While most were just trying to stay afloat at the peak of the Great Recession in 2008, Norman Jenkins was busy moving forward, leaving behind a senior vice president position with Marriott International to launch his own company, Capstone Development. After making it through a crash course in operating in a poor economy, Jenkins has learned how to prepare for the worst and appreciate the best. With seven years under his belt and 19 properties in his portfolio, Jenkins says he would not have done it any other way.
“I had toyed with the idea of launching my own firm for a number of years and, eventually, just mustered up the courage to do it,” he reflects. “I started laying down the foundation, making plans, preparing to launch, and getting support from the Marriott team, and the market just started to melt. But after 16 years at Marriott, I was a firm believer that, if I was going to do it, I needed to do it then.”
Navigating the tough times helped Jenkins grow into his presidential role within the company as he began acquiring and building properties around the country, primarily on the East Coast.
“With each transaction, we try to not only create value for our investors but also try to take some learnings into the next project,” he says. “When you’re first starting out, having worked for a really large company, everything goes to a committee process. When I started out, I was a committee of one. I’m more confident and comfortable today moving forward with my gut than I was seven years ago because I’ve proven to myself that I make pretty good decisions.”
Jenkins has a few rules he keeps in mind when Capstone takes on a new project. Though the company works on more acquisitions than new builds, investors who are willing to do both are preferable, as Capstone is then positioned to embark on either if an opportunity arises. Jenkins also considers faraway development projects in foreign markets unwieldy, given an unreasonably long commute if issues arise and a lack of distant market knowledge. And, to mitigate proliferation of brands and the addition of too many rooms in a given market, Capstone shies away from leisure-reliant areas in favor of more reliable markets that will perform well in good times and bad.
“We focus on owning hotels that may lack sex appeal because we want to be in markets where people conduct business, go to school, and receive medical care,” Jenkins explains.
Columbia Place, Capstone and Quadrangle Development’s current project-under-development in downtown D.C., is evidence of aforementioned good decision-making. The mixed-use site, set to break ground this year, was born from development challenges that plagued their recently completed Marriott Marquis Washington, D.C. The Marquis was originally planned to be 1,600 to 1,700 rooms, but as Capstone began capitalizing on the long-planned project, the economic downturn was in full swing.
“We made this decision with the city of Washington, D.C., because they said they weren’t going to give us any more subsidy to build a smaller hotel. We shrank the Marquis down to just under 1,200 rooms,” Jenkins says.
Left with a much larger plan than necessary, Capstone was forced to take another route. The answer is Columbia Place, which includes a 310-room Courtyard by Marriott and a 190-room Residence Inn by Marriott to meet the original room goal, in addition to 230 residential units.
“It’s going to offer more diversity of room type and product, which we believe makes for a better convention center destination. You’ll have a large convention hotel, a fantastic Courtyard, and an outstanding Residence Inn, which will help to satisfy meeting planners and delegates looking to pay different price points and those urban select-service hotels,” he says.
The land, which sits adjacent to the Marriott Marquis, is a piece of real estate that will soon be twice purchased by Jenkins, as he once made the deal for the land while serving as Marriott’s senior vice president of North American lodging development.
Jenkins may not need to worry about project-altering economy issues at the moment, but after beginning his venture in the eye of the storm, he’s confident Capstone can ride the waves of any new trends.
“I don’t think there’s ever been a better time in the lodging industry from a demand perspective, and I’m so pleased that supply, by and large, has been kept in check with the exception of a few markets,” he says. “We think we financed hotels properly and with good prices and debt, so we’re excited about being in the strong period, but we’re not dismayed by the downturn that will inevitably occur.”