Market analysis
Branching Out
Small real estate companies use these strategies to spread their reach.
By Stephanie Bell |
When
he decided to seek more business on the East Coast, Jonathan Hipp, president of
Reston, Va.-based Calkain Cos., realized that moving into the market was the
best strategy. "If you are there, you will gain a bigger market
presence," he says. And, he was right. Calkain, which started in January
2005 with Hipp and one other partner, now has about 18 employees including two
offices in Nashua, N.H.,
and Tampa, Fla.
Expanding
into new markets is no easy task. Hipp took advantage of the client base he
established while working for a bigger company prior to starting Calkain. He
fueled the new business and built the brand through advertising and conducting
transactions. "We are establishing [new business] all the time; we build
it and make it better," he says.
At
some point, many solo practitioners and small commercial real estate companies
find themselves considering the option of growth. Changing markets or changes
in one's personal life can spark a need for expansion. Growing their own
businesses allows practitioners to set their own goals and rules and also to
have more day-to-day flexibility. They can pursue new markets or offer
additional business services and hire as many people as they feel are necessary
to keep the business going strong.
Once
practitioners decide to expand, they face a host of decisions. For better or
for worse, many of these decisions involve learning new behaviors such as
sharing the workload and hiring new employees. For many growing companies,
finding new business is the least of their worries; instead, implementing a
fresh way to manage the new workload takes both skill and strategy.
After
the initial expansion is underway, there are several steps that need to take
place, which include formulating new hiring practices, finding leaders within
the company, and delegating the workload and responsibilities. One of the best
ways to learn these steps is by hearing from those who have been there. Several
CCIMs who decided to expand their one- or two-person businesses discuss their
experiences growing their companies.
The
Initial Expansion
Ed
Craine, CCIM, president of Smith-Craine Finance, a commercial mortgage company
in San Francisco,
began expanding his business five years ago after being on his own for 20
years. He decided to branch out to give himself more time off and more
flexibility. The company now has about 10 people - five agents and five support
staff. Craine eventually hopes to have around 20 employees.
Similarly,
before expanding to 30 people, Applefield Waxman in West Palm Beach, Fla.,
started out with four people: a president, a vice president, an agent, and an
administrative person, explains Peter J. Applefield, CCIM, president and
co-founder with Brian K. Waxman, CCIM. Founded in 2002, the company now has
three divisions: brokerage, property management, and investment services and
has gone from occupying 500 square feet to 3,400 sf and soon will be relocating
to a space that is more than 5,000 sf.
Applefield
retained his name in the company's title because he was pretty well-known in
the market area. He also maintained his previous clients, started advertising
the company immediately, and reached out as much as he could by word-of-mouth
in the West Palm Beach
area.
While
some real estate professionals are there from day one of the expansion, others
may join the company in the middle of the growth. Robert G. Thornburgh, CCIM,
executive vice president of Heger Realty Corp., an independent industrial
company in Los Angeles,
has been with Heger Realty for six years. The company started out as a
single-person operation 50 years ago, but the majority of the company's growth
has been in the last 10 years. "What started out as a small brokerage firm
now assists tenants, investors, and property owners with lease and purchase
negotiations, development opportunities, investment acquisitions, property
consultation, and management," Thornburgh says. Currently, Heger Realty
has 30 employees.
Growth
Strategies and
Hiring Practices
When
companies go through a major expansion, a good growth strategy and strong
hiring techniques are needed.
The
first part of Applefield's plan was to notify his staff that they would be
working harder and well beyond what previously constituted a normal work day,
but they also would be compensated for their efforts. "We needed to know
that everyone was willing to do some extra work," he says.
When
hiring new employees, they looked for a mix of ability and personality. While
strong verbal and written communication skills were important, how the
individual got along with the rest of the staff was a main factor. A lengthy
background in the commercial real estate field also wasn't as important because
"[we] can train new people to think how we think," Applefield says.
Another
part of the strategy was to hire for the projected work rather than the current
workload. This way, although they sometimes may be overstaffed, if more work
comes in, there will be enough people to cover it without scrambling to hire
new people. The nature of their strategies and hiring methods keeps employee
and agent turnover low, Applefield says.
