February 23, 2023 • 46 mins
In this episode, Mike Kemether, Executive Vice Chair at Cushman and Wakefield, discusses his engineering background and how he applies engineering principles to sales in commercial real estate. He emphasizes collaboration and building a team to provide the best service to clients, and shares his perspective on the state of the real estate market and the importance of strong partnerships.
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Episode Transcript
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Mordecai Rosenberg (00:15):
Hey, it's Mordecai. Welcome back to the
Origination Podcast, where wespeak to the top salespeople in
the commercial real estateindustry to try to understand
what separates the topperformers from the rest of the
pack. On this episode, I'll bespeaking with Mike Kemether,
Executive Vice Chair at Cushmanand Wakefield. Historically,
(00:37):
some of the most successfulsalespeople in our industry have
operated as lone wolf. They mayhave a support team that they
built around them. Butfundamentally, there's one key
rainmaker on the team. Mike hasfigured out how to break that
mold. There are limitations tooperating as a lone wolf. For
(00:58):
one thing, you can only beexpert at so much. If you know
one particular region or marketand your client wants to be
buying in another market. Howcan you provide them with the
best expertise, Mike has figuredout how to build a substantial
team of over 100 partners, thatall work together to provide the
(01:21):
best service to their clients.
And their success has beenremarkable. I think you'll
really enjoy hearing aboutMike's approach to the business.
I hope you enjoy theconversation as much as I did.
So without further ado, let'sspeak with Mike. All right, Mike
Kemether, it's wonderful to haveto finally have you on the
podcast. Thank you for joining.
Mike Kemether (01:42):
Hey, Mordecai.
Thank you for having me. I'mexcited about it.
Mordecai Rosenberg (01:47):
Me too.
Well, let's start Mike, with aquestion that I like to ask, do
you think back to early salesexperience. Anything that comes
to mind, it could be when youwere just a kid in high school,
college, after college. But whatanything comes to mind in when
you think about like earliestsales experience?
Mike Kemether (02:10):
I'm a mechanical engineer by schooling, I was not
a great mechanical engineer. Sosales seemed to be a good path.
And, and real estate, a reallygood path. And frankly, if I
look back, I think about what Ilearned in engineering, which is
(02:31):
to be kind of a linear thinker,and maybe kind of being a little
bit process oriented, while alsobeing maybe a little bit more
personable than some of my peersin engineering. So taking the
discipline in engineering, andapplying it to a sales process
(02:56):
works extremely well. And so ifI look back to, you know, the 23
year old, coming out of college,I'm very grateful for having
that kind of technicalbackground, because I really
think it applies in commercialreal estate.
Mordecai Rosenberg (03:15):
When you were in a development role in
Archstone. Smith also, prior.
Mike Kemether (03:21):
Yeah, that's right. That's exactly right. So
I did development acquisitionsand dispositions for a public
greed. But prior to that, someof the sales roles, including
technical sales, within anengineering firm, and then also
did management consulting, whichwas really a sales job because
(03:44):
we consulted to engineers,architects, and environmental
consultants. We were providingmanagement consulting services.
So in order to get the business,you had to sell the services. So
all these little parts andpieces have really come in handy
in commercial real estate.
Although, had I started incommercial real estate from the
(04:05):
get go, I'd probably be retiredby now. So it was a little more
of a circuitous path.
Mordecai Rosenberg (04:12):
Yeah. Maybe you never know. You never know.
Like and what would you do ifyou were retired?
Mike Kemether (04:18):
I would be working on real estate deals.
Mordecai Rosenberg (04:21):
Exactly.
Exactly. So you want to drilldown on that. So you said sales
within the engineering firm. Sowhat did that look like? What
were you selling?
