Stoler Report – Challenges & Opportunities: The Commercial Real Estate Brokerage Business

Stoler Report – Challenges & Opportunities: The Commercial Real Estate Brokerage Business


♪ [THEME MUSIC] ♪>>THERE IS THE BUSINESS OF COMMERCIAL BROKERAGE. IT LOOKS LIKE A LOT OF MONEY. THERE IS A LOT OF CHALLENGES. THERE ARE OPPORTUNITIES BUT THE CHALLENGES ARE THERE, DIFFICULTIES. I’VE ASSEMBLED A GROUP OF COMMERCIAL BROKERAGE COMPANIES TO PROVIDE THEIR INSIGHT ON THE CHALLENGES AND OPPORTUNITIES OF RUNNING A COMMERCIAL BROKERAGE. MY GUESTS INCLUDE SHIMON SHKURY, THE CO-FOUNDER AND CEO OF ARIEL PROPERTY ADVISORS. TIM KING, CO-FOUNDER AT CPEX REALTY SERVICES. OFER COHEN, THE FOUNDER AND CEO OF TerraCRG, AND YONI GOODMAN, THE PRESIDENT OF THE MERIDIAN INVESTMENT SALES. EACH ONE OF YOU AT A DIFFERENT TIME IN YOUR LIFE WENT IN THE BUSINESS. THE THREE OF YOU WORKED TOGETHER. YOU WERE AT GOLDMAN SACHS. IT WAS A DIFFERENT WORLD OVER THERE. HOW DID YOU DECIDE THAT YOU WOULD GO OUT ON YOUR OWN?>>I ALWAYS HAD A PASSION OF BUILDING SOMETHING AND BEING A PART OF A COMPANY. THAT WAS GREAT WHEN I STARTED. THE FIRST TWO YEARS WERE TO BUILD A DIVISION. WHEN IT ENDED, AS THE COMPANY MATURED, I LOOKED AROUND, LOOKED AT MY TEAM. MY TEAM SAID WE SHOULD DO THIS OURSELVES BECAUSE WE LOVE BUILDING STUFF.>>THERE IS THIS GUY, SEVEN YEARS AGO. YOU ARE 40 YEARS OF AGE. MARRIED, YOU HAVE A WIFE AND A COUPLE OF KIDS. IT IS A DIFFICULT TIME. HOW DID YOU HAVE THE NERVE TO GO INTO THIS?>>GREAT QUESTION. IT REQUIRES A LOT OF INTERNAL WORK AND A CAPITAL TO DO THAT. AGAIN, HAVING TO HAVE THE RIGHT PARTNERS. YOU HAVE TO HAVE A PLAN ON HOW YOU WILL DIFFERENTIATE YOURSELF AND GET CLIENTS RIGHT AWAY.>>TIMMY AND I ARE CLOSER IN AGE. IT WAS 10 YEARS AGO. HOW DID YOU DECIDE TO GO TO THE BUSINESS?>>TO THE POINT ABOUT HAVING GOOD PEOPLE, I WAS BLESSED TO HAVE BRIAN LEARY AS A PARTNER. WE HAD WORKED TOGETHER. WE HAD A LOT OF FUN, SAW A LOT OF DIFFERENT OPPORTUNITIES, BUT I FELT I HAD SPENT ON ALL A LOT OF MY LIFE DOING SOMETHING TO BUILD FOR OTHER FOLKS. IT WAS A CHANCE TO BUILD FOR MYSELF, TO BUILD SOMETHING THAT WAS UNIQUE. THERE WAS ALSO, IF NOT NOW, WHEN?>>THAT’S AN IMPORTANT COMMENT. I SAID TO YOU THERE ARE CERTAIN TIMES IN YOUR LIFE WHERE YOU HAVE THE OPPORTUNITY. WHEN THE KIDS ARE A CERTAIN AGE, OR YOUR OBLIGATIONS ARE AT A CERTAIN LEVEL. YOU BASICALLY LEFT AT THE SAME TIME.