Photograph by Frank Di Piazza
Do you know many smiling developers? A scan of the news this year might have you confusing the real-estate development pages with the obituaries: Chesterfield-based Taylor-Morley Homes Inc., once one of St. Louis’ largest home builders, closed its doors in May after 56 years. Clayton-based Bower & Bailey, last year the seventh-largest builder, ceased operations in March. Saaman Corp., also based in Clayton, was one of the fastest-growing real-estate companies in St. Louis; at press time, it was facing foreclosure. And downtown St. Louis, which has been on a visible upswing for the last half-decade, was dealt a blow in April with the collapse of Pyramid Cos.; one of the major forces in downtown redevelopment, Pyramid had, when it took its last breath, high-profile planned projects exceeding $600 million.
As recently as February, Pyramid head John Steffen retained power, appearing for the fourth time in a row on the St. Louis Business Journal’s list of “Influentials.” Also on the list for those same four years was Kevin McGowan, president and CEO of Blue Urban, who has developed more than 20 historic mixed-use buildings downtown, totaling 3 million square feet and $300 million. Despite the blows dealt to Steffen and other peers, McGowan is attempting to continue full-steam ahead. His current projects include Packard Lofts at 22nd and Locust, Motor Lofts at 22nd and Lucas, and the Ballpark Lofts in the Cupples Station complex, just west of the new Busch Stadium.
“What happened to Pyramid is happening to overextended developers all across the country,” McGowan says. “It didn’t sneak up on anybody, and I wasn’t that surprised. John [Steffen] made a large play to be a big developer in downtown St. Louis, but he made it at exactly the wrong time.” For McGowan, Steffen’s plight serves more as a cautionary tale than as a true barometer of downtown development or predictor of the fate of other developers.
Steve Patterson, whose widely read blog urbanreviewstl.com tracks downtown developments and other civic matters, sees the individual companies distinctly. “Pyramid bought every building in sight, and they were all about financing the next building, but they didn’t have enough revenue and got swamped with debt,” Patterson says. “They also had huge overhead.”
McGowan calls his own approach to deal-making conservative. Whereas the average price he pays for a building is $11 per square foot, topping out at $20, he estimates that other developers are paying $30 to $40 per square foot.
“Pyramid and other developers made a mistake by paying whatever it takes to make a deal,” he says, “because they believed that appreciation would keep happening. But it hasn’t.”
Looking forward, McGowan predicts that it will indeed get ugly. In addition to unfinished projects and angry investors, the fallout will include lawsuits. “What’s happening at Pyramid has hurt St. Louis and puts all developers under much more scrutiny,” he says. “But hopefully it alerts the powers that be to make sure they know who they are doing business with and what kind of business plan that company has for the future.”
Part of a close-knit Catholic family, McGowan grew up with his six brothers and three sisters in Wallingford, Conn., where his mother was a homemaker and his father worked as a midlevel manager for Emerson Electric. “All 12 of us lived in a small house,” he says, “and we never went to the big city. Dinners out were to IHOP for a confirmation or special event.”
The young McGowan delivered newspapers, mowed lawns and babysat, and he gave half of the money he earned to his father for his college fund—though it was really used to help pay for his clothes and household bills. While other kids’ parents would take their children’s candy to work and sell it for school fundraisers, McGowan was on his own. “My dad thought I should do it myself, so I became the top candy seller from the fifth grade on,” he says.
McGowan considered the priesthood, but by the time he graduated with a B.A. in English from Saint Meinrad Seminary College in Indiana, he had decided he wouldn’t seek ordination. After living in Kansas City, Birmingham, Ala., and Houston, McGowan decided to move to St. Louis in 1997. Soon after arriving, he took a seemingly random drive through downtown. He vividly remembers making a fateful turn onto Washington Avenue, which was then a ghost town compared to today.
“Being new to St. Louis, I didn’t know about the past, the property values or who the players were,” he says. “It was instinct, really, but I fell in love with and was inspired by the endless stream of architecturally beautiful but empty, rotting buildings sitting there.” Though the streets were mostly empty, he spotted someone—“a tall, skinny, red-haired fellow”—walking on the street. McGowan pulled over and struck up a conversation.
Meeting this stranger proved fortuitous, as it was Tim Tucker, whose grandfather, Raymond, was a former mayor and the namesake of Tucker Boulevard. At that time Tucker was helping sculptor Bob Cassilly set up the International Building Company, the parent company of City Museum. Always eager to support development in the neighborhood, he encouraged McGowan to check out a seven-story building for sale at 1221 Washington Avenue.