Mike Kemether (04:33):
I worked back from 1985 to 93. I worked for a
company called UnitedTechnologies, Pratt and Whitney
and it is a cutting edge jetengine manufacturer. So we were
working on some really high techstuff. And it was taking
(04:54):
technologies from that industryand introducing them like
materials. Introducing thosematerials, which were cutting
edge materials, to other areas,other industries, for example,
introducing them to gas turbineengines for power rather than
for jet engine propulsion. So itwas really fascinating. And it
(05:18):
was extremely technical. I lovetelling my counterparts in real
estate, that while at thatcompany, we would work on one
part that would fit in the palmof your hand Mortdecai. And we
may work on that one part forfour or five years. And so, most
(05:40):
real estate people have somelevel of ADD, and they're just
always amazed at, like, youwould work on one part that
that's, that's that tiny, forfour or five years. So very
different in that regard. Andthat, you know, you would really
focus on one thing and make surethat thing worked and worked
(06:03):
really well. But the sales jobwas taking technologies from the
aerospace industry, andintroducing them to other
industries.
Mordecai Rosenberg (06:13):
Very interesting. I find that in any
particular industry, there's aparticular way that people do
the business. You know, there isa way that you know, in real
estate, it's the constructionmaterials, or the way that that
a property is managed, or theway that in a brokerage, the way
(06:33):
that invest in sales is done ordebt brokerage, right. There's a
way that that people do thatbusiness, right. And within that
industry, probably like 90% isthe same, it's pretty much the
same thing. What people miss isthe opportunities to look at
other industries, some sometimesthey could be adjacent, but
(06:54):
sometimes they could be totallydifferent. Right from, you know,
your current industry, andlooking for ways to apply, you
know, a technology from anotherindustry, to your own. And so,
to have a sales job that wasreally focused on opening
people's eyes to what'spossible. Yeah, that to me is
(07:19):
very interesting.
Mike Kemether (07:20):
Absolutely, absolutely. And there's one guy
whose name immediately comes tomind, Stephen de Francis with
Courtland partners. Yeah. AndCortland is one of the largest
multifamily owners. But Stephenhas done a great job of hiring
outside of industry, in manycases, for many different roles
(07:43):
within his organization, forthat very reason. And pretty
unique in that regard. I thinkothers have kind of followed
suit, but he was one of thefirst, during, you know, the
last 20 years to really take alook at different roles within
the organization, and maybegoing to experts outside of real
(08:03):
estate, and bringing them in andkind of benefiting from that new
lens.
Mordecai Rosenberg (08:10):
So I wonder if, if that's translated to now,
you know, we were talking beforewe started recording about a BTR
if built around single familyhomes that developers are
getting into, that's been a newarea over the last couple of
years, relatively new area forthe last couple of years. But
(08:30):
that's, you know, looking to me,that maybe is one example of
looking at an adjacent industry.
And then saying, wait a second,there's actually more
commonality than we thoughtbetween these two, when you're
when you're talking to clients,or if you're if you know, or
anything that you're seeing inthe industry. That's, that's an
application of some innovationfrom from another area and maybe
(08:51):
the Portland partners, they mayhave some interesting things
that they've they've done ormaybe you've seen other stuff.
Mike Kemether (08:59):
Yeah, so BTR SFR has really become a pretty
meaningful part of our businessnow. And we look at it, as you
know, just a of, you know, kindof a horizontal apartment
community. You know, it's justflattened out and spread out.
(09:20):
But obviously, there's way morenuanced than that. How they're
managed, how they're built, isvery different. You can use
single family home developersrather than multifamily
developers and GCS generalcontractors. The whole process
is quite different. So we havea, a group within our team that
(09:43):
focuses on BTR SFR Cushman andWakefield has a division within
their property management thatfocuses on BTR SFR so it is very
nuanced and a little bitdifferent than weather. You're
selling or managing multifamily,it's a little bit different. And
(10:05):
so those who probably have, youknow, the creativity or the
ability to reach outside theindustry, and get insight
probably benefit was stuff like
Mordecai Rosenberg (10:15):
that. I also wonder about, if there are
technologies that we could beusing in our industry, you know,
if it's debt or brokerage, orservicing the company, they're
showing me like they have theirsupport desk function, right.
