Mini Series on Investment Sales Brokerage

Welcome everyone to the second installment of the investment sales series. I'm James Nelson, and along with me, back with us is Marion Jones, who's Avison Young's executive managing director of U.S. capital markets. Marion, thanks again for doing this.

Thanks so much for having me back, James.

So for those of you who did not hear our first installment and again been asked this question, James, tell me about how do you get into investment sales? How do you build the business? How do you take your business to the next level? We wanted to put together a mini series for you. So even really the first segment that we did was geared to those of you who may be transitioning into investment sales. Maybe you're in school, maybe you're on the principal side, you want to go into brokerage. But even if you're not just starting off, I think that would still be a good episode to go back to as kind of a primer for this, because now we're going to be talking about really how to build your business. So think about many of you who are doing investment sales a couple years into the business. How do you start to build your business? How do you build a team? We're going to talk a lot about that. But listen, even if you are not an investment sales broker, I want to let you know this is going to be a great episode for you regardless of the business you're trying to build. So if you're a principal thinking about how to build your business, how to scale, how to grow, there's going to be a lot of lessons in there for you as well. So with that, Marian, let's get into this. And maybe, you know, we talked about ways to get into the business the first time, but maybe, and you shared your experience, but maybe just set the stage because I know your story kind of going from a big global firm as an associate analyst work to kind of branching out on your own. I mean, that was kind of when you stepped up as a broker. So maybe talk about that, because I think that also talks about the different type of platforms that you can work with and how to go about growing your business.

Sure. I'm happy to share with you a little bit of my story, and I'll sort of caveat it by saying that this was a long time ago and I won't put years on it, but it was a long time ago and the firms are all set up a little bit differently now. But at the time I was in a larger firm working in a very institutional team with some incredible people. And I had really learned the Business that way. I was doing large deals. I was really more of an execution person, but I was helping build the models, put the pitch books together, I was helping execute the sales, doing building tours, following up with investors. And for me, I probably would have stayed in that path a little bit longer, but I kept sort of having these opportunities come my way. I was pretty content, I was learning so much and I was pretty content staying in that place of being an associate or a senior associate in this larger institutional team. But opportunities for smaller scale assignments sort of started finding me, right? I was in a point in my life where it was like a live hard, work hard, play hard time in my life. I was working late hours, I was networking a lot after work and meeting a lot of people. And it was, it was a really busy, fun time of my life. But I decided I was going to just make the leap, right? So I was at a, I was at a larger firm where I wasn't really able to go execute some of the transactions that were coming my way because I was really a piece in a much bigger machine and I had a job to do that really fit into this larger institutional team. So I could stay in that place or I could take the leap and move to a commission only smaller shop where I could go do kind of New York City middle market deals and build up my book of business. And at the time, I didn't necessarily think I was totally ready, but I also thought I'm never going to be totally ready. And that might have been somewhat flawed or naive thinking, but I remember feeling like I'm at this crossroads and I just took a deep breath and went this major change. So that's, that's a little bit about my story. I did go to a smaller shop in order to really be able to book up, build up my book of business. And I went from very large institutional deals back to a sort of middle market independent boutique in New York. And it allowed me to sort of grow as a broker and work on much smaller deals. But I had a lot of fun doing it. I learned a lot. And then, you know, over the course of the years to come, I sort of made my way back up to larger deals again. But that was a pivot point in my career and I just took a leap of faith and went into brokerage after about five years as an analyst associate. I would say the landscape is different now and I don't know that young people have to make these dramatic choices between being on a, you know, execution person on a large deal team at an institutional shop versus going to, you know, an independent, locally owned boutique. I think there are more opportunities kind of to strike a middle ground. I mean, I think Avis and Young is a great place to kind of strike that middle ground where you're in a smaller place, but maybe relative to some of the giant competitors that we have. But you have a real global platform. There are 60 offices in the US alone. We have great connectivity across service lines. So I think there are more choices for young producers now or young brokers now to kind of find the right middle ground that will work for them. Do you have any thoughts on this? I mean, I know. Well, I mean, a few different places.