>>I THINK EACH PERSON AND COMPANY HAS ITS OWN STORY. SHIMON MENTIONED PASSION. I THINK THERE IS A LOT OF CONVICTION. I THINK WHEN I WAS IN BROOKLYN I SAW AN OPPORTUNITY. I SAW THE BROOKLYN MARKET AND I HAD THIS DEEP, VISCERAL SORT OF FEELING AND UNDERSTANDING THE BROOKLYN MARKET NEEDS SOMETHING ELSE. I WOKE UP ONE MORNING AND DECIDED TO DO THIS. OBVIOUSLY THERE IS A LOT OF STRATEGY BEHIND HOW TO DO THINGS. THE DECISION TO DO SOMETHING LIKE THIS, YOU HAVE TO SEE AN OPPORTUNITY. I FELT LIKE THE BROOKLYN MARKET AT THAT POINT WAS SO EARLY AND MY FEELING WAS EVEN BE THAT KIND OF TRAJECTORY.>>10 YEARS AGO WE WERE IN THE WORST RECESSION.>>I STARTED IN JANUARY, FEBRUARY OF 2008, BEFORE LEHMAN BROTHERS CRASHED. I DID NOT KNOW THE WORST FINANCIAL CRISIS WAS AHEAD OF ME. NOBODY KNOWS. WE COULD BE 10 MONTHS RIGHT NOW BEFORE A BIG RECESSION ALSO. NOBODY REALLY KNOWS. I HAD THE CONVICTION, PASSION AND DESIRE. I WOKE UP AND JUST DID IT. I REMEMBER PAUL MASSEY THE DAY AFTER LEHMAN BROTHERS CRASHED AND SAID, DO YOU WANT TO COME BACK? IT WILL BE REALLY ROUGH OUT THERE. HE WAS BEING SUPER NICE, AS HE IS, AS USUAL. I SAID I ALREADY DID THIS.>>HERE IS THE SITUATION. EACH ONE OF YOU WENT OUT REALLY WITH NO BUSINESS. YOU STARTED AS AN ENTREPRENEUR. HE STARTED A COMPANY WITHOUT BUSINESS EITHER, BUT HE HAD A BIG BROTHER. LET’S TALK ABOUT HOW MERIDIAN INVESTMENT SALES CAME ABOUT.>>SURE. THE EXPERIENCE HAS BEEN SOMEWHAT DIFFERENT THAN LAUNCHING COMPLETELY ON OUR OWN. WE LAUNCHED AS PART OF MERIDIAN CAPITAL GROUP. FOR ME AND FOR THE PLATFORM THAT WAS THE MOTIVATING FACTOR, THE DIFFERENTIATING FACTOR AND REALLY THE OPPORTUNITY.>>I HATE TO MAKE THIS COMMENT. IF YOU DID NOT HAVE THE BIG BROTHER AT THAT TIME, YOU WOULD HAVE STAYED IN THE INVESTMENT BANKING WORLD AT A PLACE LIKE GOLDEN?>>THERE IS NO DOUBT I CAME TO THE BROKERAGE WORLD TO BE A PART OF MERIDIAN. TO TAKE 25-30 YEAR OLD COMPANY WITH SUCH DEEP ROOTS NATIONALLY, TAKE THAT AND LEVERAGE THAT ALONG WITH THE FOUNDERS OF THE FIRM INTO CREATING A NEW PRODUCT LINE TO SERVE THAT DEEP AND LOYAL CLIENT BASE.>>HOW LOYAL WAS THAT CLIENT BASE? — PROVIDING FINANCING FOR THE COMPANY. THE BIG QUESTION IS, HOW AM I GOING TO ACCOMPLISH — IT’S LIKE THE RESTAURANT GUYS. SOMEBODY SAYS, I WILL BE YOUR BACKER. TALK IS CHEAP UNTIL THE DEAL TAKES PLACE.