also led investors in the purchase of the landmark Banner Building.
But lately Gaddy has been buying swaths of desert west of El Paso in Santa Teresa, New Mexico, a rugged industrial community where investors have long envisioned a booming border oasis. Gaddy believes the area’s time has finally come.
Gaddy is also president of Silver Farms, which operates a 300-acre commercial pecan farm in El Paso’s agricultural Upper Valley. But what takes most of his time, Gaddy says, is his job as president of W Silver Recycling, the region’s largest scrap recycling operation.
Gaddy is doing it all at 33, and together with his wife, is expecting a child.
“I want to be part of creating the city I want for my children,” he said.
Gaddy grew up in Albuquerque, New Mexico. At the urging of his grandfather, Bernard Fenenbock, he moved to El Paso in 2005. He had just graduated from the University of Arizona with bachelor’s degrees in finance and entrepreneurship. His grandfather hoped he would work in the family business, which was founded by Gaddy’s great grandfather in 1918.
Gaddy became president of the company in 2006. Since then, it has grown from 26 employees to more than 220.
In 2010, Gaddy purchased the Coronado Tower with a group of young investors and completed a major renovation of the 1960s-era building.
Gaddy, who later earned an MBA from the University of Texas at Austin, is also a founding member of the Progress321 leadership group and serves on the boards of the Texas Trost Society and the Tax Increment Finance Zone No. 5. He was an El Paso Inc. nominee for El Pasoan of the Year in 2015.
He sat down with El Paso Inc. on a shaded park bench in San Jacinto Plaza and talked about his latest ventures, the difficulties of working with old buildings in Downtown and why he thinks Santa Teresa’s time has finally come.
Q: The projects you have been involved with in the region – have you totaled the investment?
I have not.
Q: Any guess?
It’s certainly over $100 million.
Q: How have you been able to marshal the investment?
Working with really good people. Having good partners is the No. 1 priority.
Q: What brought you to El Paso?
My grandfather did not have a succession plan and had been basically holding on to what had been a successful company, W Silver Recycling, which had hit some management issues and succession issues. It had seen better days, so he asked me to come down here to El Paso after I graduated college.
Q: Your first big investment was a high rise that needed a lot of work. How much did you know about real estate when you jumped in?
We did not know as much as we probably should have, but we saw it was a gem waiting to be polished up.
A lot of people thought we were crazy. I had many people who said that we were going to lose all of our money and we had no idea what we were doing, but it has been very successful.
Q: There had to have been some cringe-worthy moments.
There were many. When we had the fire, the arson, at Coronado Towers that was quite a shock. We learned a lot.
Q: There are many things you can do with your money. Why buy tired, historic buildings in Downtown El Paso?
I love urban centers. And being able to travel around and see many successful downtowns, it was so frustrating to come to El Paso and see the community so aligned toward the goal of a better Downtown – the plans and the meetings – but little idea of what the first steps should be.
Q: What are the obstacles to putting these troubled buildings back into use?
There are many. One of the bigger ones is you don’t have comparable property values or rents to look at, so you don’t really know what to expect when you build something because there is nothing to compare it to. That makes the financing tricky, especially when a lot of folks might think certain types of projects won’t work in Downtown El Paso.
Other challenges include the cost and working with a building on the National Register of Historic Places. It is a very lengthy process with an unbelievable amount of paperwork, so you have to have a lot of patience.
Q: How costly is it? For a long time, many said it was too expensive to rehabilitate these historic Downtown properties.
That might be a bit of a misnomer. When people say it is too expensive, it is too expensive relative to the rents you are going to get.
Compared to New York and other markets, it’s much cheaper to work in these buildings. But the rents you ultimately get do not justify the expenses, so you need tax credits at the federal, state or local level.
Q: How have you made it work?
Just sheer force, to be honest. You really have to force certain aspects of the project.
You have to bring in people who know what they are doing – the consultants who have run hotels before, the people who understand the tax credits, the bank that does the financing and the construction company that knows how to do the construction. It’s just managing all the pieces. Grouping the team together is what it takes.
Q: Did you ever worry about failing?
No, because we believed in Downtown so much that we knew if we could get the product to market, it would be a success.
Q: What convinced you?
Seeing the community’s desire for success in Downtown. That’s not something you see anywhere else.
If there were 50 apartment buildings coming up Downtown, it would have been a bigger concern. But to fill up 40 units and to create a district with 50,000-square-feet of retail and a couple of hotels, we have plenty of room for that in El Paso.
Q: Has working on these projects changed your view of Downtown redevelopment?
One of our goals was to make things easier for people who follow us. We’ve worked with the city and other stakeholders to communicate the challenges we face to hopefully make the path easier for others. If anything, I am more encouraged.
The city and county are doing an amazing job both in hearing what people are saying and putting the right pieces in place to get people to come down and invest. I’m hearing 10 times more potential projects today than the previous 10 years since moving to El Paso.