And they track all of the calls,right, that come in. So they can
they can tell you somehow itit's analog, the technology is
(10:39):
analyzing those calls, andpicking up on what was the issue
here? Like, what was their tone?
Right? And are there trends thatthey should be picking up? Right
that they can then transmit tothe, to the support team or to
the sales team to get out aheadof it? And so like, even things
like the amount of conversationsthat were that we have, with
other people and your team? Imean, think about how many
(11:02):
conversations, a VAT team acrossthe country? How many
conversations
Mike Kemether (11:08):
five, we have 105 teammates in the southeast 105
Mordecai Rosenberg (11:13):
teammates, it's remarkable. Think about all
of the conversations that arehappening every day. Right? And
I mean, that person, whoever ishaving that that conversation is
picking up that that knowledge,but there's nuance, and there's
data that that's being created,that's just kind of goes into
the ether, you know, that otherindustries have figured out what
to do, how to do fine with that.
Mike Kemether (11:34):
Do you think commercial risk, because this is
the knock is that maybecommercial real estate has been
slow to adopt various differenttypes of technology and maybe
has been a little bit behindwhen it comes to technological
advancement? Do you think that'strue?
Mordecai Rosenberg (11:53):
What I would say is yes, and no, it's no
doubt the case that commercialreal estate companies have
deployed probably lesssophisticated technology than
compared to a retail bankingcompany or retail sales company
or, you know, right now, thatbeing said, you have to ask what
the technology is trying whatproblem that they're trying to
(12:14):
solve? And I think one of theinteresting things about our
industry is that you would thinkthat it would be an inefficient
market, right? You would thinkthat because you don't have like
a stock market, or NASDAQ, orright, where things are
constantly traded, and you knowexactly what they're worth, that
it would be like an inefficientmarket. You would agree on
(12:36):
imagine that it actually seemsto be a very efficient market.
Because you know, there's verysmart people that are involved
and are pick up on a nuanced. Soit's, I think one of the issues
is that we're not really clearon the problem that we're trying
to solve.
Mike Kemether (12:52):
A that's a great point. And I would say it's
incredibly efficient. And a lotof that efficiency comes from
competition, frankly. So I wouldargue that if you like, you
mentioned that, you know, thenice thing about publicly traded
things is they have a price,they're very liquid, and they
have a price at any time, right?
You know exactly what it'strading for. But in commercial
(13:15):
real estate, that's, especiallyin the private sector, that's
not always the case. But if yougo to a market like Atlanta,
where there are a lot of goodoptions when it comes to
advisory services, valuation,investment sales, it's a pretty
scientific process for valuationof an asset. And I think part of
(13:39):
the reason it's so sharp isbecause of that competition,
frankly. So if you go to an MSAor a market, that maybe the
competition isn't as good. Iquestion whether or not the
valuations are as good. And I'llgive you an example. In the 90s
and early 2000s, there was apretty dominant brokerage shop
(14:04):
in North Carolina. And my bossat the time used to argue that
cap rates were higher in theCarolinas because of lack of
competition. Think about thatfor a second, so that you could
buy an asset in Charlotte or inRaleigh, maybe above market,
simply because there was not thebroker competition. There should
(14:28):
have been that is fascinating tome. So maybe to your point in
markets like Miami, New York,Atlanta, there's so much
competition, that it reallyrefines valuation.
Mordecai Rosenberg (14:44):
Look, I think there's something to be
said for that. I also think itis very different 15 years ago
than it is today coming out ofthe financial crisis after
Lehman Brothers that was when Ifeel like institutional
investors There's discoveredmultifamily, right as mean, it
used to be that either pensionfunds would have some small
(15:06):
amount that would be allocatedto real estate and multifamily
was like very, it was all mount,you know, mostly Mom and Pop
owners. And then some, likelarge institutions like
Archstone Smith, or, you know,these REITs like to have it has
a real allocation, I think itwas when the rest of the market,
you know, fell apart, and peoplelooked at multifamily. It's
like, wait a second, everyoneneeds a place to live. There's
(15:26):
some good fundamentals hereprobably have become more
efficient over the last 15years.