>>THE WAY I WOULD CHARACTERIZE IT IS AS FOLLOWS. IN THE BROKERAGE BUSINESS, ON ANY SIDE OF THE BUSINESS, MORTGAGE, SALES, LEASING, YOU ARE ONLY AS GOOD AS THE SERVICE YOU PROVIDE. HONESTY, SERVICE AND EXECUTION, GETTING THE JOB DONE. WHILE WE HAVE A DEEP AND LOYAL CLIENT BASE, THEY WERE LOOKING FOR US TO PERFORM. WHAT I WOULD SAY IS WHEN YOU HAVE THAT TYPE OF REPUTATION IN THE MARKETPLACE, WHILE WE HAVE TO PERFORM DAY IN AND DAY OUT, THERE ARE A LOT OF PEOPLE AROUND THE MARKETPLACE THAT ARE LOOKING FOR AN EXCUSE. LOOKING TO GIVE US THE BUSINESS, LOOKING TO NOT GIVE US THE BUSINESS. IT IS ALL ABOUT OUR PEOPLE AND EXECUTION.>>WE ARE IN THE BIGGEST INVESTMENT SALES MARKET IN THE WORLD OVER HERE. WE HAVE BASICALLY LOCAL PLAYERS COMPETING AGAINST THESE NATIONAL AND INTERNATIONAL FIRMS. HOW DO YOU COMPETE? YOU DON’T HAVE AS MUCH MONEY. SOME ARE PUBLICLY HELD COMPANIES. THEY HAVE CAPITAL. THEY CAN GO OUT AND SIGN UP BONUSES. HOW DO YOU GET PEOPLE ON A DAY-TO-DAY BASIS TO WANT TO COME TO WORK WITH YOU? WHAT IS GOING TO MOTIVATE THEM?>>THE FIRST THING IS TO BE NIMBLE AND KNOW YOUR MARKET. HALF OF OUR COMPANY IS RESEARCH. WE PROVIDE A TREMENDOUS AMOUNT OF INFORMATION TO GO AND KNOW EVERYTHING THAT NEEDS TO BE KNOWN ABOUT A BUILDING OR A VACANT LOT. IT STARTS WITH — IF YOU TAKE AFFORDABLE HOUSING, EVERYTHING RELATED TO REGULATORY AGREEMENTS, WE KNOW HOW TO DISSECT AND UNDERSTAND. IF YOU LOOK AT THE ZONING SPECIFICALLY FOR NEW YORK CITY, YOU NEED TO UNDERSTAND EVERYTHING FROM A TO Z ABOUT THAT. THESE ARE THE LITTLE THINGS IN NEW YORK CITY SPECIFIC TO THE LOCAL MARKETS, THE SUBMARKETS.>>WAIT A MINUTE. THE NATIONAL FIRMS HAVE THAT TOO, DON’T THEY?>>IT’S A MISCONCEPTION — BIGGER IS BETTER. I MAKE THE ANALOGY — THINK ABOUT THIS. FORD SELLS MORE CARS THAN ROLLS-ROYCE, BUT WHICH WOULD YOU RATHER DRIVE? WHEN YOU’RE LOOKING FOR ROLLS-ROYCE SERVICE, YOU CAN’T ALWAYS GET IT FROM A FORD DEALER. SURE, THEY CAN PROVIDE A PANOPLY OF SERVICES, BUT DO THEY HAVE THE SAME LEVEL OF HANDHOLDING THAT I CAN OFFER? WE ARE ON A DIFFERENT PLANE THAN THOSE FOLKS.>>IN TERMS OF THE RESEARCH AND UNDERSTANDING OF LOCAL PRODUCT, AT LEAST FOR US, WE DEFINITELY HAVE BETTER INFORMATION.>>EACH ONE IS TRYING TO DO A NICHE. YOU ARE — A LOT OF YOUR BUSINESS TO THE FINANCE SIDE. CERTAIN MARKETS THAT HAVE NOT SOLD BEFORE. YOU ARE SPECIALIZING IN BROOKLYN. YOU ARE MORE OF A LOCAL BROKER WHO KNOWS THE MARKET AND UNDERSTANDS THE MARKET. HOW DO YOU COMPETE? HOW DO YOU MOTIVATE PEOPLE? MONEY IS MOTIVATION. THERE ARE OTHER REASONS.