Well, again, making the parallel also for those of you who are investors and thinking about, you know, small shop, big shop, going out on your own, there are a lot of parallels in that. You know, some of you listening might be working for a big developer right now. And it's exciting because you're working on bigger deals. And maybe like you said, when you were starting out, you saw opportunities, but, you know, the firm was like, that's a little bit below the radar. And so for many of you might say, hey, look, if I want to pursue these opportunities and have a larger stake in the deal, whether it's on the sale front, whether it's on the brokerage side going off, and could that be an independent firm? Could it be a smaller firm? Or like you said, there are firms that are in the middle, like in Avis and Young, where you can kind of go up and down the various deal sizes. So I think regardless of what it is, I think when it's, it's your time to really, you know, whether it's strike out on your own, kind of build out your own business, I think what's really important, and I'm a big believer in the Donald Miller story brand. You know, he's really a marketing guru. And what he talks about is it's about the audience, it's about the customer, it's about the client. So when you are looking to grow your business, it's not about talking about how great you are. And you know, you're the top at what you're doing. Right? You have to make it about the customer, the client. Right? So, and I know we're going to get into talking about the importance of specializing and we're in the information business, but whatever that is, whatever you land on as your specialization, you have to put yourself in the customer's shoes and say, okay, well, what, what, what are they concerned about? What's keeping them up at night. And if you can really become the expert and help provide those answers and the solutions, that's really helpful to grow your career. Because now you're differentiating yourself. You're not just like every broker who, you know, might be calling up and down a block saying, hey, are you selling? No click. Are you selling? No click. And by the way, if you do that a thousand times, someone's ultimately going to say, yes, I'm going to sell. But that's really playing the short game. And I think what you want to do is play the long game, which is to build that, that business, to build that, you know, that trusted advisor role. And again, whether that's on the brokerage side, whether that's being investor, I mean, I think that really speaks to the need to specialize.

I think that's right and I think I'd even take it a step further. So it's, there's, you know, there's product or asset specializations and that's just where the world has gone really. And behind that is also, you know, I would encourage every investment sales broker, every investment sales professional to start really getting curious about what are the needs of the capital behind my clients. Right. And, and, and sometimes, you know, your clients are in a position where they're, they're not necessarily going to disclose all of the pressure points with their capital partners or, but you want to really understand how easy or difficult is the fundraising environment for this asset class right now. What are the fund level returns that investors are expecting? How is the LP universe shaping out for this sector right now? And really, as you get into specialization, understanding the behavior of capital as it relates to that product type will make you so much more valuable, I think, to your clients because then you're really kind of able to walk a mile in their shoes in terms of how difficult it is to make transactional decisions, particularly in markets like this where there are a lot of green shoots, but there are also some headwinds sort of navigating all of that in real time.

You know, it's really a great point. And in my new national role with the company as head of US Investment Sales and starting to look at different markets. So I'm out in Las Vegas at the NMHC conference and I'm speaking to one of the top brokers out there nationally, if not globally. And I was kind of sharing with him, you know, look, after being based in Focus in New York for the, you know, the first 20 plus years and now focusing in on other major Markets as well. It's interesting to me how many investors really the equity, like, who's making these investment decisions. Some of these same markets just keep coming up not to pick on Nashville. It's a great market, but it's a small market. But everybody's talking about Nashville. I want to get in Nashville. He said, well, what I found after a lot of time doing this is it's not necessarily what the sponsor investor developer wants. It's really what the equity wants. And he says, if the equity wants Nashville soup, then give them Nashville soup. You know, so it's like. And I think it's great advice because as you think about specializing, we can get back to whether it's geography, whether it's asset class, especially when by now, we're not starting out. Right? I mean, this is about building your business where you really become an expert. You want to make sure it's in a space where there's room for growth. Right. And where you're also not happening to swim upstream. And I feel like most brokers who are early on in their career, they gravitate towards multifamily and look multifamily, it makes sense. It's the safest asset class. Roughly speaking, if you look at all US Investment sales, about half of them are multifamily.

