Published on November 21st, 2016 | by UC&D Magazine0
WDG: Going Strong After 20+ Years
As a top executive for many years at Draper-based heavy/ highway firm Ralph L. Wadsworth Construction, Kip Wadsworth chuckles when asked what he likes about running a development company vs. a general contractor.
“I like that I don’t have 600 employees, deadlines with $50,000 per day liquidated damages, plus this business feeds you back,” said Wadsworth, CEO of Wadsworth Development Group (WDG) since January 2014. “I build a building, it cuts me a check every month. Working here is a lot less stressful. You’re dealing with big dollars and big investments, but it’s just a piece of property. In construction, you’ve got to constantly be out looking for new work
and worry about the risks that go along with it.”
Kip said 30-plus years ago his father Ralph Wadsworth heard that a new I-15 off ramp was going to be built in Draper at some point in the future, and figured he’d get ahead of the game and bought 13 acres. By 1995, he decided to build three projects to lease – two 26,000 SF buildings and a 67,000 SF building – and WDG was off and running.
Kip said his father looked at the new business venture as a way to diversify assets while building a steady stream of income from other sources.
“We had no idea what the hell we were doing,” admits Kip, who runs WDG along with General Manager Nate Ballard, a 13- year veteran of the firm. The 20-employee company has offices in Draper and Phoenix, and has developed 100 projects throughout Utah, Arizona, Montana, Idaho, Wyoming, Washington, Colorado and Nevada. We built our (RLW) office and then three initial buildings on spec. “We leased up the first building (1-800 Contacts was a key early client) and thought, hell, we’re pretty smart. We leased up the second one, built the third and things have gradually progressed.”
In addition to 15 office projects, WDG has developed 40 retail projects, four industrial properties, two hospitality projects, 12 development projects, and 22 land properties. In all, it totals 1.2 million square feet on 525 acres at a cost of nearly $250 million. Not bad for a highway contractor that initially dipped their toe in the water before realize that jumping in headfirst would prove so beneficial and profitable.
One of the keys has been reinvesting money through a 1031, which allows firms to avoid costly capital gains taxes. As Kip explained, “If you build a piece of commercial property and sell it, you make a profit. If you take that entire amount (including profit) and reinvest it, you don’t pay taxes. It’s worked well for us.”
For the first 15 years of its operations, WDG didn’t sell many properties, as the intent was to diversify finds from RLW Construction. “Once we got a cash flow stream, as (RLW) made money, we’d take a percentage and put it into real estate. It got to the point where we started buying raw land and develop it ourselves,” said Kip.
Notable developments in recent years includes projects like Top Golf in Midvale, the 23-acre Skyway Regional Shopping Center in Helena, Mont., several Starbucks and other restaurants, and Bangerter Crossing. Development projects sometimes require great patience and foresight before ultimately coming together. Bangerter Crossing, which is anchored by a Harmon’s grocery store in Draper, is a prime example of a project requiring several years to complete.
“It took five years to put the land together, assemble it from different owners,” said Kip. “It’s a long process…it’s a lot different than construction.”
The company recently purchased a 5.8-acre site in Sandy from Jordan School District at 110th South and State – former site of Crescent Elementary/Valley High School. Wadsworth said he hopes the area becomes home to three or four “really nice sit down restaurants.”
The company has averaged 18% annual growth the past 10 years, and actually fared pretty well during the recession, even though it meant holding onto land a little longer than the firm wanted. Heady stuff for guys who specialized in highway and bridge construction.
“You ever tell a Wadsworth they can’t do something,” Ballard smiled. “We’re looking for new opportunities every day and we’re optimistic about our future.”