The leader of this Massachusetts commercial real estate firm offers his perspectives on the industry and discusses his company as it celebrates 50 years in the business.
CEO Dennis Clarke took the helm at Cummings Properties 15 years ago after holding various leadership positions with the company. He joined the firm in 1992 as general manager of Community Weeklies, Inc., a local newspaper chain that was under Cummings Properties’ ownership at the time. He began working on the real estate side of the business in 1996 as operations manager, and was elected president and CEO in 2004. Cummings Properties owns and manages 10 million square feet of commercial real estate north of Boston. It is comprised of office, manufacturing, R&D, laboratory, medical, warehouse and retail space.
Development: Your company has a motto — “The Cummings Way.” What does that mean and how does it impact your business?
Dennis Clarke: Cummings Properties is a privately held company and entirely debt-free, so we are able to operate differently than most other firms. For example, we do not leverage our assets, and we operate with very little bureaucracy. These practices enable us to be nimble and take fast action, and they have served us well for nearly 50 years. In addition, we look for great values so we can offer our clients the same. Buying at the right price — for everything from office supplies to steel and actual buildings — is important to our approach. We are highly disciplined about controlling cost, and we pay close attention to the details that allow us to do so. Finally, we often recognize opportunities that other developers do not see or want. With no outside financing on any of our buildings, we are able to acquire distressed or undervalued properties and make major investments in renovations, providing opportunities for growth.
Development: What qualities do you look for in hiring senior staff?
Clarke: We do not do a lot of hiring from the outside for high-level roles. Instead, we focus on mentoring and developing talent from within. Our senior management team has remarkably long tenure. But when we do hire senior staff, we look for not only a cultural fit, but also an outside perspective that brings value to our company. We have hired attorneys, architects and entrepreneurs who all have experience that benefits the organization by bringing specific skills, problem-solving ability, initiative and a spirit of collaboration.
Cummings Properties has joined other NAIOP Massachusetts members in actively encouraging greater diversity and inclusion within the commercial real estate industry. In recent years, we have been pleased to grow our roster of female managers and to partner with NAIOP to offer paid internships for students of color. In addition, our affiliated foundation (whose board of trustees is 50% female) has invested heavily in workforce development programs that promote employment equity for people of color, people with disabilities and other marginalized groups.
Development: What’s special about your company’s environment that allows you to retain employees 10, 20, even 40 years?
Clarke: Employee retention starts with strong hires. We hire not only for experience, but also for character, and we look for candidates that fit well within our culture. We often say, “hire the person, not the résumé.” We share an overview of our corporate philosophy, outlining our culture and practices, with prospective new hires from the first interview. This helps assess whether a prospect is a good match for our company and vice versa. Our average employee tenure is 11 years, which is unusual for any industry in this day and age, but especially so for the construction field. Our colleagues choose to remain at the company because we provide work that is meaningful, offer an appropriate level of challenge, and enable colleagues to shape their career paths in line with what they enjoy and do well. Our culture recognizes contributions, and it rewards on merit. What’s more, we offer stability. By providing consistent year-round work for both office and tradespeople, even in difficult economic times, our employees know we are committed to them, and we benefit from the loyalty we receive in return. Our corporate social responsibility and charitable giving certainly also contribute to our sense of culture and employee engagement.
Development: Could you tell us about the Cummings Foundation and the organization’s commitment to charitable giving?
Clarke: Charitable giving is part of the DNA of Cummings Properties. Its founder, Bill Cummings, has always supported the communities in which our company operates and our colleagues live. In 2011, Bill and his wife committed to giving most of their wealth to charity. Even before making that public statement, they had donated the majority of Cummings’ buildings to the Cummings Foundation. As a result, 100% of the rental income profit from those properties goes directly to the foundation for charitable purposes. The Cummings Foundation contributes more than $20 million a year to greater Boston nonprofits. This local commitment stems from the belief that businesses should be good neighbors. Above and beyond the foundation giving, Cummings Properties has a program called Cummings Community Giving, which allows each employee to select a local nonprofit to receive a $1,000 donation from the company. We have offered this program for the past eight years around Thanksgiving, and the 2019 program resulted in more than $550,000 in charitable support.
Development: While we are experiencing tremendous transaction volumes in our industry, how is your company preparing to weather the inevitable downturn? Is that why you operate your assets entirely debt-free?
Clarke: Our portfolio is currently 94% leased, which is a very healthy position. Cummings Properties attracts firms of all sizes from a variety of industries that are looking for value, and this niche has served us very well during the past 50 years of operation. Our clients tend to look for professional, functional and high-quality commercial real estate space at lower prices than downtown metropolitan areas. In a softer economy, when other commercial real estate companies are not active buyers, we have the ability to utilize our capital and look for value investments.
Perhaps the best example of using 100% of our own capital is the purchase of the former United Shoe Machinery Corporation property in Beverly, Massachusetts, in 1996. This mammoth property had been on and off the market since 1980 and had dropped from an original asking price of $78 million to $10 million. This early brownfield project was not financeable for most parties. Cummings Properties purchased the site for a mere $500,000 and went on to invest $83 million to rehabilitate and greatly expand the dilapidated complex, which today is the 2 million-square-foot Cummings Center campus. This property was lauded by Wall Street Journal architecture critic Ada Louise Huxtable in 1997 as “the single most important, and generally unrecognized, concrete landmark in this country.”
Development: What is your outlook for the commercial real estate industry in New England and beyond over the next three to five years?
Clarke: The Boston market tends to have a regional outlook. Areas along I-95 and I-495 have growing business clusters, good services and amenities, and industries like health care and biotechnology already have a world-class presence in the suburbs. Downtown Boston and Cambridge traffic has become a significant issue, so we see opportunity for job growth where a majority of working adults actually live. With a healthy — and expensive — downtown commercial real estate market, the suburbs are an attractive and more affordable option.
We have two current projects, the ongoing development of Dunham Ridge in Beverly and a new life science building planned for Woburn.
Dunham Ridge is a 54-acre campus north of Boston where Microline Surgical now occupies the previous headquarters of Parker Brothers and Atari. We purchased the site with just one existing building and went on to design two additional mixed-use buildings for the campus. One is now leasing, and the other is under construction. We also sold two subparcels to third parties. One of these parties, Harmonic Drive, outgrew its high-tech manufacturing space in nearby Peabody and is consolidating at a new 100,000-square-foot advanced manufacturing and headquarters building.
Development: What advice would you give someone entering the commercial real estate industry today?
Clarke: Something I suggest, and we do very well at Cummings Properties, is to find a mentor and learn as much as you can about the business. Understand various roles within the organization and wear as many hats as you can. If you show utility across the organization, it provides you more career paths to explore and helps you discover and play to your strengths. It is easy to work hard if you love what you do.