The Challenger Brand
This is an HTML version of a story that ran in the April issue of Real Estate Forum. To see the article in its original format, click here.
Just three years old as of March, Cassidy Turley already ranks fifth in the 2013 edition of the Lipsey Co.’s annual survey of the top 25 commercial real estate brands. Ahead of it in the rankings are such household names as CBRE—which boasts 10 times as many employees globally—and Jones Lang LaSalle, but while it’s keeping pace with the top names in terms of industry perception, it doesn’t vie with them for sheer scale. Nor do its key executives intend it to.
Instead, Cassidy Turley—which began in 2008 as a union of four former Colliers affiliates that were joined by four other regional firms in March 2010 to rebrand as Cassidy Turley—is positioning itself as a challenger brand. “I believe there’s more demand for what we do than there is capacity for our industry to provide it,” CEO Joe Stettinius tells Real Estate Forum. “There’s plenty of opportunity for top-tier talent, top-tier solutions and top-tier services in our business. We’ve done a great job of aligning the right people with the right opportunities to drive that solution for clients, and we’ve been able to do that in a nimble and entrepreneurial way that allows us to be truly innovative. That innovation could be around technology, social media marketing or just a fresh approach to old problems.”
A bigger trend, Stettinius says, is that “there’s a generational shift in the workplace. While legacy brands in many industries continue to be successful, you look at the impact Under Armour has had on Nike, or Whole Foods on Safeway or even Apple on Microsoft. As the real estate industry matures, it’s intuitive to see a similar challenger brand that provides legacy services in a fresh, innovative way that distinguishes us from some of our competition.”
Accordingly, says Stettinius, “We don’t believe we have to have a presence in every single market in America or globally. What we need to have is a plan to provide best-in-class services in every market where our clients would like to have a presence.” He adds that as the domestic economy revives, Cassidy Turley’s clients are looking for “more resources to address the opportunities that the recovery is presenting to them. Because we haven’t been hampered by legacy debts acquired in the recession, our ability to create a platform that can help them exploit those opportunities is very high.”
Observes Peter Hennessy, who joined Cassidy Turley from JLL in 2011 as president of its New York City tri-state region, “We’re never going to become as big as some of our competitors, people that we go toe-to-toe with every day. Yet our intention is not to become the biggest but to continue to be the best, and to have our client base view us as a real strategic partner in the work that they’re doing.”
The emphasis has paid off, thanks to a combination of existing relationships and vigorous business-development initiatives. Headquartered in Washington, DC, the firm completed transactions valued at $22 billion in 2012, manages 455 million square feet across the US on behalf of institutional, corporate and private clients and supports more than 28,000 domestic corporate services locations.
Hennessy, who was brought in to provide “an injection of energy” for an already well-performing operation that began life as Colliers ABR, offers insight into the foundation underpinning Cassidy Turley. “Most of these firms coming together were single-market firms, a few multi-market, but these were not nationally focused organizations as the original Cassidy Turley organization came together,” he says. Along with Colliers ABR, the other founding organizations were Colliers Turley Martin Tucker, Cassidy & Pinkard Colliers and Colliers Pinkard, which were joined in 2010 by BT Commercial in Northern California, BRE Commercial in Southern California, BRE Commercial in Arizona and Colliers Houston & Co. of New Jersey as the Cassidy Turley rebranding got under way.
“Clearly, we’ve been leaders in many of our markets historically, and we have come from origins where our local market was the predominant interest that we had,” says Michael Kamm, who headed Cassidy Turley’s Northern California operations—and, before that, predecessor firm BT Commercial—before becoming the company’s president this past October. “As we put the company together over the past five or six years, we felt it was important to retain that local perspective and recognize that local markets each have their own dynamics, but at the same time overlay a national infrastructure and national service delivery capability” sought by corporate and institutional clients.
Accordingly, Kamm says, Cassidy Turley’s 3,700 professionals see themselves as both local and national players. “They recognize the value and benefit to the client of that dual aspect, because fundamentally, real estate services are delivered locally, yet it’s very important to have a national approach to many of the business lines,” he says. “Any individual transaction has a mostly local component, but there are elements that need to have a national or regional perspective and service delivery capability built in.”
