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January 20, 2017

Data centers help propel family-owned Sabey Corp. to the future

Puget Sound Business Journal

Patti Payne and Emily Parkhurst

Real estate and technology are arguably the two hottest industries in the Puget Sound region, and this year's Family Business of the Year has found a clever way to harness both.

Sabey Corp. was founded in 1972 when David Sabey, then only a few years out of college, decided to start a construction company. His son John was just a child.

In the 45 years since then, Sabey Corp. has become a leader in real estate development and management, particularly buildings that house data centers. The company jumped into the data center development business after building computer centers for Boeing in the 1980s. Since then, it has become one of the largest private owners of data centers in the country with more than 3 million square feet of space in its portfolio.

Data centers, which house the massive servers known as "the cloud," are big business. Cloud computing is predicted to be a $270 billion market by 2020.

Sabey had a good year in 2016. The company sold a 62-acre lot near Boeing Field for $138 million in November, $45 million more than the company bought the land for in 2007.

Sabey Corp. has a wide variety of major developments underway, including a $450 million New York City project that is half data center, half office space.

In Ashburn, Virginia, near Washington, D.C., Sabey is developing a 900,000-square-foot data center on 40 acres.

Closer to home, Sabey is the joint owner with Swedish of the $500 million Cherry Hill campus in Seattle's Capitol Hill. That project will add another 1 million square feet to the Swedish campus over the next five years.

David Sabey, who is about to celebrate his 70th birthday, has spent years preparing to hand the growing company over to his children. John, his eldest son, is 48 and serves as the company's CEO.

"Dave Sabey is regarded as one of the smartest business people around - not only book smart, but street and gut smart," said Jason Rosauer, senior vice president with Kidder Mathews, who has worked with Sabey since the start of his career.

The key component to Sabey Corp.'s success, Rosauer said, is the company's motto: "Do the right thing."

"All his kids have been brought up that way. That's why they're successful," Rosauer said. "Their company is not going to cut corners to make money. They've got your back and you can trust them."

Sabey has not only been good at predicting market cycles, Rosauer said, but has used that information to play offense and defense as the market swings.

"Many people sit there and wonder what's happening next," Rosauer said. "Somehow (David Sabey) always seems to have his finger on that pulse."

The youngest Sabey son, Joe, is 35 and runs the company's marketing, and the middle son, Jim Sabey, works outside the family business as a manager for music stars, including Beyonce and Maria Carey.

Like most family-owned businesses, Sabey Corp. has had its challenges.

"The good news is it's a family business - the bad news is it's a family business," David Sabey said. "The good news is that it has brought us together and the kids have grown up in the business."

Sabey Corp. has been preparing for the transition from David to John for 15 years. That has meant training and integration into all aspects of the family business.

"I started working as a kid in our lumber yards at 12 years old, doing inventory and other jobs," John Sabey said, "and worked through the system all the way through high school."

He then went off to college and then got a job at Prudential Real Estate in Chicago before going to Northwestern University's Kellogg School of Management.

"I had the choice to work in finance or come home and create value for myself and for my family, which is what I chose to do," John Sabey said. "I have been here ever since."

The transition between second and third generation is traditionally the most difficult for family owned businesses.

The third Sabey generation is still too young to decide if they'll take up the family business. John Sabey's teenage son is planning to spend the summer working for the company, though.

"The world is changing at an accelerated pace, so while our core values stay the same, we evolve in business as the market evolves," David Sabey said. "That works for us."

Family values: How being a family business impacts company culture

John Sabey, CEO:"It feels like a family and everybody cares for each other. It keeps everybody clear and consistent about the core values. We're not a small organization, but small enough to have a good opportunity to really impart our core values of insightful stewardship; doing the right thing; encouraging individual initiative; pioneering with urgency, tenacity, passion and common sense; building esprit de corps and long-term relationships; and thinking outside the lines. As we get spread out it becomes a little more difficult, but always that family culture really comes through our organization and keeps everybody together."

David Sabey, chairman and president:"The company culture is well evolved. We have combined the best of a private company and the best assets of what would be a public company and created a very long-term strategy and vision, realizing the importance of individual mindsets. Thus there is enormous alignment among the people here. We have new people and some who have been with us 35 years. ... We do a good job and spend a lot of time looking at the personal alignment of the team. We are really focused not on the product, but on the people. Ours is undeniably a happy, positive organization."

Sabey Corp.

  • Chairman and president: David Sabey
  • CEO: John Sabey
  • Headquarters: Tukwila
  • Founded: 1972
  • Employees: 222
  • Property under management: 6 million square feet on about 300 acres
  • Other businesses: Sabey owns two Starbucks franchises at Cherry Hill and in Belltown.
  • Fun fact: David Sabey also owns Montana Ranch LLC in Big Fork, Montana. The ranch has 450 registered Angus cattle and produces 150 purebred bulls every year for breeding.
  • Hometown impact: "It means a lot to Tukwila to have the Sabey Corp. headquartered in our city," Mayor Allan Ekberg said. "They've been an outstanding business in Tukwila since 2001 when they first opened here. In addition to keeping their properties attractively maintained and operating successful businesses, they have always helped make the whole community better. They are leaders in keeping the surrounding neighborhood clean, especially Tukwila International Boulevard. And they have helped local nonprofits, encouraged better quality development, engaged in regional issues and actively supporting our local schools. Plus, we just love Dave Sabey's entrepreneurial spirit."

For the full story, go to Puget Sound Business Journal.

© 2017 American City Business Journals. All rights reserved.

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