Do you feel like it's also the most crowded from a, well, service provider standpoint?

For sure, for sure. And it's also, you know, when you look at multifamily, we look at some of these markets where it's very spread out, right? So it's not just the primary markets, it's the secondary tertiary markets. It's, you know, you almost, in some areas, have to become a regional player, which also means that you're spreading yourself thinner. It's just a different approach. Whereas, and I don't want to say, you know, go all in on data centers because it's, you know, kind of the hottest asset class right now. But it is interesting to me that a lot of brokers out there who are looking to build their business saying, well, okay, multifamily is kind of what I've always known. It's kind of a safe bet, if you will. Like, why not try to really become an expert in industrial, for example, or, you know, because I think if you're covering industrial, then you can also kind of even get more specialized beyond that. Like, maybe you do learn more about data centers or maybe cold storage. Right. And logistics. I mean, there's different kinds of it, but it's just again, finding where the action is. And again, it's doing the research and looking at the data. We do that for all the major markets. We figure out, okay, what asset classes are selling, where are the trades happening. And I think there's something to be said that goes back to your initial point.

Well, yeah, you want to know where there's liquidity, where there's transactional volume. And I do think at that stage in your career that we're speaking to right now, I would, I would really recommend. You were kind of like alluding to this, but maybe having a major and a minor, right. So maybe your major is industrial or it's multifamily and it's. It's one of the, you know, larger food groups. Maybe you have a minor that's a sort of subset of one of those major food groups or maybe it's a niche. Right. So if you're spending a lot of time in office and, and that's, you know, challenging. Maybe there's a focus in healthcare properties and medical office is kind of a minor or an augment, so that you've got a niche where there's maybe a little bit more investor interest or liquidity in certain moments in the cycle. But it's also a differentiator for you, which I think can be really helpful as you, you know, look at some of these, you know, major food groups and the big categories. I mean, the world of office is a big, broad place, as is multifamily, as is, you know, industrial and all of the sort of larger food groups. So to think about ways to kind of, you know, dive deep, if you're an industrial broker into cold storage or to have one or two sort of minors is maybe how I would think of it. I think that can be really helpful.

Yeah. And to your point, once you specialize in that major asset class like office, then there's different possibilities with it. And resi conversions, that's a really hot topic lately. And if you've been studying the office buildings and you know, the ownership, then you also know what to look for for a resi convers. That's really interesting. The other thing we've been finding at Avis and Young is that, and we just finished wrapped up a study on all the office buildings that have sold in Manhattan since the pandemic. And 11% of them were converted to residential, but 25% of them were actually bought by end users. That's really interesting to go find companies that want to buy their office. So again, you kind of, once you specialize, then you can really look at what are the trends, what are the different ways to maybe reposition an asset. Now I will say that there are three major ways to cover a market. As a broker, okay, you can do it as a territory system. And that's where I grew up, the Massey Nakal business, which was in the territory system where you basically cover a geographic area, you're covering all asset classes and you're kind of going door to door, so to speak. The next way is asset class specialization where you pick a vertical and you get to know multifamily and then generally your geography is broader to cover it. And then the last way is really client customer based. And we see professionals on the debt equity side follow the client. So you get a client and the client says, look, you're my trusted advisor, you understand how I work and now you're going to work with me across the country or whatever investments they choose to go in. Now, of course you kind of layer in all these three different approaches because even if you're geography focused, you'll probably gravitate towards the asset class that's most prevalent in your area. Certainly you're going to have clients from that area that maybe you expand on those relationships. But I think it is interesting as you think about how to build your business and how to grow it. I will tell you, I'm a big fan and Blaine Strickland continues to be one of my mentors. He wrote a book called Thrive and and he talks about the top 125 principle, which is who are your top 125 contacts that you could do business with in the future? And so, you know, that is really kind of taking that client approach where. And again those 125 people could be in a certain geography, they could be in a certain asset class, but then you're going to really focus in on them. And again then you're cultivating these relationships because again, above all, when we talk about how to grow your investment sales business, it's really, this is a business about relationships.