>>SURE. WE SAY THAT MARKETS ARE EFFICIENT. THE EMPLOYMENT MARKET IS ALSO EFFICIENT. THE PEOPLE THAT WORK FOR DIFFERENT COMPANIES ARE LOOKING AT WHAT THE COMPANY PROVIDES THEM. WE REALLY LOOK AT THREE THINGS. THAT EVERY EMPLOYEE WAKES UP IN THE MORNING AND ASKS THEMSELVES, COMPENSATION, WHAT EDGE DO THEY PROVIDE ME WITH, THE TOOLS, AND THE CULTURE. WE THINK THOSE THREE THINGS ARE OF PARAMOUNT IMPORTANCE. THERE IS NOT ONE THAT IS MORE IMPORTANT THAN THE OTHER.>>PART OF THE PROBLEM IS WE ALL HAVE DIFFERENT PERSONALITIES WHO SELL FOR YOU. WHO HAVE TO PLAY NICE IN THE SANDBOX. SOME PEOPLE PLAY BETTER IN THE SANDBOX AND CERTAIN PEOPLE DON’T PLAY BETTER.>>I FEEL LIKE LARGE FIRMS NEED TO HIRE A LOT FASTER AND A LOT MORE PEOPLE. SMALL FIRMS LIKE OURS THAT ARE FOCUSED ON BROOKLYN ARE HIRING STRATEGICALLY. SOMEWHAT CAREFULLY AND SLOWLY. WE ARE 30 PEOPLE NOW. IN TWO OR THREE YEARS WE WILL BE 42, 45. THAT IS NOT A TREMENDOUS AMOUNT OF PEOPLE OR BODIES TO GROW AND TAKE AN OPERATION TO SCALE. THAT ENABLES US TO FOCUS ON OUR MARKET. 80% OF OUR RESOURCES ARE GOING TOWARDS GROWING OUR MARKETS, SPENDING TIME WITH CLIENTS.>>THE MAJORITY OF YOUR BUSINESS AND EVERYONE UNTIL RECENTLY WAS THE INVESTMENT SALES. YOU ARE MORE IN THE LEASING.>>OFFICE RETAIL AND SALES.>>I’M SAYING THAT SOMETIMES YOU WANT TO BE MORE THAN YOU ARE. THE SITUATION ON OUR FRIENDS AT EASTON. THEY WERE JUST AN INVESTMENT SALES COMPANY AND THEN WENT INTO LEASING, THEN THEY WENT INTO FINANCING. IT IS ALWAYS NICE. PEOPLE LOOK AT THE GRASS OF WHAT SOMEBODY ELSE IS MAKING.>>THERE IS ONE QUESTION I’M ASKED EVERY DAY. WHY NOT QUEENS? — IT IS THE NEXT BROOKLYN. THE ANSWER IS OUR TRUE AND SO COMPETITIVE ADVANTAGE IN TERMS OF HIRING AND SERVICING OUR CLIENTS AND SERVICING THE MARKET IS OUR FOCUS ON BROOKLYN. LET’S BE HONEST, WE HAVE 5%-6% MARKET IN BROOKLYN RIGHT NOW, JUST BY PURE EXECUTION, WE CAN GET THAT TO 10% TO 12% IN BROOKLYN. WHAT WOULD BE THE INCREMENT COST OF OPERATION TO START IN QUEENS, HIRE THERE –>>WHEN — DECIDED TO GO TO NEW JERSEY. IT’S A DIFFERENT WORLD. TOTALLY DIFFERENT MARKET, RIGHT?>>THE BROOKLYN AND QUEENS MARKET HAVE A LOT OF SIMILARITIES. THE SAME OWNERS THAT OWN IN THE FULTON MALL OWN IN JAMAICA AVENUE. THE SAME GUYS RUNNING OUT OF LAND TO BUILDING BROOKLYN ARE NOW LOOKING IN QUEENS. FOR US IT IS AN ADVANTAGE TO BE IN MULTIPLE MARKETS. I LIKE TO THINK WE CAN BE OF BIGGER FISH IN A SMALL POND.>>IF WE HAVE TO LOOK AT IT THIS WAY, WHEN HE WENT OUT ON YOUR OWN HOW MANY PEOPLE WERE YOU?>>8.>>8 TO 150.