Mike Kemether (15:31):
No doubt. No doubt.
Mordecai Rosenberg (15:34):
We talked a couple weeks ago about your team
based approach. When peoplethink about a salesperson, I
think what might come to mindfor people is this idea of the
rugged individualist, a lonewolf out there just on their
own. You've proven that there'san alternative model that can
(15:56):
work very, very well. So Can Canyou talk a little bit about your
philosophy around your team? Andlike how you've done that your
approach to team building?
Mike Kemether (16:06):
Yeah, absolutely.
First of it, say, collectiveeffort with I have. There's
about 50 of us salespeople, andthere's 105 of us on the team
plus or minus, okay, it kind ofcame from the spirit of listings
beget listings and a largerteam, especially in times when
(16:31):
there are there isn't completeclarity. larger teams can be
really advantageous. Becausewe're all on text threads, we're
all on emails, we see Oh, whohas a 1031 exchange, who has the
hot money, migrating money fromone state to another, brokers
(16:52):
can tend to be a little bitcovetous. So by coming up with a
shared model, where everybody'sleaning in, everybody's working
hard, and we're all connected,especially in times like today
where there's not completeclarity, it really is
beneficial. And the biggestbeneficiary, Mordecai is the
(17:14):
client, right? Because we'removing buyers. Oh, Savannah, we
just sold a deal in Savannah.
Well, guess what, Savannah has alot like Mobile port city
similar in size. So there aresome similarities. So that buyer
is Mobile buyer, they just don'tknow it yet. So that gives us
(17:36):
the opportunity to tell themabout the benefits of being in
Moil, as well as Savannah orCharleston, for example, or
Jacksonville, it's workedextremely well. It takes a
unique personality to kind offit in the model. It's not for
everybody. But if you canimagine, think about a two
person shop right now in themiddle of nowhere, trying to
(18:00):
understand multifamily capitalmarkets, they have no idea
what's going on, they're seeinga couple of data points. We're
seeing dozens and dozens of datapoints each week. So it really
makes the world a lot clearer,at least for me. And it also
comes from just enjoying workingwith others rather than being
(18:23):
kind of a me guy that's morefocused on self and maybe a
little bit more covetous.
Mordecai Rosenberg (18:31):
In some ways, when you're looking to
hire a broker to lift yourasset, you're the greatest
strength can be the greatestweaknesses. Also, if I have a
property in Charlotte, and Iwant to list it, I'm going to
find the guy who's in Charlotte,right? The Charlotte guy, right?
Who knows that market backwardsand forwards knows exactly who's
buying and selling. And what'shappening is that the market,
that's great, so that's my guyfor selling in Charlotte. But
(18:54):
now if I want to take my money,and go buy something in mobile,
or that route, now, where am Igoing? The salesperson was so
valuable to me because he knewCharlotte, but he also knows
nothing about that route. Youcan't be a national generalist
where you know, every singlemarket in the country, right? So
(19:16):
you've kind of you kind of solvefor that.
Mike Kemether (19:18):
How about the Charlotte guy and the Baton
Rouge guy or or woman are bothincentivized to help you? So you
get it. Do you have anymultifamily apartments that
you're interested in selling? Wecan help you in the southeast.
Mordecai Rosenberg (19:34):
Thank you.
Yeah, there's nowhere else Iwould go.
Mike Kemether (19:38):
Good, good. Good.
Yeah, we got that. Right. Great.