He says that many of Cassidy Turley’s clients have said they believe the firm does “a better job of integrating national and local services and transactions into a bundle than they have experienced with other firms. Our people get the notion that our relationships with clients are multifaceted. They understand that we’re working as a team to provide the service to the client, and that service is multifaceted. It’s not simply a deal or a property-management or project-management assignment; it’s a relationship with a client that can take us in any one of those directions to solve problems for the client.”
For Cassidy Turley’s 455-million-square-foot property management platform, says the firm’s Marla Maloney, “One of the opportunities that we have in front of us is to expand our relationships with existing clients. We’ve built the platform to be organized around our clients, and we’re still fairly nimble in terms of being able to customize or tailor what we’re delivering. But we have large relationships across service lines, and we have to leverage those. So as we’ve entered new markets, typically we’ve integrated predominantly brokerage firms with established relationships. So the opportunity for me is to build a high-quality property management team and staff to deliver across service lines and integrate property management into these established relationships.”
Portfolio sales provide many of the opportunities for Cassidy Turley to add business in the property management arena, says Maloney, executive managing director and principal. When you’re a prospective client selecting a national services provider, “you’re buying consistency from market to market. You’re buying leadership or oversight in the deliverables. We have a dedicated transition team of people that do nothing but take on these portfolios, because first impressions really matter.”
If a property manager is sitting at a desk entering data about a portfolio’s tenants or vendors the day a sale closes “that’s not a good thing,” she says. It means the manager is not out shaking hands with tenants and finding out what they like about the property and what could be improved. “A dedicated transition team is really important to hit the ground running,” Maloney says.
The team has bolstered Cassidy Turley’s success in property management. “Last year we won over 16 million feet of net new business,” says Maloney. “We also make it a priority to understand where we’re starting from. So tenant satisfaction scores matter, especially now when it’s still in many ways a tenant’s market.”
On the capital markets side, the emphasis is on building full-service platforms for cities where institutional capital flows are occurring, says William Collins, vice chairman and principal. Along with Washington, DC, where Collins is based, those markets include New York City, Boston, San Francisco, San Diego and Dallas.
“Our capital markets approach is a full service approach, which is sales, financing and structured financing as it relates to either recapitalizing existing assets or providing debt and equity for developments for all product types,” Collins explains. “When we visit a client, it’s not ‘do you want to sell?’ or ‘do you want to finance?’ It’s ‘what’s the best strategy for you at any given time?,’ with no preconceived notion as to what the best capital plan is for your asset. That’s been a great approach.”
Stettinius also cites growth opportunities on the corporate- occupier side, where “project management has been particularly robust. We’ve got a number of ground-up headquarters requirements around the country”—specifically, Capital One and Yahoo!—as well as “a number of high-profile restacks in markets around the country. Corporate America is retooling to take advantage of the technology revolution that’s occurring as we move through recovery. Clearly, the demand for our services has been higher in the past couple of years in some of the larger markets, but the growth in demand for what we do is accelerating in some of the second-tier markets as well.”
In the largest of those markets, New York City, Hennessy says he’s focused on building the corporate occupier platform in addition to his tri-state regional responsibilities. “About 65% to 70% of our total revenue comes from the occupier arena; we’re trying to create a greater depth of business around that,” he says. Although he counts himself “pretty pleased” with the 24% revenue growth in the tri-state region since he came aboard, “my mandate was to take our business and double the total revenue in five years. Twenty-four percent in two years is pretty good, but I’ve still got a lot more to do.”
Among the assignments that helped drive that revenue growth was the relocation and consolidation of Coty Inc. into what is now 290,000 square feet at the Empire State Building. The beauty products manufacturer was the first major corporate tenant to relocate into an iconic office property that formerly was known mainly for very small-scale tenancies. “The focus with Coty has been on creating the kind of environment that would allow high-level collaboration and communications, and how it would create efficiency for them,” Hennessy says.
For account manager Richard Bernstein, among the challenges was accomplishing these goals in a significantly smaller footprint, reducing the ratio of ESB space to three-quarters or even one-half a square foot for each full square foot occupied in other locations. “He’s been through quite a process to help them get greater efficiencies and collaboration, and really an environment that allows them to produce more on a reduced footprint,” Hennessy says of Bernstein.