>>THERE WERE 3 OR 4 OF US.>>TODAY?>>40.>>2?>>2 AND NOW 30.>>UP TO 30. WE STARTED WITH ZERO.>>YOUR INITIAL BASE?>>5. WE’VE GROWN TO ABOUT 30. TO YOUR QUESTION, YOU ARE ABSOLUTELY RIGHT. TO GET INTO OTHER BUSINESS LINES FOR THE SAKE OF BEING IN ANOTHER BUSINESS LINE, WE HAVE TRIED TO BE VERY DISCIPLINED ABOUT THAT AND IT HAS NEVER BEEN INTERESTING. WHAT IS INTERESTING IS SYNERGIES. IF WE BELIEVE WE HAVE AN UNBELIEVABLE FINANCING ARM AND WE CAN SELL A BUILDING, FINANCE THE BUYER. THOSE FULL CIRCLE TYPES OF ASSIGNMENTS. THE SELLER APPRECIATES IT, THE BUYER APPRECIATES IT. MAYBE NOW THE SELLER BECOMES A BUYER. THOSE SYNERGIES — WHAT PEAKES OUR INTEREST BECAUSE THERE ARE HUGE OPPORTUNITIES.>>WHEN YOU ARE DOING THE SALES PITCH TO BRING IN A NEW EMPLOYEE, BECAUSE THAT IS A CHALLENGE AND OPPORTUNITY, HOW DO YOU SELL? WHY SHOULD THEY GO TO WORK FOR SHIMON OR TIM OR OFER? WHAT IS YOUR EDGE?>>I ENCOURAGE THEM TO MEET WITH US AND OTHERS AS WELL. I WANT THEM TO BE COMFORTABLE THEY ARE MAKING THE RIGHT CHOICE. WE DON’T HIRE ANYONE UNTIL THEY HAVE SPENT THREE OR FOUR FULL DAYS IN THE OFFICE MEETING WITH FOLKS. WE HAVE AN INTERESTING ECOSYSTEM. IN OUR BUSINESS EVERY AGENT WORKS ON A SPECIFIC PRODUCT TYPE. IF A NEW PERSON WILL JOIN THE FIRM, WE HAVE TO FIGURE OUT WHAT TEAM THEY WILL WORK ON. WHAT PRODUCT THEY WILL SPECIALIZE IN. THE TEAM HAS TO BE RECEPTIVE TO THE NOTION THAT BRINGING THIS PERSON ON WILL MAKE MY SLICE SMALLER BUT MAKE THE PIE BIGGER. THAT WHOLE CULTURE COMPONENT IS VERY CRITICAL. I WANT WHOEVER COMES ON BOARD TO KNOW THEY ARE BURNING THE BOAT BEHIND THEM. YOU WILL DIVE INTO THE DEEP END OF THE POOL. THIS IS NOT A TRYOUT.>>IN OUR SYSTEM WE PROVIDE BROKERS WITH A SPECIFIC CORE OF GEOGRAPHY OR TERRITORY. IN ADDITION WE PROVIDED TREMENDOUS AMOUNT OF SUPPORT.>>IF I’M A YOUNG BROKER AND I GO TO YOU AND I SAY I WOULD LIKE TO COME TO YOU BUT YOU WILL TELL ME I HAVE TO WORK IN EAST NEW YORK? OR I HAVE TO GO TO THE BRONX? I’M BEING LIMITED.>>NO, YOU CAN WORK IN THE BRONX AND ORIGINATE ANYWHERE ELSE AND PARTICIPATE IN THE DEAL. THE WAY YOU SHARE FEES AT OTHER COMPANIES, OUR SYSTEM SAYS YOU HAVE A SPECIFIC AREA. YOU CAN BRING DEALS IN OTHER AREAS IF YOU CHOOSE TO AND WORK WITH OTHER PEOPLE. WE ALSO HAVE A SUPPORT SYSTEM WITHIN THE OFFICE. A COLLABORATIVE CRM, EVERYBODY IS OPEN TO IT AND ALLOWS EACH AND EVERY ONE OF OUR BROKERS TO WORK TOGETHER VERSUS AGAINST EACH OTHER. OUR GOAL IS TO HAVE THE MOST COLLABORATIVE ENVIRONMENT, THE MOST SUPPORTIVE ENVIRONMENT OUT THERE FOR INVESTMENT SALES PROFESSIONALS. AND FOR CAPITAL SERVICES.