Mordecai Rosenberg (19:41):
Now listeners who are in sales, who
are originators or brokers, theywould say they might say, Well,
yeah, that's well and good. Butwhat about commissions? That's,
I think a lot of times wherethese things fall apart, but you
guys have figured out a modelwhere you know, everyone have a
share in the success of thatteam. Yeah, we've
Mike Kemether (20:03):
created a model where there's it is a shared
model, folks are focused ontheir regions. But it is a
shared model to allow the freesharing of information of
clients. So it's, it worksreally, really well. Again, it's
not for everybody, if you'rekind of an eat what you kill
(20:27):
kind of person, you would notlove this model, the biggest
beneficiaries, candidly, areyoung brokers really benefit and
ramp up much more swiftly thanif they were working in a small
shop. And maybe it was a littlebit more focused on you know,
(20:49):
the deal you have around thecorner that you absolutely,
positively have to sell thisyear, otherwise, your, your
spouse is not going to betalking to you. So it allows
young brokers to have productinteract with sellers, and
(21:11):
really build up a book ofbusiness in a healthy way, I
would argue they're the biggestbeneficiaries. And and again,
it's not for everybody, becausethere are some very, very good,
very successful brokers who do agreat job and a great fiduciary
for their owners, their sellers,but they are more solo artists,
(21:37):
they do a great job. But thismodel really appeals to me. It
appeals to 49 other partners,candidly, from a brokerage and a
n a staff standpoint, from astaff perspective, very little
to no turnover brokeragestandpoint, I think, my guess
(21:58):
is, if you looked kind of acrossthe country, at broker turnover,
we would we would be on the lowside, it's certainly not zero,
but it would be low.
Mordecai Rosenberg (22:09):
How does it work, let's say you're a younger
broker, I don't know, let's sayyou're just out of school,
you're coming in as just animagine you're not going to be
made a partner like from dayone, get to earn your keep first
or you know, produce a certainamount before you're, you know,
for your wedding.
Mike Kemether (22:26):
Many of the brokers who have ended up on our
team have started as staffmembers, maybe they're doing
production, putting pitchestogether. So probably the
majority kind of work throughthe ranks here and became
brokers that way, there are someexceptions to that. And brokers
(22:48):
we've hired from other shops,but probably the majority
started on a brokerage team as aas as a salaried employee and
work their way through that.
That's probably where most ofthem have come from. That's a
guess, on my part. But the waywe've structured it is that we
all are kind of yoked togetherand we all benefit every time a
(23:14):
deal closes, we don't benefitthe same way. When you close we
close 360 deals last year, in2022. So it does eliminate some
of the risk of being a twoperson shop in Bloomington.
Right. So it is really a goodsetup for a young gun who wants
(23:37):
to build up a book of business?
And so the question I usuallyget is, well, what if somebody's
not leaning in, we have methodsof kind of reviewing who's on
first and who's doing what froma procurement and execution
(23:58):
standpoint. And we just have aculture that is really driven,
and you know that there aren'tmany people taking plays off. So
the concern is someone getscomfortable in a shared model.
And we do not let people get toocomfortable, frankly, and
(24:21):
actually haven't really had aproblem with that.
Mordecai Rosenberg (24:25):
I think in some ways, when you're sharing,
it puts more of a magnifyingglass on that.
Mike Kemether (24:32):
You know, it's funny you say that because we
had one person leave. This was acouple of years ago, great guy,
and he left and it was pressurehe was putting on himself to
perform in this type of a modelbecause you have a team and
teammates are reliant upon you.
And he was doing a great job bythe way, but he felt pressure
(24:54):
that he didn't want and he wouldprefer or to be more of a, you
know not to use that analogy.
But as solo artists, he was justhappier kind of doing a more of
an eat what you kill model. AndGod bless him, he's he and I are
still great friends. He did notwork in the Atlanta region. But
(25:16):
he's a great guy, and he's asuccessful broker. And so when I
mentioned that the model doesn'twork for everybody, that's true.