Totally, totally. I have, I want to ask you something like on that, in that same vein, James, how do you, I mean, did you ever feel attention or maybe you still feel it now of like how broad I need to go versus how granular or deep I need to go. So I think, I think, I mean, I think that's a tension I have felt most of my career is, you know, and I like what you said. About 125 contacts right there gives you. It's a, it's A. That's still a long list, right? It's still a long list. It can still feel ambitious at times. And I like that there's a metric around it, but I don't know if you have ever felt that tension of like, well, I need to be. Maybe it's 300 should be my list. Or I don't know if you ever feel that tension.

Yeah, well, Blaine was the one who came up with 125 names. And I think if you look at, if you really want to take an organized approach where I'm going to call this person at least once a month, I'm going to go and hopefully have lunch or go out for a cup of coffee. We're going to hopefully work on some transactions along the way. You know, 125 people is actually a lot to cover. Now the reality is some people you'll end up doing more business with than others, but sometimes you don't know who's going to do what in a given year. But I will tell you that the deeper the relationship is. And again, what Blaine talks about in this, this chapter that he wrote on the top 125 is being top of mind, meaning that the test is, you know, and he says, well, the reason why Marlboro for so many years was successful is when people thought of cigarettes, they think about Marlboro. Right. And so in the same way, if, you know, One of your 125s is at a cocktail party and someone says, hey, you know, my family owns this, you know, apartment building. I just inherited it. I don't want anything to do with it. Hey, you know, Steve, you're in real estate. Who, who should I talk to about that? You know, the test is if you're 125 says, you know, hey, you should really speak to Marianne. She's. She's an expert. And even if she doesn't know, multifamily in wherever, New Jersey, she'll point you in the right direction. So I think the, the test is really, you know, this is about making relationships. It's about kind of you should be that person's go to. I think that's really a test. And if that's. That would be hard to do with two or 300 people, I think so.

And when you're at this stage in your career, it will feel maybe like, you know, I've got my 125 or whatever you decide your number is. It might feel like less fruitful. Right. Because your peer group might not necessarily be in decision making. Positions yet. But yet to me is really the key word. I mean, I look at some of the folks that I kind of grew up with in the industry that, you know those nights when I was in a associate in my 20s, working late and then going out and meeting people and a lot of those people have landed in just phenomenal roles today. And I am so grateful for that time in my life. Not just because I've a fruitful network to show for it later, but a lot of those are also like just great friends and people that I can call to call and you know, ask questions, bounce ideas off. I mean, it's a genuine connection and relationship. And I think at this stage in your career you can do both, right? You can think about your 125 or whatever your number is as your list of people that I'm maybe going to transact with or do business with. But you can also really, I mean, I'm telling you, if you take the long game approach, so many of those folks, when you're at this stage in your career, give it five, ten plus years, you'll see them rise to really phenomenal roles and you'll really be able to help each other in a much more meaningful way over time. And it's so worth the investment in the genuine connection and relationship.

It's such a great point. And again, some of the relationships also that I met, you know, 25 years ago, they were maybe sons or daughters at the time. Now they're running the family business. So I think the point is that you do have to be willing to take a long view. It can't just be transactional, where, hey, this year I'm going to do business, these people are there kicked off the list. So it does take that, that longer perspective. I did want to go back to something about because originally when you asked the question about how deep do you want to go, I thought what you were going to ask was actually on the subject matter and as far as whether it's picking a geography or an asset class and there is that expression jack of all trades, master of none. And so we've talked about who to cultivate relationships with. But talking about again, your area of focus, I think whatever it is, whether you're a broker, whether you're an investor, what you don't want to do is be a generalist, right? Because then it is tough to get that insider's edge a big part of this book. And talking about how do you gain the advantage, whether it's investing, whether it's brokering, Is understanding kind of what's going on behind the trades, what are the major trends, what are the things to look for? And after you have enough reps, you intuitively know kind of where the value is, where the opportunities. So again, I think what we're going to talk in our final episode and we talk about really the mastery aspect and becoming a thought leader and becoming an expert and really speaking on these trends. We'll talk about that next time. But for now, I just, I did want to make the point that also when you're kind of thinking about your area to specialize, it's got to be an area that's tight enough that you can really establish yourself as the expert.