>>WE HAVE A LITTLE BIT OF A SIMILAR APPROACH AND A DIFFERENT APPROACH. WHAT IS DIFFERENT IS THAT WE WANT PEOPLE THAT WANT TO BE IN THE BROOKLYN MARKET. THE FIRST QUESTION, WHEN THEY WALK IN THE DOOR IS WHY YOU ARE HERE? IF THE ANSWER IS NOT, I MOVED TO BROOKLYN. MY FRIENDS ARE IN BROOKLYN. I’M EXCITED ABOUT THIS NEIGHBORHOOD. I LOVE BROOKLYN. IF IT IS NOT EXCITEMENT ABOUT BROOKLYN, THEY ARE PROBABLY NOT THE RIGHT CANDIDATE. IF I NEED TO CONVINCE ANYONE THAT BROOKLYN IS THE RIGHT MARKET FOR THEM, THEY ARE NOT FOR ME. BECAUSE I DON’T NEED TO HIRE 17,000 PEOPLE. I ONLY NEED TO HIRE 10 OR 15. IT IS A WAY TO SCREEN PEOPLE.>>WHAT PRODUCT TYPES ARE YOU SELLING RIGHT NOW IN YOUR COMPANY?>>INVESTMENT SALES, RETAIL, AND OFFICE LEASING.>>YOU HAVE EXPANDED INTO RETAIL LEASING AND OFFICE LEASING. YOU ARE SELLING WHAT?>>WE DO OFFICE LEASING, RETAIL LEASING AND ADVISORY SERVICES.>>INVESTMENT SALES AND CAPITAL SERVICES.>>YOU HAVE GONE INTO CAPITAL SERVICES AND YOU HAVE GONE A LITTLE STEP FURTHER WITH REGARD TO MORE ON THE ISRAELI FINANCING.>>THE BOND FINANCING IS, SOMETHING THAT IS COMPLETELY DIFFERENT. WE ARE DOING CAPITAL SERVICES IN-HOUSE. THIS IS VERY SYNERGETIC TO THE INVESTMENT SALES BUSINESS. WE HAVE A FEW PEOPLE WORKING SYNERGETIC WITH OUR INVESTMENT SALES BROKERS. IN TODAY’S MARKET SPECIALIZATION IS KEY. THAT IS WHY I THINK IF YOU DIVIDE THE MARKET TO BE A PRODUCT OR A TERRITORY OR GEOGRAPHY OR WHATEVER YOU HAVE THAT ALLOWS THE BROKER TO SPECIALIZE AND FOCUS, THAT WILL HELP THEM A LOT TO GROW AS A PROFESSIONAL.>>SPECIALIZATION?>>SPECIALIZATION IS ABSOLUTELY KEY. COMMERCIAL REAL ESTATE IS A DYNAMIC, LIVING, BREATHING THING. NOBODY WANTS TO HEAR YOU CAN GET A LOAN. PEOPLE IN TODAY’S WORLD WANT SUCH SPECIFICITY. 73% LTV OR 79%? WHAT BANKS ARE YOU GOING TO TAKE ME TO? HOW WILL THEY LOOK AT MY PROPERTY? EXTREME SPECIALIZATION IS EVERYTHING IN OUR BUSINESS. EVERYONE KNOWS YOU CAN GET A LOAN AND THE APPROXIMATE LEVERAGE, BUT THE ANCILLARY TERMS, THE SPECIFICS — AN OWNER, THEY WANT TO FEEL LIKE YOU UNDERSTAND THAT NEIGHBORHOOD, THAT MARKET, THE BUYER BASE IN THE BUILDING BETTER THAN HE DOES. OTHERWISE THERE IS NO VALUE PROPOSITION. THE SPECIALIZATION IS DEFINITELY KEY.