Mordecai Rosenberg (25:26):
It also works better at scale, because
now you're really getting thepower of various markets. How do
you start? Let's say, if youhave, you know, if you're a
broker today that maybe you're,you know, a lone wolf
salesperson, and you see thebenefit in this, right, but
everyone in your firm is likelone wolf, how do you start? Is
there one conversation withanother person say, hey, why
(25:48):
don't we team up? Or is it likea whole group that gets
together? Like, how do you startthem?
Mike Kemether (25:52):
Mordecai, I'll just say two things. One is,
again, the biggest beneficiaryis the client, because they get
the benefit of 49. Others, aboveand beyond my Kenneth are
working on their assignment.
That's pretty powerful. Andclients feel that the truth of
the matter is, our model isreally, really hard to
(26:14):
replicate, frankly. And it hasto do with a lot of things. One
of them being ego driven, it'sjust a very hard thing to
replicate for some of thereasons you're mentioning. And
it's really hard to get started.
So we did a merger of two teamsback in 2016. And it was almost
(26:42):
the only way that we could alllock arms. So we got a taste of
it when we did that merger. Andwe've just expanded on that
model quite a bit. At that time,it was probably a team of 16.
And now we're a team of 50. Butthat's that's how we got
(27:02):
indoctrinated.
Mordecai Rosenberg (27:04):
I think it's a good protective mode. Because
if you are at whatever nationalbrokerage firm, yeah, and they
operate with your kind ofindividual office lonewolf
model, like good luck. Trying tocreate it like it almost has to
be either. Yeah, it has to befrom scratch with a lot of
(27:24):
people that are starting withthat mindset. So I think if
you're you mentioned your theturnover rate of your staff, I
think that's probably part ofthe reason is that if they want
to if they want to replicatethat team based approach, there
probably aren't a lot of otherplaces you can go.
Mike Kemether (27:38):
No, and it is unusual in this regard. How can
I say this tactfully? If mychemother got hit tomorrow by a
beer truck, we don't miss abeat, frankly, we have a team
that kind of absorbs the workand absorbs the client, which
makes it a great model for thebrokerage shop, frankly, whereas
(28:01):
if the lone wolf gets hit by atruck, that business dissipates.
Mordecai Rosenberg (28:06):
I mean, I love that focus on the customer.
I mean, in theory, like we're ina sales business, and we're in
we're both in like servicebusinesses, it should be obvious
that the focus should be aroundhow do we provide the best
experience for the client?
However, that's not always firstin mind for
Mike Kemether (28:25):
Well, well, everybody says that, everybody
says it. They everybody,everybody says it. But to do it
is tougher. And I believe in myheart of hearts that clients
feel the difference. And they'vecommunicated that, by the way,
it's this model is not withoutits complexities and issues,
(28:46):
there's been a growth in it,just the number of things you
have to deal with. And there'sjust a host of things that come
up, we have a very strongadministrative team, that helps
a lot. We're led by Morgan Berg,from an administrative
perspective, because we alldon't always see eye to eye. So
(29:08):
that's been incredibly helpful.
So having a really strongadministrative team has been
helpful. But I don't want topaint this kind of picture
where, you know, there thereare, you know, daily things we
deal with, that are complex,and, you know, things are not
always perfect, but by andlarge, this model has worked
(29:32):
really well for us.
Mordecai Rosenberg (29:36):
Well, there's always complications,
Mike Kemether (29:38):
no doubt, no doubt.
Mordecai Rosenberg (29:41):
I'm curious how you're advising your clients
today, and we're sitting here inFebruary 2023. No one really
knows where the market is.
Today. Still, I mean, I thinkyeah, there's questions about
where the where rates are going.
And I'm curious, like, let'ssay, let's start with like a
(30:03):
brand new client, let's saysomeone who you've never
actually transacted with, right?
So this is a prospect, someonewho you're you've been
introduced to, what are yousaying in that meeting that
first meeting to them?
