CEO Hessam Nadji of Marcus & Millichap “If you look at our most successful brokers, they do a great job in filtering the noise for clients, ” says Nadji.

CALABASAS, CA—Marcus & Millichap’s new CEO, Hessam Nadji draws on a background that runs the gamut from research and information to team-building. The 20-year company veteran was hired by Bill Millichap in 1996 as the company’s first head of research. Previously, Nadji was with Grubb & Ellis for 11 years, where he ultimately rose to head of research and information services, working closely with Hal Ellis.  Nadji joined Marcus & Millichap, then a Western US brokerage company, to augment the firm’s real estate investment  sales platform with an advisory orientation as the company set out to open offices nationally.  In a few short years, he helped establish Marcus & Millichap as one of the top sources of economic and real estate investment trends and was becoming one the most quoted real estate executives in the industry. 

Over the years, his role expanded to head of marketing, where he helped to solidify the firm’s national brand, developed the firm’s growth strategy and played a key role on the leadership team that took the company public in 2013.  Under former Marcus & Millichap CEO John Kerin, who recently retired after a successful 35-year career with the company, Nadji was tasked with overseeing and growing the firm’s specialty brokerage divisions which entailed leading some of the firm’s top brokers.  Under Nadji’s leadership, the company’s 16 specialty divisions registered impressive sales growth, closing over $21 billion in 2015.

Nadji officially took the helm as CEO on March 31 and talked exclusively with Globest.com on his views on the business and plans for the company.

GlobeSt.com: How does the experience you have come into play as the new leader?

Hessam Nadji: From the very start, our goal for having a research function was really to transform the broker-client dialogue and relationship. Nobody needed another research department or a bunch of new reports that sat on a client’s desk, but investors needed actionable market information, analysis and forecasts delivered by advisors who care about a long-term relationship. So the very essence of our research was integrated with our sales force from day one; our reports were designed as investment advisory pieces.

We tailored our work for the real world from the start. We started all of this at the cusp of the internet revolution and our national expansion. Everyone knows Bill Millichap is a real estate technology pioneer and working for Bill enabled me to roll this approach right into our office openings, brokerage hiring and training and electronic delivery systems. When I joined we had 18 offices vs. 79 today. The close working dynamic I had with our sales force for all of those years positioned me to run our specialty divisions, thanks to John Kerin who supported me in expanding my horizons.

I view the opportunity to lead the company as a chance to integrate the analytical, technological and consultative sales philosophies of the firm into an ever-improving delivery system. And it will be even more tailored by client group, product type and market area—it’s about putting everything I’ve learned along the way to work to raise the client service bar.

GlobeSt.com: What is your growth strategy?

Nadji: Our foundation and platform is stronger than ever. We had a record year in 2015 with over 8,700 deals closing and $37.8 billion in volume. We are in a unique position of being the category killer in the $1-million-to-$10-million private client market segment, which is by far the largest with 84% of sales marketwide last year. And yet, we have plenty of room for market share growth in this segment—even in apartment sales, which is a large component of our business.

Our growth plan has three major components, which starts with increasing our private client market share. We are executing a variety of strategies related to better deployment, market coverage and better levering of our accomplished brokers to increase share. Growing our presence in $1-million-to-$10-million office and multi-tenant retail is a major focus.

Secondly, we are aggressively expanding our specialty practices such as hospitality, seniors housing, student housing, self-storage and our Institutional Property Advisors division. Every one of these segments offers room for growth although we already dominate a number of specialties nationally.  IPA in is a key strategy in connecting private capital with institutional assets and we bring a unique capability in doing that which we continue to expand.

Last but not least, our financing arm, Marcus & Millichap Capital Corp., provides a major growth opportunity. We have grown to over 100 loan originators. MMCC closed over 1,600 financing transaction last year for a volume of $4.9 billion and we have significant room to grow by adding more originators and expanding our capital markets services.

We have several strategic initiatives in the works related to technology and our brokerage training, which should produce exciting results over the next couple of years. We are the private client leader with a lot of room for growth and have become a major force in larger transactions through IPA. Everything is on the table in terms of synergistic, logical growth mechanisms including M&A when it makes sense.

GlobeSt.com: How would you describe the MMI culture? Any changes planned?

Nadji: Our culture defines us. We are the largest small firm in the business from the standpoint of never having lost the focus on our people and clients as we grew from an entrepreneurial start-up to the industry’s largest player in our space. We are very proud of that and will be harnessing it to grow faster and better while keeping the culture of results and performance for the client as the driver of everything we do.