>>ALSO SIMILAR, WHEN IT COMES TO STRAIGHT OUT OF COLLEGE HIRES, WE HIRE THEM STRAIGHT INTO A TEAM. GOING INTO AN EXISTING TEAM AND THE PIPELINE THEY ARE HANDLING ALREADY ENABLES THEM TO LEARN MUCH FASTER. NOT UNLIKE THE APPROACH OF HERE IS A DESK AND A PHONE –>>ARE YOU GETTING THE SAME APPLICANTS AS CBRE, JOO?>>ONE OF THE THINGS WE DID FOR THE SALES ASSOCIATES IS PUT THEM IN A POOL, ALLOW THEM TO ROTATE AMONGST DIFFERENT BROKERS. WE DO THE SAME THING WITH ANALYSTS AND IT IS MANAGED. IT’S A LOT MORE EFFECTIVE AND EFFICIENT FOR THE COMPANY. IT ALLOWS THE JUNIOR PEOPLE TO GROW A LOT FASTER AND GET A LOT OF EXPOSURE TO DIFFERENT PEOPLE. IN TERMS OF APPLICANTS, WE HAVE VERY FEW POSITIONS TO FILL RIGHT NOW. WE HAVE HUNDREDS OF RESUMES.>>BUT YOU BRING UP A GOOD POINT. PEOPLE WHO ARE NOT IN THE BUSINESS, INSIDE BASEBALL, DON’T REALIZE MOST OF THE PEOPLE WHO WORK FOR YOU IN THE INVESTMENT SALES AND LEASING BUSINESS ARE COMMISSION PEOPLE, YOU MAY HAVE THEM AS EMPLOYEES, BUT THEY ARE COMMISSION EMPLOYEES. HOW DO YOU GO AFTER SOMEBODY WHO LITERALLY HAS EDUCATIONAL DEBT, HAS OBLIGATIONS, HOW DO YOU KEEP THEM MOTIVATED IF YOU’RE NOT TAKING CARE OF THEM FINANCIALLY?>>JOINING AN EXISTING TEAM IS A GREAT SOLUTION FOR THAT. THEY ARE JOINING AN EXISTING PIPELINE OF REVENUE THE TEAM IS ORIGINATING. THROUGH THAT –>>YOU ARE TALKING ABOUT THE TEAM GIVING UP MONEY BECAUSE THEY’RE ADDING ANOTHER PERSON.>>THAT IS WHY IT IS CRITICAL THAT PERSON HAS TO FEEL THEY ARE BRINGING SOMETHING TO THE PARTY, THEY ARE MAKING THE COMMITMENT. THE TEAM HAS TO FEEL LIKE THIS’LL MAKE THE PIE BIGGER, NOT MY SLICE SMALLER.>>YOU’LL HAVE TO PAY YOUNGER TALENT THAT COMES IN THE DOOR. THAT IS PART OF THE INVESTMENT IN THE COMPANY. THERE ARE NO TWO WAYS ABOUT IT.>>HOW DO YOU GO TO THE NEXT STAGE? ALL OF YOU HAVE DONE WELL.>>FOR MERIDIAN, WE THINK ABOUT DIFFERENT PRODUCT LINES AND ABOUT GEOGRAPHIES. OUR RETAIL LEASING IS A BIG, BIG SYNERGY. FROM A GEOGRAPHIC PERSPECTIVE WE ARE VERY THOUGHTFUL AT ALL TIMES ABOUT WHAT GEOGRAPHIES WE HAVE A STRATEGIC REASON AND EDGE TO GROW IN. WHERE DO WE HAVE A REASON TO GROW AND WHERE DO WE HAVE AN EDGE THAT IS COMPETITIVE?>>OUR STRATEGY IS TWOFOLD. ONE, IF YOU COME TO OUR OFFICE, THERE IS A CONFERENCE ROOM WITH THE TRANSACTIONS. THE MAJORITY OF THE TRANSACTIONS ARE SORT OF LIKE CENTRAL BROOKLYN AND UP NORTH. THERE IS STILL HALF OF BROOKLYN BEING SOUTH OF THE PARK TO CONEY ISLAND.>>YOU CAN’T TAKE THE CEMETERIES.