Mike Kemether (30:17):
So Mordecai, one of the benefits of being a large
team, is you're bumping into alot of clients, and maybe you
have a little bit more on yourshelves, right. So, so we showed
up at the big nationalMultifamily Housing Conference
with 120 deals that were eitherlaunched about to launch or we
(30:40):
were working off market, that'sa lot of data points, it's a lot
of product, bigger team. So it'sa little bit misleading, right?
You know, it's hard for a twoperson shop to have that kind of
inventory, we do have a prettygood sense for what's going on
in the market at any given time.
Even right now, we do feel like2023 Each month that we get into
(31:02):
this year, there will be moreclarity in terms of debt,
markets, capital markets, andthere'll be more deal volume. So
I mentioned that because in someof the larger MSA is like
Atlanta, Atlanta, we had a callfor offers yesterday on a deal,
and we just set the record fornumber of tours on that
(31:26):
particular deal. And as offerscontinue to come in, the number
of offers will maybe set arecord, I think the number of
tours already did. That doesn'tmean that pricing on that deal
is back to March 2022 levels,what it would have been worth in
(31:47):
the first quarter of last year.
But it does mean like we'regonna have a fist fight for that
deal in the best and final,almost by definition, given how
many offers and interestedparties there are.
Mordecai Rosenberg (32:02):
Let's say that this group that you're
sitting down with here for thefor the first time, right, they
have a portfolio, they're notsure what they want to do with
it, they're thinking aboutselling, but they've been
working with, who knows CBRE orMarcus and Millichap or new mark
like for they have an existing,strong existing relationship?
What's your pitch to say, here'swhy you should give, you know my
(32:25):
team, and that means Krishnan,but it also means just you know,
my chemists are like their, youknow, and team. What's What's
your pitch for? How do you getthem to open up in this kind of
a market where maybe people aremore reluctant to try something
new? Or maybe the idea of like,Look, we're not trying to
actually land a deal today. Butwe're gonna just try to build
(32:47):
trust today in the hopes ofinvesting in future possibility?
Mike Kemether (32:51):
Well, it depends on the portfolio or the specific
deal because there are some,some deals that are ready for
primetime right now. And mybenefit from the dearth of
product on the market right now,my guess is in the third and
fourth quarter of this year,maybe there's a little bit more
(33:11):
clarity. But you're probably ifyou're launching a deal, it's
probably competing against a lotmore product. The reason we just
sent that rep set that record inAtlanta, is because of scarcity
of products. So there'll be ascarcity premium on that deal.
Now, what will, what will thingslook like in the third and
(33:33):
fourth quarter of this year? I'mnot sure. But I do know if
there's more product, we'reprobably not doing the same
number of tours on thatparticular on that same deal. So
I think the story, each deal,there's there's a story and it's
deal dependent, as to the besttime to go. But what I would
(33:55):
make sure that that owner leftthe room understanding is
instead of having a bunch offiefdoms, where maybe other
brokerage shops talk aboutworking together, but maybe
aren't great at it. Always. Inthis instance, we would be we'd
(34:16):
have if they hired Mike Kenneth,or if they hired one of my
partners doesn't matter whoyou're really hiring an army of
50 people who are focused ongetting that deal done because
we're all incentivized to get itdone.
Mordecai Rosenberg (34:31):
To get 50 People for the price of Yeah,
one thing you're paying
Mike Kemether (34:35):
the same fee, you're paying the same fee.
Right. Some of my partners havedone a great job on the top end,
providing some pretty deepadvisory services, not to get
too into it, but into the weeds,but really providing advisory
services again, there's one fee,but maybe they're good Adding
(35:00):
maybe the clients getting someadvisory services over a period
of time, that could be very,very helpful.
