It’s almost one year since Peter Hennessy became president of New York tri-state region for Cassidy Turley. In the first of a new series of one-to-one conversations with the city’s leading brokers, he tells us where he’s going with the team he’s built and what he has learned from where he’s been in the commercial real estate industry…
Q: What have been the most obvious changes you’ve implemented at the company?
It’s been a whirlwind – wonderful, but a whirlwind. The experience has been everything I expected and more. We have a phenomenally talented group of individuals with a tremendous pedigree in certain sections of the business that are desirous of taking their game to the next level.
The fundamental, overriding change I’ve tried to make is to engage the team and really get back to the mentality that what we do first and foremost is focus on performing at the highest level of our business. We need to focus our attention on what we sell, how we sell it and how we are servicing our clients.
We have created certain changes in the work environment so that we can ensure better collaboration between the different groups that work together: the capital markets people, the project management team. The full impact of that won’t be felt until we pick up and move out sometime in the early fall, then we will holistically change the environment we are in.
The firm already had a participatory culture. The environment was about being part of a team, and I’m a team player.
We also need to focus on performance and to raise the performance of each and every one of us every day as we service our clients. Fundamentally, we need to be able to measure and improve all the work we do every single day.
I’m not bold enough to say that it’s all run smoothly – you’re asking people to change a little bit about the way they look at their work process. It’s an evolutionary process more than revolutionary one. You don’t change everything in one day, one month or even one year, it happens over time.
But overall, I think the first year has gone well. Last year revenue was up 15% in New York City and 9.5% in terms of net profit. This year, through the first four months of the year, we are up 18% in terms of revenue and 16% in profit. That isn’t the only metric we focus on, but two that we are very conscious of because it is an indicator of our efficiency.
Q: Have you added employees in the last year and have you found new offices for the firm?
We have added new employees in each different service line, but our net headcount, while the same, has improved. We are always looking to improve, so when we lose individuals we always look to replace them with equally or better-qualified talent. We have 100 people on staff in New York: brokers, the project management team, property management, capital markets, finance and marketing people. We are scattered over two floors with two different elevator banks, so not all of our work space plans will go into effect until we move to our new offices.
We are moving to 277 Park Avenue. It’s a 47,000 s/f sublease from PineBridge, and Wendy Miller and Mark Boisi did the lease for us.
We looked at a lot of spaces, but felt this was a great location, a great asset and it happens to be a property we manage and lease, so we are staying close to one of our most important clients. We were also able to spend a minimal amount of capital to get us into the right kind of environment because PineBridge and AIG had already improved the space.
Right now, we are jammed into 25,000 s/f. We really need 32,000 s/f for the head count we have today, but we’re taking the additional space to accommodate growth.
We’ll sublease a small portion of it to accommodate midterm growth and we’ll be moving in early fall. That’s when we will really be able to apply the changes to the work environment with lower partition spaces to give us that sense of participation.
[PineBridge Investments, the former global investment arm of American International Group, Inc. (AIG), moved out of the Stahl Real Estate-owned 277 Park last year to a consolidate a new operation at 399 Park.]
Q: Does the Newmark deal with BGC create the sense that there really isn’t room for midsize firms anymore – either you have to be large or boutique?
A: There are two very large players in the industry: Jones Lang LaSalle and CB Richard Ellis.
Then there is the next group down. We definitely think there is a place in there for a midsize firm – not a global, multi-national, but a firm focused on local market work across the country.
Today, we have 3,000 employees and manage some 450 million s/f of property, making us the third largest manager in the US. In certain respects you might call that mid-size, but in many respects we are large.
We are focused on our clients. We don’t have to answer to public markets or outside investors. This company is owned by the people who walk in the door to work here every day, and that allows us to focus our attention on developing and delivering the best service that our clients demand.
I really don’t have clarity on what the recent deal does for Newmark or BCG, but, from my perspective, Barry Gosin [principal of Newmark Knight Frank] and Howard Lutnick [chairman of BCP Partners] are incredibly creative and smart individuals. Their vision might not be clear to us, but I would never think they were not going to accomplish their objectives.
Q: Cassidy Turley is ranked among the top global outsourcing providers in the US, with clients like H&R Block and apparel company Hanesbrands. Given the recent global expansion drives by other firms, are we likely to see you venture into foreign markets this year?
We have a joint venture agreement with GVA in London, so when we need to service inbound or outbound clients that want help either in Europe or in Asia, or if they have clients who need help in the US, we have the global reach to service those clients.
Look, more organizations die from indigestion than from starvation. What I mean by that is that we are focused on the things that are of the highest priority to our clients and on what will benefit our clients.
We won’t do more than we know is prudent and to go fully international we don’t think is in the best interest of our clients. It might be some time in the future, but right now, we are right where we’re meant to be.
Q: What are your ongoing goals for Cassidy?
Cassidy Turley has been on a pretty expansive acquisition and merger program. Since the beginning of 2010, we have done 10 acquisitions or mergers and we are not done yet. We have a geographic platform that has a couple of holes, like Atlanta, Chicago, Boston and the LA Basin and we are actively filling those holes. That’s a priority for us.
A secondary goal is to continue to integrate the organizations that have merged with us into a unified platform. We have most of it done. We are in the process of an ERP [Enterprise Resource Planning] to buy new software for the different sectors of our business. It’s not very sexy, but it’s something that has to get done.
We have multiple CRM [Customer Relationship Management] systems around country, but we are going to put everyone on a single platform. We also may upgrade our HR and finance systems – we may not change it, but we are looking at it.
And, we want to finish the acquisition process. Once that’s complete, hopefully some time in the third quarter, we will continue down the path of integration.
Q: What’s your sense of the office market in the city? Has it essentially recovered from the downturn?
First quarter job growth was substantial and very positive for New York City. That provides for optimism as it relates to leasing of space and organizations’ committing to New York. We are seeing positive indicators. It’s not as robust as the landlord community would like it to be, but there are positive indicators that we are moving in a good direction.
Q: You’re a veteran of the real estate business. What lessons have you learned?
Fundamentally, when you go through the cycles you go through in our industry, the most important thing you do every day is deliver a high quality of service to your clients. If you stay focused on that, your clients will stay loyal to you. The bad times reinforce that – since we’ve just been through the bad times, people have that in their mind.
Q: Do you have a close colleague within the industry that you use as a sounding board? Who is it and why?
Bill Elder over at RXR. I’ve known him for years and while we are generally on opposite sides on a deal, I trust his acumen and his sense of where a business can be grown. We’ve never worked at the same firm together, but he’s a smart individual and I respect his judgment.
[Earlier this year, RXR principal Scott Rechler asked Elder, with whom he’d worked at Reckson Associates before he sold the company to SL Green, to go back to work for him as he grows the company’s NYC portfolio. RXR just paid $900 million to buy the Starrett-Lehigh Building.]
Q: Are you planning a summer vacation? Where are you headed?
I will try to get a little vacation time in with my boys [12-year-old twins Brooks and Andrew] and my wife, Lisa, who has been incredibly understanding this past year.
When I took this responsibility, we knew there would be a lot of late nights and a lot of time on the road, and she has been incredible about it.
So, she’ll get the vacation with the boys and I’ll try to squeeze in a few trips to visit them on vacation.