I think that's, that's so true. And I wanted to ask you a question and maybe pivot a little bit here. But I am so curious, James, when you are sort of in this career moment yourself, what were some of the early successes or maybe kind of pivot points or decision making points where you said, okay, now this happened, I closed this deal or I've got this moment, this pipeline, something happened where you thought, this is a time where I can really begin to build a team. Can you describe what was going on then and maybe some of the decision process that you had?

Yes. So when I started out and I was definitely the beneficiary of a market that was going like this, so I got into this in 1998 after the dot com bust. But after that there was this huge run up and it was also just really good fortune that I was at a firm that was just cranking on all cylinders, right? So found that very quickly that had the ability to onboard listings and opportunities. Well, guess what? If you're one broker and you're trying to manage the sales process effectively of even five or six properties, you're going to find yourself get overwhelmed very quickly, right? And so because it just becomes a question of time, right? So you have to, there's a lot of different aspects to brokerage, starting with the valuation piece. So you, you, let's say you, you've done your canvassing, you've come across a lead. Well, now what's the next step? You got to go do the bov. So now you've got to stop, you got to go look at the property, then you have to underwrite it, okay? Then you get hired. Okay, well now what? Now you got to build out the marketing book, right? And now you have to make calls and you have to sell it and then you have to go down and show the Property.

Also, you should be meeting with investors or on the phone with investors all day long.

So you quickly find out that there's like at least two or three different parts to the brokerage business, if not more. And so. And Rod Santomasimo, who's another one of my big mentors, was kind enough to write about this in the book Teams Built to Dominate. And he featured my team in the book, but I talked about how important it was to bring on help very early on. Right, right. And so for those of you might say, well, James, I'm just starting off, I'm on commission, I don't have the money for a full time salary. Look, there's tons of interns out there, you know, and here in New York, we have, you know, whether it's nyu, Columbia, Fordham, there are students that are studying right now who would love to have, you know, 10 to 20 hours a week, not just summer interns. Yes, we're all flooded with these summer intern requests, but I'm talking about throughout the year, someone who just says, hey, I'd love to get another 10 or 20 year, 10 or 20 hours a week. It's great experience for them. Have them do research, have them kind of tee up your valuation work, whatever you can do to start streamlining your business. Because for me, that was really a critical move when I finally brought on a junior partner, Clint Olson, who's still doing it today, Brock Emmonsberger, who's still at it. I mean, these were some of the early ones, you know, David Shallum, Mitch Levine, Brandon Polakoff. So the last three mention is still with me now, you know, 10 to 15 years later at Avis and Young. But bringing on those people on and building a team was really important to help, streamline, to start. And then I think another big piece of it is figuring out where is your time most valuable. And this is a big thing that Rod Santomasimo talks about is how do you spend your time? And I'm today, I'm maniacal about it. My calendar is actually color coded based on, you know, am I doing internal meetings, am I meeting with clients, am I doing, you know, podcasts?

It's the only way for you to keep up the volume, I think, of conversations and meetings that you're having is to be just radically well organized.

