The leader of the largest global network of owner-operated commercial real estate brokerage firms shares his perspectives and insights on the commercial real estate industry.
Development: How did you get interested in commercial real estate?
Olshonsky: When I graduated from college in 1982, interest rates were 18 to 19 percent and it was tough to get a job. My mother worked for a real estate developer in Washington, D.C., who asked me if I had ever considered a career in commercial real estate. I said no, I had not. Fifteen days after I graduated from college, I was a leasing agent in Washington, and I have been in the business ever since.
In 1995, I went to CBRE, then known as CB Richard Ellis, and stayed with the company for 15 years, eventually running all of its Washington-area offices and the region. In 2010, I relocated to New York City and went to work for an NAI Global member firm, which evolved into my heading New York City for NAI Global. In December 2012, after C-III Capital Partners purchased the firm, I was named president and continue in that role today.
Development: Could you describe the size and scope of NAI Global and where you want to take the company in the future?
Olshonsky: We have 170 independently owned and operated commercial member firms in the network, predominantly in the U.S., but we also operate in 35 other countries. We have 375-plus office locations with over 6,700 professionals worldwide. Our members manage about 400 million square feet of property globally. We have gross revenues of slightly under $900 million; That is the current status. For the future, we have identified 300 locations where we want to add members. We want to grow to 270 members by 2017 and to 300 members by 2018.
Development: How does NAI Global differ from other large real estate companies?
Olshonsky: There are two ways that we differ from other large global commercial real estate firms. One, we are a network of independently owned and operated CRE firms; our competitors are all owned models. When a client calls us, he or she is speaking to the owner of the firm; when they call one of our competitors, they are speaking to an employee. Comparatively, our organizational structure is flat and small, which gives us great flexibility, even though we are very long and have a lot of reach throughout the world. Two, our members are deeply rooted in and knowledgeable about their local markets and communities. Some are the third or fourth generation in the business in those markets.
Development: What special leadership skills do you employ to manage this diverse network effectively?
Olshonsky: The No. 1 leadership skill that I use and instill in our people is to lead by example: don’t just talk the talk, but walk the walk. I spend a lot of time in front of owners and users of real estate, talking to them about how we can help them create solutions. We do transactions on occasion with our members from our headquarters in New York. We have a person in New York who does 50 to 60 transactions a year with our members. I am working on 10 transactions as we speak. Yes, I run the company, but I am still negotiating leases. That is the key to our leadership. We try to have everyone lead by example and not sit in an ivory tower waiting for things to happen.
Development: As president, what are your core areas of focus?
Olshonsky: It shifts from time to time. I handle monthly forecasting, monthly reporting, signing checks — all the things you would expect me to do. At the same time, I spend 80 percent of my time with our members facing clients.
Development: What qualities do you look for when hiring senior staff?
Olshonsky: The No. 1 quality I look for is a person’s desire to be something grander than he or she is today. I want self-starters who don’t like being told what to do. I am gender blind, color blind and age blind. I want people with open minds. Eighty percent of the people in commercial real estate don’t realize things are changing and that they are being left in the dust. I want people who ask, “where’s it going,” not “where’s it been?” The six worst words you can ever say are “that’s how we’ve always done it.”
Development: How often does your network get together?
Olshonsky: We have three major events during the year. These include a leadership meeting attended by both owners and managers of our firms; our annual convention, where we bring the whole company together, which is attended by 700 people; and our global market report, where our economist, Dr. Peter Linneman of Linneman Associates, and I invite a guest speaker and have a panel discussion for both NAI Global members and their clients. We also participate in numerous industry events, including those sponsored by NAIOP, SIOR and CCIM.
Development: Apart from the data your own firm produces, what economic or market indicators do you track on a regular basis?
Olshonsky: I focus on leading indicators such as oil prices, currency and valuation of currency, and initial public offerings of technology companies. I focus on those IPOs because that has been the No. 1 growth area in office in the last five years. If they start slowing down their valuations or their venture capital payoffs, ultimately that will lead to layoffs of people in technology, beginning with San Francisco and New York City. I also look at cycle time: 2008 was the beginning of this cycle, and now we are six or seven years into it. So historically, I think that things could change and change drastically. I don’t know what will tip the cycle, but something will.
Development: Over the next 18 months, what challenges and opportunities do you see for the commercial real estate industry?
Olshonsky: We are at the top of the market in most areas today. From our perspective, if you are the owner of commercial real estate, it is a very good time to sell; if you are a buyer of commercial real estate with a seven- to 10-year hold period, it is a very good time to buy, because interest rates are low and money is inexpensive. Those are the biggest opportunities.
Development: Looking three to five years out, what do you see on the horizon that will impact the industry? What are you doing today to prepare?
Olshonsky: The availability of data is so good today that it will fundamentally change the way owners and users acquire, lease and manage space and interact with service providers. Today, between the Internet and websites, you can push a button and market your property to 40,000 people. Not all 40,000 will be interested, but how do you know that one of them won’t? Those are readily available systems.
At some level, this is changing the way service providers are interacting with their customers. It will still be a relationship-driven business, but the way to prepare for it is with better relationship-building skills and better technology. There will be pricing pressure, and fees for service providers will go down. I think you will see owners and users of real estate “self-helping,” doing more themselves. Today, CoStar’s No. 1 growth area is selling its data to owners and users. It used to be that its No. 1 customer was brokers. If the owners and users of real estate have the same data as service providers, what do they need the service provider for? So that means you have to change the way you apply service going forward. In a nutshell, this is where the business is going in three to five years; it will be very different from where it is today.
Development: How has the industry changed during your career?
Olshonsky: The real estate industry went from a completely not technical, non-data oriented service relationship business to where it is today. When I was 22 and brand new in the business, people like me were hired by clients because we actually had all of the information. I memorized all of the buildings and all of the availability in Washington. There was no way for an owner or user of real estate to get that material unless they engaged someone like me. That has all changed today. Everyone has all of the information today.
Development: What is the most valuable lesson you’ve learned over the course of your real estate career?
Olshonsky: There are a few lessons. Never say no; never say never. The most valuable lesson I have learned is that change is coming, so you’d better get out in front of it.