Brian Kowert, COO at HBD Construction—McGowan’s future general contractor—recalls being struck by McGowan during their first conversation, before he began working for him. “Kevin wasn’t just interested in renovating one or two buildings but creating an entire district, and this was when most people were fleeing the area,” Kowert says. “He saw an opportunity for a construction and development renaissance in St. Louis, and his timing was perfect, as he could utilize the tax credits.”
McGowan, who at the time sold insurance at The Daniel and Henry Company, sold his St. Louis Hills home for $175,000 and bought the building on Washington Avenue for $120,000. “I’d spent 15 years as a rehabber of one- to two-bedroom single-family homes,” he says. “I usually did one home per year, either on the side or as a full-time job. But I enjoyed taking something rotten and turning it into something. I viewed rehabbing a building as stacking 13 or 15 homes on top of each other.”
Along with his brothers Tim and Sean, he moved into the top floor of what he says was a messy, nasty building with a leaky roof and broken windows. “We didn’t have heat or hot water for the first year, and the building wasn’t watertight, so rainwater would fall all the way down to the first floor,” he says. “We also had to be careful where we placed our beds due to the pigeon droppings.”
Lacking the money to fix everything at once, McGowan figured he’d fund the renovation in stages, one wall at a time. He convinced representatives of a New York company rumored to be interested in renting out the first floor for a bar/restaurant to fly to St. Louis to take a look. “I told them it was once one of the grandest streets in the city and that it would be that kind of place again,” he says. They signed on.
By early 1999 McGowan and his brothers—Tim, Bill, Sean and Seamus (Terry would join them later)—formed McGowan Brothers Development in equal partnership to develop rental loft properties. Within a few years they had totally rehabbed the building—to be called McGowan Lofts—each taking a floor and designing it in their own desired style. (Kevin lives there still, with a growing family of his own.)
“Kevin and his brothers were totally into grass-roots development, using sweat equity to renovate that building,” recalls Tucker, who now serves as president of project management for Blue Urban’s Kansas City office. “We used to call them ‘the Urban Waltons,’” he adds, explaining how they envisioned the brothers turning out the lights on their floors and calling out to one another.
By 2004 the McGowan brothers had developed and managed 10 St. Louis loft condo rental properties. That same year McGowan decided to branch out and partner with former U.S. Title president Nat Walsh, remaining a principal of McGowan Brothers. Under the name McGowan|Walsh, they set about designing high-end loft condos for sale with a modern, European style, hoping to attract urban types with money and creativity. The architecturally significant loft/condos featured custom crown molding, exposed brick walls and granite countertops. Some included wall-to-wall windows and balconies, offering incredible city views.
By November 2007 condo sales in St. Louis were up 28.6 percent. Inside the walls of the company, though, there was turmoil—that month the two men ended their partnership in what has been described as a contentious split. While Walsh declined an interview request for this article and McGowan cited a confidentiality clause in place, some colleagues and friends have speculated that McGowan and Walsh had very different personalities and working styles that probably doomed the partnership from the beginning.
One friend of McGowan’s, a businessman who has lived on Washington Avenue for more than a decade, suggests that Walsh had problems with McGowan being the face of the company. “Kevin isn’t a typical developer; he’s more of an artist. Sometimes his vision is really in his head, and he doesn’t always communicate it well,” the friend says. “And sometimes he’s so passionate about what he wants to do that he needs someone to rope him in and deal with the reality of the project—and Nat wasn’t really that person.”
Whatever the reason, a nine-month reorganization plan was finalized. McGowan|Walsh will continue to develop the existing projects, while McGowan’s new company, Blue Urban, will manage them. The Shell Building, home of their former office, has been sold, and all 14 St. Louis staff members, including the three in-house architects McGowan rooted from other firms—Greg Trost and Matt Huff from The Lawrence Group and Joel Fuoss from Trivers Associates—have followed him to Blue Urban’s new headquarters at 2200 Washington.
With McGowan|Walsh and now Blue Urban, McGowan has guided strategic moves into other markets, including Kansas City, Springfield, Mo., and cities in Pennsylvania and Ohio. “It’s crucial to have a diverse basket of revenue sources and streams,” he says, “so if there’s a slow project in St. Louis or I lose a project somewhere, I’ve got others to carry it.”