After
hiring, an important strategy is building new business by becoming more active
in your specific market. While Craine already was well-known in the San Francisco market, he
did even more in the commercial real estate community to get name recognition
to promote his growing company. "I became even more involved in my local
CCIM chapter," he says. His new-found motivation led him to eventually
become president and he now holds the human resources position. Craine also
speaks at seminars on topics such as investing and evaluating properties for
beginning real estate professionals. These actions allowed him to increase his
client base and make business contacts through networking with other designees.
Thornburgh's
more business-oriented plan for growth primarily was built on his existing
client base and their needs. Heger Realty expanded to become a true full-service
brokerage, which meant offering clients strategic guidance in sales, leasing,
and development. It also aligned with the best organizations in the commercial
real estate industry such as CCIM Institute and the Institute for Real Estate Management.
In addition, the company maintained a strong performance and exhibited the
highest level of ethics and integrity in all its business transactions. All
these strategies combined led to Heger Realty's successful expansion.
Peter Applefield, CCIM, (left) and Brian Waxman, CCIM, grew Applefield Waxman in West Palm Beach, Fla., from four employees to 30.
Photo credit: Peter Morpurgo Photography
Distinguishing
Leaders
While
strategy is important, seeking out leadership also comes into play when
expanding. Heger Realty follows the philosophy that "a true leader has the
confidence to stand alone, the courage to make tough decisions, and the
compassion to listen to the needs of others," Thornburgh explains. The
positions of influence in the office weren't initially intended to be
leadership roles. Instead employees' performance determined who really had the
initiative to become leaders by making their own decisions while listening to
and managing their clients' needs every step of the way.
Craine's
strategy is similar to Thornburgh's. He likes to see how individual employees
handle assigned tasks as well as how time is spent when they don't have
assigned projects or are finished with their current projects. Taking the extra
steps to become a leader is important. "You need to be proactive if you
want to rise to the top," he says.
"We
don't believe in titles," Applefield says of the company's non-traditional
approach to seeking out leadership. Instead, they look for hardworking
individuals who take pride in their work. For example, when the company first
opened, its one agent was young and had little sales experience, Applefield
explains. However, he had "the willingness to work hard, an excellent
manner, and superior computer skills" and is now a company shareholder and
assists in managing the brokerage side of the company. Applefield also finds
that the ability to lead others through positive reinforcement and example, instead
of by fear, helps to distinguish leaders.
Delegating
Responsibilities
Once
leaders have been identified, the next step in the expansion process is to make
sure that responsibilities and workload are divided up properly. "The key
to effectively delegating responsibilities is not to micromanage," Craine
says, admitting that he had trouble with this in the beginning. He found that
if he didn't delegate the work, he just ended up doing it on his own. Since
sharing the work was why he began the expansion, he learned to spread the work
among the rest of his employees even if it meant that the work wasn't always
done exactly his way. "You can't get upset if it's not the way you want
it," he says. "Sometimes it's better to focus on what you do best and
let others take on what they do best in order for the work to get done in a
timely manner," he adds.
Applefield
finds the right person to delegate the specific responsibility to and then
gives the individual the space to learn, make mistakes, and then learn from
those mistakes. When employees do make errors, Applefield makes sure that he
and Waxman are constructive when offering advice and expect their employees and
agents to grow. "In our opinion, they will not develop if they are nervous
and think that we are watching them every minute," he says.
"Typically,
we'll give [employees] an assignment and a clear deadline. The deadline will
give us time to fix their work," Applefield says. In order to not
micromanage, Applefield leaves the individual alone until the deadline. Once
the deadline has passed, he learns if the individual was able to meet it and
complete the work well.
Joel
Kahn, CCIM, managing director of the Nashua,
N.H., branch of Calkain
Institutional Advisors, finds that it's important to have a combination of
trust and system controls that provide a way to measure individuals'
performances. Before actually delegating responsibilities, Calkain spends a
considerable amount of time training its team to tap into their strengths and
learn their weaknesses. Through this process Calkain managers are able to
understand each team member's potential and then can give them the right
projects.
Getting
to know employees also keeps Thornburgh and his colleagues from delegating to
the wrong person. "Knowing that the person to whom you are delegating is
fully capable of handling the assignment takes the guessing and worry out of
the process," he says.
Whether
choosing the fast track or a slower pace for expansion, these CCIMs focused
their energy on not only expanding their companies, but on making sure they
remained competitive in their respective markets. Commercial real estate professionals
who are deciding if they want to expand should consider Thornburgh's advice:
"There is no secret to being successful in the industry. We all work
extremely hard."