Amazingly, George Marcus’ original vision of helping real estate investors create and preserve wealth by dedicating an entire platform to investment brokerage is as relevant and powerful today as ever. The founding principles of the firm were transformative because they brought together information sharing, proactive marketing and scaling the business to reach the largest buyer pool for every asset. These are as crucial now as they were in 1971 when George started the firm. The underlying factor that has made it work really is the culture because it clarifies the ultimate measurement of success–which boils down to getting the best result for the client.

I see my job as fostering more idea exchange, expanding our professional and personal development and training programs and coming up with innovative ways to make MMI even more productive and fun for our brokers. Most importantly, we are very proud of our client loyalty with repeat business being a pillar of strength for us over 45 years. There are many plans to further build on that. I’ll stop at that for now.

GlobeSt.com: How does the MMI culture affect the company’s business model?

Nadji: Most companies think of culture and their business model as separate aspects of their business. For us they are very much intertwined. Being the broker of choice for private investors means you have to have the scale to reach out to millions of high net worth individuals, partnerships, private fund managers and smaller syndicators who comprise the vast majority of the $1-million to $10-million transaction market. That’s why we have over 1,600 sales and financing professionals and counting. This size of a sales force has to share information, deliver services in a consistent way in 79 locations, follow a set underwriting and valuation standard, collect and process acquisition requirements from buyers that are then matched with our available inventory and so on. To make it all work, everyone has to collaborate and buy into the way the system works for the client. So collaboration is the engine running on top of a results-based culture, which basically means you have to perform for the client.

For our larger private and institutional clients, the platform is tailored to make sure they are working with the most qualified individuals and teams with institutional quality underwriting, packaging communication and marketing.  Each client group has different needs which is what drives our strategy. We are very fortunate to have countless brokers who have been with the company for 10 years and 20 years or more who really guard the culture and push it forward to the next generation. It’s great to see the reaction of the younger hires and rising stars who truly appreciate the camaraderie. You should see the reaction from some of the experienced people we have recently hired from other firms. They love the tools, culture and management focus on helping them grow.

GlobeSt.com: The investment sales/advisory business has changed over the past several years due to market conditions, technology, etc. Talk about those changes and how you see yourself fitting in the new role as CEO?

Nadji: This is a major challenge for us because we are the firm that has countless professionals presenting in the living rooms of private clients who own single assets or have specialized teams in board rooms of major pension fund advisors or public REITs on the same day. I see the industry in a constant state of change. Over the past 30 years we have gone from information scarcity to information overload. More data source are proliferating by the minute and our brokers and clients can get buried in trying to figure out how make sense of it all. So we do a lot of that for them through our research team, managers and specialty executives who boil it all down to usable, actionable content.

My job is to challenge our team to come up with even better, more expanded ways to do this internally and for our clients—personalized. We are fortunate to have a very talented management team leading our offices and a senior executive team with a lot of tenure who play a crucial role in supporting our agents through market and industry changes, so it’s a team effort well beyond me.  If you look at our most successful brokers, they do a great job in filtering the noise for clients, keeping in touch with them but instead of sending them generic, off-the-shelf steams of data, they give them their take on how what is happening around us affects their situation, investment or property. That is the art of modern brokerage. It is all about the relationship between the broker and financing professional and the client. The same goes for branding and how our individual brokers, teams and the entire firm is being represented to the client base—again by client group, by property type and so on.

GlobeSt.com: Where are we in the cycle and how are you preparing?

Nadji: After six years of recovery in occupancies and massive rise in sales from the recession bottom, it is not surprising to hear all of the concerns about the market peaking. We have basically regained prior peak levels in activity and pricing on a broad basis—so where do we go from here? If an over-leveraging bubble had formed as in 2004-2007, or if new construction had been outpacing absorption as it did in the same period, I would say let’s prepare for a major downturn. But none of these threats are in place. It seems the market is experiencing slower growth, but a sustainable cycle because of healthy fundamentals, low interest rates and yields that are still competitive compared to alternative investments. With the Fed on the accommodative side, interest rates should stay low for a while, but I would not be surprised to see inflation start to build in the next year to 18 months, forcing rates up. But interest rates should not rise at a   pace or to a level that become significantly disruptive any time soon.

Remember, we are still adding 2.5 to 2.7 million jobs per year, and even if that slows in light of global headwinds, there is enough economic activity to eventually build up inflation. For us, the focus is on making sure our clients are staying abreast of economic and market dynamics, develop a buy-sell-hold-refinance strategy for every asset and modify that strategy as needed if and when conditions change. There is certainly risk out there, mostly global economic and geopolitical issues or events that could come as a shock or surprise but the data suggests the US economic and real estate foundations are solid.