“Kevin was smart to diversify into other markets,” says Patterson, “and he made a wise decision a number of years ago buying in the Cupples warehouse area and the GW. He and others have helped stretch the market beyond just a small core area.”
The GW complex at 2615 Washington, in the old Guth Lighting Building, is one project that has tested McGowan’s ability to adjust and regroup. Initially conceived as a showcase project for Blue Urban, the $23 million rehab has shifted from purchasable units to only rentable—which for some raises the concern of market saturation. McGowan says other projects are in fairly good shape, though there’s no question that some are moving a bit slower due to the economy. Residents have begun moving into both the Packard and Motor Lofts, but there are still units for sale. And on the retail front, Gateway Greening (McGowan is a board member) and Downtown Children’s Center, one of only a few nationally accredited day-care centers in the city, are both located in the Motor Lofts Building.
In mid-May all 36 units of the Ballpark Lofts #9 sold, and 57 of the 68 units in the 118,000-square-foot Ballpark Lofts #8 (at 10th and Spruce Street) have been sold as well. Two Clayton-based advertising agencies, Osborn & Barr Communications and Adamson, have announced plans to move to McGowan|Walsh’s $45 million Cupples Station development #8, with the former occupying 44,000 square feet on the second and third floors and the latter 13,000 square feet on the fourth floor. The 10-year leases are estimated to be worth $12.5 million to Blue Urban.
Patterson suggests that McGowan and other developers may keep a lower profile in touting projects, as he believes that the Centene Corp. calling off its Ballpark Village move to stay in Clayton was a bigger blow, due again to too much hype. Craig Heller’s LoftWorks is selling condos in The Syndicate Building (at 1006 Olive), and more than 900 people attended the annual May Loft Tour. “We definitely celebrated too soon,” Patterson says, “but Centene pulling out of Ballpark Village hasn’t hurt Kevin’s developments there. He’s going forward, and I believe he will do exactly what he said he was going to do. He’s great at finding investors—he has projects under construction.”
In August 2000 McGowan married Erin Shannon, daughter of Cardinal baseball announcer Mike Shannon. Several friends had tried to set them up before, but he had resisted due to their 16-year age difference. But at one of Shannon’s charity golf tournaments, McGowan saw her handing out awards in the clubhouse. “This beautiful, poised young woman keeps it together, while all these drunk golfers are whooping and hollering,” he says. “I thank God I found her.”
Since then they’ve had five children, son Maddoc and four daughters: Kennedy, twins Hennessy and Lochlan, and Teaghan, who was born in June. “We have five children under 5,” he says, and he isn’t ruling out more down the road. “Playing with my kids in the living room are definitely some of my best times.”
His wife helped introduce him to St. Louis’ often cliquish society, where the provincial “Where did you go to high school?” question is still used to peg people. One of his biggest supporters has been his father-in-law. “Mike has been there for me in many ways,” says McGowan. “Aside from being a great father and grandfather, he’s talked about the work I’ve done while broadcasting the Cardinals games, and he’s also invested in projects.”
McGowan, his father-in-law and his sister-in-law, Pat Shannon, have formed a new development division called The Minaret Group. Their first venture, in partnership with Pete Ferretti and Buddy Coy (Pepper Lounge, Mandarin), is Lumen, a high-end private event space that opened earlier this year on the first floor of the Packard Lofts building. The Minaret Group will also develop a new restaurant in the Cupples development and a second Mike Shannon’s Steaks & Seafood in the $25 million Heers Tower development in Springfield, Mo. McGowan|Walsh also developed the $4.5 million new Shannon’s Steaks & Seafood on Market Street near Busch Stadium.
A family man who likes to golf when he has the time, McGowan counts many colleagues as friends, but he credits his wife, who has a Ph.D. in psychology, with keeping him grounded, helping him cope with his inner demons and find some peace. While he seeks counsel from a close inner circle that includes his partner Dan Langley, COO of Blue Urban, and attorneys Guy Brandt, Jim Fredericks and David Richardson, he’s often on his own when it comes to making decisions.
“Democracy is all well and good, but in the end someone has to make the decisions,” he says. “Even though my goal wasn’t to manage an office, I have to. But I see myself as a benevolent dictator. Maybe I am a bit of a narcissist, but what CEO isn’t a little bit in love with himself?
“I also have a rather unique view of compromise,” he continues. “I see it as a failure, as two people losing out. I have a real problem with wishy-washy people who water down my vision.”