You have to be well organized. But I think at the root of it is where is my time best spent? And it should be on the front lines speaking to clients. And I've gotten some questions like, hey, James, you got this new title. You Know, ahead of US Sales. Like, what does that mean? Are you like no longer doing brokerage? I'm like, no, no, no, quite the opposite. Now I can help you transact in the other major markets, right? But to do that you have to have a great team. So without you as a partner, without Erica Dean running, you know, the US Capital markets expansion, there's a lot of work to be done, right? And so I think having great partners bringing on people early is really important to scale what you're doing now. I know plenty of brokers who've been doing this 20, 30 years or more who've been doing it on their own. Like, I don't know how you do it. I will see most of them are off market because to actually again, walk the property, do that valuation, marketing materials, there's just no way you can do it effectively as one person if you're doing off market and just running around with buyers, maybe. Like to me, I think one of the most gratifying parts of the business is actually building the team and the business than actually just doing the deal well.

And I would also add that our clients expect us to have a real bench, to have a team approach. I would say that 25 years ago, I think the sort of brokerage side of our business, of investment sales, there were this sort, there was maybe this sort of personality type that would effectuate transactions on their own. Maybe very little bit of a team or really junior folks on the team. And it was almost like they would just will the transaction to close. You know, it was sort of through their own, you know, cult of personality or, you know, sort of just will to get things across the finish line. Really tough sort of, you know, kind of lone wolf or one man show type of profile. And you see very little of that. I think we've evolved as an industry into one where our clients really want to see a cohesive, tight team. They want to see multiple senior folks. And as you're building up your practice and your career and your pipeline, I think that, you know, there is an advantage of maybe not being at these, you know, smaller places where you've got to go find your own intern. But at a place like Avis and Young or maybe others in the similar space, where the firm is really providing you with incredible market intelligence and incredible resources to draw from marketing to data analytics. I think that one of the things to think about as you go through scaling yourself and scaling growth is where is a platform going to give me freedom in terms of doing my business and executing, building relationships and executing business in a way that is going to make me successful and make my clients successful. Where am I going to have that right setup and freedom and it's a freedom versus support dichotomy sometimes. Right. And so I think that's. As you begin to think about scaling, it's really, who am I getting to help me scale? I think you're so right about building the team around you and being really thoughtful about who does what and the complementarity of skill sets and personalities as well as do I have a platform that's really going to just foster my growth and make my team a rock star team? And that's a, that's a pretty big consideration as well.

Yeah. Marian, this has been amazing. And as we start to wrap this up, it's, especially with your last comment, it kind of brings us back full circle because we talked about, you know, do I go work for a big firm, Do I go out on my own, do I work with a medium sized firm? And again, whether you're a broker, whether you're looking to invest, and I think that last point, and I think that'll be especially of interest to those of you who are looking to maybe go out and start investing on your own because there is some consideration of having that platform where you show up to work and, you know, the lights are turned on. There's. You're not having to worry about, you know, payroll and hr. Right. You can just focus on if you're an acquisitions person. I'm going to go find deals today or an analyst. I'm going to just run numbers, numbers. Again, you go out on your own, all of a sudden you got to work about, you got to worry about running a business on top of actually going and finding those opportunities and doing it all. So I think, you know, again, there is a little bit of leap of faith. You can build it over time, but it does again, for those of you starting out again, if you're on the investor side, it might be partnering with a bigger investor who has that infrastructure where, okay, you can go run and find the deals and then once you find it, you bring it to someone else and partner. I talk about that in the book as well. A good way to start off and build your business. So, Mary, this has been fantastic. Hopefully this is helpful. I know I get a lot of requests. I mean that we've done over 200 episodes talking about investing. But on the brokerage side, I think it is important to understand how this works, how to go about the business. And so I really appreciate your being a part of this.

Well I'm so thrilled to sit down and have these conversations with you. It's always fun for me and we have a young producers Rising Stars program here to address some of those same types of issues when you're really trying to grow your business and scaling is tough but there's so many great ways to go about it and I appreciate all the ones that you've outlined. So thanks so much.

Awesome and thank you as always for joining. You can go to james nelson.com I built this site for you. That's where you can find the show notes for this episode. You can figure out how to connect with Marian if you have not already done so. I encourage you to as well as a lot of helpful resources that we put forth. Every week I put out an article on Forbes again with investing advice and other helpful information. So and until next episode, thanks again for joining.