12/03/08

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Diversity gains more ground

When it comes to commercial real estate, making deals is all about who knows you. For decades, that's meant a long slow climb toward the top of the profession.

But new technology, new educational opportunities and a new emphasis on diversity are changing the way business is done, while also changing the face of commercial real estate.

Around five years ago, as the real estate market hummed, more people tried their hands in the commercial arena — many of them, young individuals. The influx continues today as the residential real estate market plummets and new faces try their luck in the commercial market.

"I've had so many calls from people who want to learn more about [commercial real estate]," said Belinda Krause, president of the Realtors Commercial Alliance in Palm Beach.

And many firms all over South Florida are welcoming younger brokers. "With all the things that need to get done to make a deal, more and more brokerages are hiring younger people," said Anthony Librizzi, 34, of the West Palm Beach firm Applefield-Waxman.

Tony Cho seeks out young agents, -especially if they have a "certain image and a certain energy." At 29 years old, Cho already owns his own firm, Metro 1 Properties in Miami. Most of his brokers are under the age of 35 and "some are as young as 20," he said.

"There is a select group of key young people who are making it happen," Cho said. Many younger brokers have a background in technology or "alternative media marketing," which is very valuable in promoting a property in the Internet age.

It also helps that more and more, younger people are in charge of large sums of money. "You are seeing younger developers come in," said Librizzi, a seven-year veteran of commercial real estate.

Younger people are increasingly in charge of real estate investment trusts. "What you are seeing are the brokerage houses trying to stay with the times more than anything," he said. As such, many of these firms are having experienced brokers mentor younger associates.

Part of what enabled younger brokers to come into the market was that commercial real estate companies realized that diversity of age, ethnicity and gender was desired by their clients, explained Diane Parker, a 25-year veteran and Miami office manager for Cushman & Wakefield.

Turn back the clock five years ago and major houses, when they stood in front of their clients, would all be "white males in blue IBM suits," Parker said. "The clients helped in creating a paradigm shift, demanding that you need to reflect who they are. Then you started seeing commercial real estate companies focus on gender and ethnic diversity."

With that demand also came college courses on real estate, another recent trend. "When I went to George Washington [University], there was not one class in the school of business even mentioning real estate," Parker said. Now, not only are there real estate classes, but also curriculums that specialize in commercial real estate. "That would be when you started seeing actual younger professionals in commercial real estate."

Maurice Veissi Jr., 28, who recently co-founded the Dumonde Consulting Group in Miami with four partners, said his father is a successful commercial broker. Yet he didn't get into the business until after he got a masters degree in international real estate from Florida International University. His classmates were aged 30 to 60 and "were all kinds" of people. "We had lawyers, brokers [who wanted to learn more], hedge fund managers ... basically, we got every side of the story."

With business owners reluctant to move into new office or warehouse space in this poor economy, Veissi said the challenges for younger brokers have only increased — and that's true all over the country. Here, the advantage still belongs to those who have been in the business for decades and have been proven to be quite good at it.

"Ninety percent of all the deals are done by the top two percent of the [brokers] in South Florida," Veissi said. "If you are going to buy something now, you are going to go with someone who has been around for a while, someone who has got a really good reputation, so you can get more bang for the buck."

That hasn't stopped newer people from giving commercial real estate a try. "I still know people getting a license for future use," Veissi said. However, "everyone knows the market will gradually turn and it is going to weed out the people who don't belong."

Parker of Cushman & Wakefield said building trusting relationships is key to becoming a successful commercial broker. Still there is plenty of room for those who work hard and are willing to accept that commercial real estate is "high risk and high reward," she said.

"There are a tremendous amount of transactions," she said. "A 3,000-square-foot office lease will make a new junior broker a lot of money, more than doing a desk job somewhere."

But that junior broker should not expect to make money right away, even if he works 12 hours a day. Instead, Parker said, the broker should look to the future and look forward to learning something new about his market.

The old guard commercial brokers, and their managers, are also realizing that they can't expect to corner the market forever.

Commercial companies have to invite younger brokers if they want to compete, said Luciano Rappa, the 32-year-old president of Kaizen Realty Partners in Doral. For one thing, many listings are now available on the Internet in MLS (multiple listing service) systems. For another there is quite a workload out there. "More deals are needed to be made" in order to make multimillion-dollar profits, he said.

For Parker, the infusion of new faces in commercial real estate is a victory. As an active member of the Miami chapter of CREW (Commercial Real Estate Women), Parker has been part of a nationwide campaign to make commercial real estate more inclusive, especially where women are concerned. "Companies like mine are looking at changing the base of their brokerage team, which is why you are seeing more women and more ethnic diversity," she said. "I'm just happy that we are seeing it now. Do we have a long way to go? Yes, but we are at a tipping point in creating the surge."

And there are plenty of young people who are sticking it out in commercial real estate. There have been a lot more agents in their 20s and 30s joining the Realtors Commercial Alliance of Palm Beach "and they have been very, very busy," Krause said.