I think for the next five to seven years that mass all feeds on itself, so I don’t view it as competitive. Now, 10 years from now, if Downtown is a success, then everyone is going to be competing for that next project. But that’s at least 10 years away.
Q: What is the Recolada Project?
That’s the name we coined for the couple of blocks we are working on in Downtown. We imagine it as an entertainment area with bars and restaurants, extending essentially from the Plaza Theatre to Stanton – you could say all the way to Hotel Indigo.
It really feeds off of the energy of the park, San Jacinto Plaza. So you have retail, entertainment, residences for people to live and all the office buildings around for work.
Q: How is the Martin Lofts property performing?
Very well. We have leased 37 of 40 apartments. That’s about the pace we had expected.
The biggest sellers of the project are the people already living there. It was tough to get the first and second tenant. There’s an education process in El Paso of what it is like to live in Downtown. It’s new and nobody knew quite what to expect.
Q: What is the greatest threat to your Downtown investment?
It would really take a loss of overall momentum, which would mean the alignment between the private and public sector would have to fall apart.
Five years from now, we know we have a great project. Ten years from now, if that momentum stops – the public sector goes on to something else and the private sector loses interest – maybe it won’t.
Q: Your investments are surrounded by some historic, but derelict buildings. The city has determined some are hazardous. How worrisome are they?
It remains to be seen. It’s not just Billy Abraham’s buildings that need revitalized; there are others. The question is, will the market force some of those properties to be rehabilitated? I believe in the market economy and that market forces will make it happen.
Q: What is your next Downtown investment?
We are opening a restaurant. I’m just a partner in it; I’m not going to be managing it. We think we are bringing a segment of the restaurant industry that is currently missing in Downtown that is the right price point, the right environment, the right design that is going to provide momentum to continue to fill in this entertainment district.
Q: Where is it going?
It is going to be the entire bottom floor of the building at 204 E. Mills. We are working on some things to do a very large patio. We are hoping to be open in January. We have some partners who have a local restaurant and entertainment venue that is doing very well.
I know it may not be everyone’s cup of tea, but I am also excited about the trolley.
It is one of the missing pieces – a conduit between Downtown, the University of Texas at El Paso and the Cincinnati Entertainment District. I imagine people living in the Martin Lofts in Downtown and being able to go to school or go up to Cincinnati or the ballpark. I live in the Kern area and I would love nothing more than to never drive again and come down to the office on the trolley.
I’m a big believer in preserving the old but juxtaposing it with contemporary. There is nothing better than to encapsulate the past but also put that next to where we are going as a city. City’s like Berlin, Germany, and Washington, D.C., do that very well.
Q: What opportunity do you see in Santa Teresa, New Mexico?
The returns out there have been very good. People have been burned by it in the past – heard about the “Santa Teresa miracle” for 30 years. They still don’t believe it, and it has created a market opportunity.
Q: What makes you think it is real this time?
The investment by Union Pacific (in a $400 million rail facility). It is already a shipping hub, and we are seeing more interest out there. For right or wrong, the international bridges in El Paso have pushed a lot of commercial traffic to Santa Teresa.
Q: What have you invested in there?
We probably have 10 different projects that have been carved up for different users.
Q: So you’ve purchased land for commercial development?
Land, but we are up to 90 percent occupancy. We just cleared 57 acres out there, and we are looking at two more projects. One is 21 acres and one is 70 acres.
Q: How much do you expect your investments to grow over the next five years?
Significantly. People have this perspective that El Paso is a sleepy economy that’s not diverse. It’s much more diverse and exciting than people give it credit for. It never ceases to amaze me how powerful the people in El Paso are – who are really selfless and want to be part of something bigger than themselves.
Q: You are also involved in a pecan farm?
The farm has been in the family for a while, but we are actively looking for agricultural investments. We are looking at a couple of opportunities for doing some things that are not done locally in El Paso.
Q: In the Upper Valley?
Q: What do you mean by agricultural investments?
We have some ideas about the intersections of the service sector, hospitality and farming that we would like to bring to town. We are still figuring it out, though.
Q: What’s new at W Silver Recycling?
We just opened a second location in Monterrey, Mexico. We think we will be completing one of our first acquisitions here in El Paso in the near future.
Q: The scrap recycling industry has been in trouble as the price of commodities has remained low. What’s your take on the market?
It’s an election year so it is not uncommon to have this sort of paralysis, and this election year is very… unique. I don’t see much happening in the next six months.
Q: Has the presidential race impacted your investments? Are people holding off on projects on the border?
The one thing I’ve heard is there is not less interest in Mexico, but people are paring down the speed and size of their projects. There are too many unknowns.
Q: Where do you like to meet and network with other entrepreneurs? What’s your hangout spot?
Dive bars, hole-in-the-walls and coffee joints – anything casual. I go to lunch at L&J Café all the time. I go to Coffee Box.
Q: Has the MBA helped?
No, not really.
Q: What is the last show you binge-watched?
Silicon Valley is hilarious. It is a snapshot of so many cultural phenomenons right now; it’s perfect.