Why CRE Needs the Millennial Generation

LOS ANGELES—The commercial real estate industry is beginning to realize the value of young people entering the field and what they can offer in terms of fresh ideas, technology and insight into other young minds. GlobeSt.com spoke exclusively with Walter F. Conn, president of brokerage for Charles Dunn Co., about its investment in young people, in addition to issues affecting Los Angeles commercial real estate.

GlobeSt.com: Your firm's professionals focus on expertise in specific submarkets. Why does it take this approach?

Conn: We are landlord and regionally focused, often in specific submarkets and/or property types. That in itself is a specialization within our industry. By focusing on those individual markets and product types, we become dominant, sought-after experts with intimate market knowledge. This knowledge ultimately leads to more-exclusive assignments and a stronger market share in specific areas and product types.

GlobeSt.com: How is commercial real estate affected by Los Angeles' ongoing transportation infrastructure developments?

Conn: Los Angeles is becoming increasingly attracted to the idea of faster, more-sophisticated mass transit to diminish the sprawl. Where the Metro rail extensions and stations arrive, the demographics change dramatically. Along with the obvious adjustments to traffic patterns, the services offered in these areas also evolve. From a brokerage perspective, agents and owners must anticipate the types of businesses and services that will best meet the needs of the transforming neighborhoods. From a property-management perspective, maintenance needs change due to changing property uses. Everything from common areas, power usage, security and normal wear-and-tear repairs are affected as submarkets evolve around public-transit hubs.

GlobeSt.com: Emerging careers in the tech and entertainment industries are flooding Los Angeles' urban hubs with start-up businesses and young residents. What role does commercial real estate play in supporting their growth?

Conn: We are seeing an influx of young people who care deeply about urban community. The younger generation is less tied to the idea of paying a higher price for a better area. As commercial real estate agents and business organizations provide opportunities for these people to thrive in redeveloping submarkets, our Millennials create jobs in tech, entertainment and lifestyle-oriented businesses.

Commercial real estate can contribute to civic growth by supporting organizations that promote community redevelopment. We work closely with Central City Association, a business advocacy group that lobbies for the revitalization of areas such DTLA's core. As groups like these secure better conditions for businesses and their specific needs, we fill and manage properties with companies and ventures that will benefit the communities in which they own or lease space. One of the most successful examples of this is the case of the Broadway corridor. When the CCA successfully worked with L.A. City Councilman José Huizar to update and modernize some of the zoning in the area—a very rare occurrence on the part of the City—both the business and residential sectors of the area began transforming much faster.

GlobeSt.com: Speaking of young people, Charles Dunn has been hiring and training a good amount of young brokers over the past few years. Can you tell me about the strategy behind this?

Conn: Just a few years ago, almost 75% of our company was aged between 50 and 70 years. Today, almost 75% of our team is between the ages of 25 and 40. We're being proactive about our future in an evolving marketplace. The old CRE hiring model is to pay high signing bonuses to bring in veteran salespeople—which is a huge risk because clients don't always follow the salesperson, not to mention that buying experience doesn't guarantee a relationship with the greater team. Additionally, hiring only mature salespeople often means that they could be set in their ways, and their sales and marketing strategies may not be as cutting edge. Why not invest in young people, who don't have preconceived notions about the nature of the commercial real estate business, who explore and conquer newly engaged submarkets and who adapt rapidly to the changing structures of information and technology? Charles Dunn Co.'s response and investment is in our Fast Start Program, which trains emerging real estate professionals from scratch. By investing more time and money on them upfront, we are seeing that the most industrious of these students become star players on our team. They're bringing us market share in new territories; they're cross-selling; they're introducing new practices into our industry. They also infuse energy, enthusiasm and a renewed sense of purpose.