While Coty may have sought to reduce square footage, Hennessy has taken the opposite tack with business development. “You don’t double revenue with the same headcount, the same players,” he says. “So starting in the spring of 2011, we instituted a business development program, and today I’ve got 21 folks between the ages of 22 and 32,” part of a wave of 130 new hires Hennessy has made since 2011 to fill out the service lines in the tri-state region, along with upgrading a number of systems and support services.
He sees the newcomers as “the backbone for the future of the organization,” especially as some of the senior professionals begin winding down their careers over the next five to seven years. “If we don’t build an organization around the thought processes and images that the future of the firm wants, then we’re going to build an organization that the future of the firm doesn’t want to be part of,” says Hennessy.
The energy and camaraderie shown by the tri-state region’s twenty- and thirty-somethings has also paid off in the near term. “Between September of 2011 and January 2013, they set up 489 meetings with prospects that we had never worked for as Cassidy Turley,” Hennessy says. Of the region’s 14% revenue growth in 2012, “almost three-quarters came from the folks sitting on the business development desk.”
Three years and 60 offices in, says Kamm, “We’ve largely met our geographic expansion goals. We will have additional expansion in the US, but we’re pretty close to covering the markets that we envisioned ourselves being in. Chicago is an example of a market that we need to grow into, but otherwise we believe we’re in the important markets.”
A greater emphasis, Kamm says, will be on rounding out operations in some of the individual markets where Cassidy Turley is already established. “As an example, we purchased a firm in Boston which was a market leader in tenant representation, and we’re going to be building out that platform to include more emphasis on property management, project leasing and project management,” he says. “We’ve got several markets around the country where our business is very robust in one or two areas, but needs further investment and development in order to make our services across the board.” As Stettinius puts it, “Each of our offices has strengths and each has opportunities.” The Washington, DC region, for example, is “very mature” on the investment sales aspect of the business, while the tenant representation side leaves room to grow.
The other major initiative, Kamm concludes, is “a continuous integration process. As we grow, we have to bring people into not only the platform and processes of Cassidy Turley, but also the culture of Cassidy Turley. It’s important to emphasize the people side of the business as much as the infrastructure and process side of the business. So we’ll be spending a lot of time building what we consider to be a strong culture across our platform.”
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SIDEBAR: Tech Support
Befitting a company that came into being during the 21st century, Cassidy Turley has been quick to embrace the advantages that technology can provide in terms of enhancing the client experience. “As we all know, technology has been hugely empowering for society as a whole, and also for our industry in particular,” says president Michael Kamm.
Yet there are other ways the influence of tech has been felt. “Information used to be tightly controlled by commercial real estate companies, but with the advent of third-party information providers, it’s become more of a commodity,” Kamm continues. “So what we’ve focused on is not so much the gathering and reporting, although that’s still important, but interpretation of real estate data,” and using the data as the basis of forecasts that provide clients with “intelligent advice on how they should be approaching the market.”
Another area where data enhances Cassidy Turley’s offerings, Kamm says, is that when “you have thousands of people interacting with the client every day, you’ve got the opportunity to gather data and to analyze it. That can give you benchmarking data on clients’ uses, it will give you a variety of information on how clients are moving into the market and it will allow you to be more intelligent in terms of providing value for your client.”
A third area, Kamm says, is “how you run your business. We’re in the process of rolling out an enterprise resource plan, which fundamentally allows us to run more efficiently. That translates into providing our clients with better services as well; it’s not just an internal benefit.”
Across the property management platform, for example, “Today we have the benefit of technology we didn’t have 10 years ago,” says the firm’s Marla Maloney. “Creating custom reports with client accounting software—you sort of build it one time and then you’re able to get increasing returns on it as you use it every month. Once you understand the need, technology really helps us meet it.”
Technology can also influence clients’ priorities, points out CEO Joe Stettinius. Thanks to big data, “the access to information has made it increasingly a commodity,” he says. “As a result, the relationships are more important than ever, because everybody has access to most if not all of the information. That changes how companies use space. They’re using it to lubricate and encourage social interaction among their people.”