>>A BIG PART OF OUR STRATEGY IS GEOGRAPHICALLY EXPAND TO SOUTH BROOKLYN AND CULTIVATE THE RELATIONSHIP AND BUSINESS DOWN THERE. ON THE LEASING SIDE, WE SEE A TREMENDOUS OPPORTUNITY IN EXPANDING OUR OFFICE LEASING OPERATION. IT IS CURRENTLY ONLY THREE PEOPLE. WE ARE ACTIVELY SEEKING SENIOR AND JUNIOR SALESPEOPLE TO THE OFFICE LEASING BUSINESS.>>I THINK THERE IS A LOT OF GROWTH IN BOTH OFFICE AND RETAIL LEASING. IN TERMS OF INVESTMENT SALES, EVEN A 5% OR 6% MARKET SHARE IS AN AWFULLY BIG PIECE. IT IS JUST ABOUT GROWING SMARTER, BURROWING DEEPER, AND HAVING A SKILL SET WITH THE CURRENT CROP WE HAVE SO IF THEY MOVE UP, WE CAN MOVE IN NEW FOLKS UNDERNEATH THEM.>>IT’S ABOUT GEOGRAPHY. WE HAVE GEOGRAPHY THAT IS UNCOVERED AND WE ARE HIRING FOR THAT. THE MOST IMPORTANT THING IS TO LOOK INSIDE, WHO YOU ARE TODAY AND WHO CAN GROW FROM WHAT YOU HAVE TODAY.>>WITH THE EXCEPTION OF — DO YOU SEE THE GEOGRAPHY GOING TO NEW JERSEY?>>WE HAVE A SMALL OFFICE IN RED BANK, NEW JERSEY. IF YOU — MANY ARE ALSO IN JERSEY.>>WE COVER ALL FIVE BOROUGHS. WE COVER IT. WE HAVE A LOT OF ROOM TO GROW. AT SOME POINT WHEN WE ARE COVERED IN NEW YORK CITY AND THEN WE WILL GO OVER THE RIVER.>>AND YOU?>>WE ARE A NATIONAL FIRM SO WE HAVE A LARGE NEW JERSEY OFFICE. OUR NEW JERSEY OFFICE DOES A SIGNIFICANT AMOUNT OF BUSINESS IN NEW JERSEY AND NATIONALLY.>>YOU HAVE A LARGE NEW JERSEY FINANCING BUSINESS.>>CORRECT. ON THE INVESTMENT SALES WE WILL GROW OUTSIDE OF NEW YORK. WE THINK GROWTH IN INVESTMENT SALES IN CERTAIN MARKETS WILL DRIVE THE FINANCING IN THOSE MARKETS.>>I THINK GOING INTO THE MONEY — EVEN THOUGH YOU ARE NOT A NATIONAL FIRM, YOU DON’T HAVE TO BE A NATIONAL FIRM TO BE SUCCESSFUL. AS YOU SAID, IT’S A COMBINATION OF THE PEOPLE. THIS IS A PEOPLE BUSINESS. THE BIGGEST CHALLENGE IS TO MAKE SURE THAT PEOPLE ARE SATISFIED AND ENJOYING GOING TO WORK AND UNDERSTANDING WHAT IS GOING ON. I WOULD LIKE TO THANK SHIMON, TIM, OFER AND YONI. SEE YOU NEXT WEEK. ♪ [THEME MUSIC] ♪

One thought on “Stoler Report – Challenges & Opportunities: The Commercial Real Estate Brokerage Business

  1. I partner with CREB's and I'm really trying to help these guys out but they're so closed off about talking about the issues they face. We've been trying to break into the CREB industry for over a year and have helped on a few broken 1031's.
    Are there any issues you can think of in particular that CREB's face on a regular basis that we may help them with?

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