Once a member of Downtown St. Louis, he resigned several years ago. He finds that kind of organization too large and cumbersome to make things happen. “If a decision needed to be made at McGowan Brothers, we would all sit down together, and meetings could go on seven hours.”
While no one except the brothers knows whether there’s lingering animosity about McGowan going out on his own, one downtown insider described it this way: “When Kevin split from McGowan Brothers, it was the result of a different level of ambition and need to make an impact and be important. The other brothers were pretty happy with their investments to date and comfortable with their lifestyles. They didn’t feel the drive to grow dramatically and take on much greater levels of risk. Kevin was driven by many factors, including his self-acknowledged ego, to expand the scope of his business and his impact upon St. Louis and other communities.”
Among those scope-expanding projects is the $25 million renovation of Springfield’s seven-story, 120,000-square-foot Heers Tower, the first solely Blue Urban project. (Former NFL running back Ki-Jana Carter is a partner on the mixed-use project.) In his bid, McGowan added a contingency that the city develop the nearby square, which will begin this fall. “I agreed to take the risk, but I also expect them to honor their commitment to renovating their own front yard,” he says.
McGowan is big on beautification and improvements, believing them to be crucial to future development and residents coming to downtown St. Louis. “We’ve brought back every single architectural jewel of a building, and developers collectively have spent $4 billion in our downtown in the last 10 years in real-estate development, and that’s outstanding,” he says. “Yet parts of downtown St. Louis are still a drive-by to many people … Right now you can stand on a street corner and see four different types of sidewalks come together, and the streetlights aren’t in sync. We need a fabric of downtown landscaping and greenery that knits it all together.”
McGowan donated money for the American Institute of Architects to host a charrette, in which architects around the country discussed ideas for solutions to the Gateway Mall. Patterson served on the same team as McGowan. “Kevin and I argued a lot, and we’re both very stubborn, but there’s a lot of mutual respect,” Patterson says. “Kevin is a person you can disagree with and still be friends, whereas other people you argue with, they become enemies.”
Whether it’s fundraising or networking, McGowan remains committed to developing the urban core. The East-West Gateway Council of Governments honored him in 2005 with the Outstanding Local Government Award for his work on the Market Street Garden, an urban park in the 16 blocks between Union Station and the Arch. McGowan also serves as president of Heat-Up St. Louis, an organization that’s helped thousands of mostly single mothers, people with disabilities and the elderly pay their cooling and heating bills. “Every penny we have raised, which is in the millions, goes to the people in need,” he says.
While he has no properties in the Old Post Office Square, McGowan joined forces with Heller and others working to block the demolition of the Century Building, which was being spearheaded by Steve Stogel, cofounder of DFC Group, and Mark Schnuck of The DESCO Group. “I was outraged when I heard that they wanted to tear it down and build a bus station in that part of town,” he says. “I didn’t think it was fair to the city or to Craig [Heller], who was doing development in that neighborhood. It would have really killed his efforts … I had no idea what we were up against, and we got beat to pieces. But we did prevail, in that there was no bus station built there.”
McGowan will no doubt butt heads again with the powers that be, in part because he’s not afraid of pushing for what he wants. He’s even passionate about building a new skyscraper that symbolizes St. Louis to the world. McGowan was ready to announce the project a year and a half ago, but he’s put it on hold until the economy rebounds. Still, he’s adamant that it will come to fruition.
“We built something that the world knows, but the Arch is a glass ceiling in development in St. Louis, in that we don’t build anything higher,” he says. “The shadow of the tower I propose will extend to Chicago, Dallas and beyond.”
As both a father and a developer, McGowan believes it’s crucial to leave a legacy that allows his children and grandchildren to stay in St. Louis rather than move elsewhere. “I want all of our kids to be able to find fulfilling careers and lives here,” he says, “but we’re constantly in competition with other cities, and we’re either winning or losing … What we’ve done in the past six or seven years in
St. Louis is really unparalleled, and we serve as an inspiration to the rest of the country.”
With McGowan’s projects widening to other cities, some assume he will eventually find reason to leave the city.
“People do come up to me a lot, asking me when I’m moving, but I don’t plan on going anywhere,” McGowan says. “I’ve lived in many places, but I’m happy to say that I’ve finally found my home and it’s here in St. Louis. The only moving I’m going to be doing in the near future is doing everything I can do to move St. Louis forward.”