Mordecai Rosenberg (35:06):
What kind of advisory? Oh, there's,
Mike Kemether (35:08):
there's, there's 100 things that it could be but
but, you know, it's interestingbecause owners don't have the
same lens that we do as brokers,maybe that owner is seeing a
half a dozen deals across acouple of southeastern states,
(35:28):
we closed 360, I don't even wantto think how many deals we've
been exposed to. So helpingclients with a host of things,
whether it's in lease up, orwhether it's rent structure, or
whether it's, what do you do inthe two months for operations
(35:49):
prior to launch? Are there somethings we could do as the owner
that would help maximize ourvalue? The answer to that
question is yes. And some ownersdon't even know to ask the
question. But I would argue I'msurrounded by partners, who are
very good at the advisory partof the business, who can really,
(36:10):
really help clients and ownersmaximize value by possibly
setting setting the stage priorto hitting the market. Yeah,
that is that makes sense.
Mordecai Rosenberg (36:24):
Right, helping them, helping them
prepare to do the right thing toposition themselves for maximum
proceeds when they do
Mike Kemether (36:32):
that try and it's not all intuitive ease, either.
Even for someone who's doneproperty management for a while,
setting something up fordisposition. It's not always
completely intuitive, what thebest move is, and that's where
we can help.
Mordecai Rosenberg (36:51):
Yeah, I think that's, that's very
valuable in terms ofconversations with clients. You
know, might you might my fatherhas like, one kind of question
that he likes to ask, which is,you know, how dumb Do you feel
if you're wrong? It's like,well, you know, interest rates
are so high, they're at five anda half percent cap rates like
this, maybe, maybe the marketwill come back. It's like, okay,
maybe, but how dumb Do you feelif you're wrong? Yep. People are
(37:14):
treating this, like a, like areal downturn, you know, because
interest rates have crept up.
And yes, the Fed has raisedrates faster than they ever have
before. That being said, I don'tconsider that. I mean, this
isn't, isn't slower. It's not adownturn like we've seen in the
past downturns in the past.
(37:35):
You've seen art quick, sudden,right? No one saw them coming.
The issue is unrelated to themultifamily market. It could be
the Russian ruble crisis. Itcould be the subprime loan
crisis. You know, it could be911. Right. But something
happens in the or your long termcapital management, right?
(37:57):
Something happens that hooks themarket, and then liquidity is
nowhere to be found. Yes, therearen't as many loan lenders that
are chasing deals today, you canstill find capital, you know,
there's still capital out there.
Right. So what happens if youknow something happens, and I
don't know there's war breaksout with China, and now spreads
blow out by 500 basis points,and there's no buyer for the
(38:19):
paper. Right now you've gotright now you feel really dumb
it You didn't take your loan atfive and a half percent and sell
it at your 5% cap rate. Whenthere's no liquidity in the
market,
Mike Kemether (38:32):
no doubt, no doubt. And just to put things in
perspective, last year, 2022 wasour second best year ever from
an investment sales standpointin the southeast in our on our
11 State team, we see this yearas kind of being a mirror image
of last year. So last year, themajority of the business got
(38:56):
done in the first half of theyear. And then it dropped off,
especially in November,December. But the first half was
the best six months we had everhad. We see this year as being a
mirror image of last year,suggesting that the first six
months we'll replicate the lastsix months of last year. And
(39:19):
then this year being prettyweighted towards the second half
of the year. We haven't seenanything to discourage that
prediction yet. And just to putthings in perspective, in 2008
and 2009, when we were sellingdeals, there was no debt
available. We the deals that wewere getting done and getting
(39:42):
across the finish line, werebeing sold to all cash buyers
for the most part in eight andnine. So if you look at all of
the debt options availabletoday, and you look at the
equity that's available, andwaiting There is plenty of
business to be done for folkswho are willing to lean in and
(40:06):
and focus on the business. Yeah.
And by the way, if you've got ahuge pie, right, and the pie
gets a little smaller, butyou're grinding, there's plenty
of pie. And and frankly, there'splenty of business to be done
right now. And we're starting tosee it in launches, and in
closings, so it's it's alreadyhappening.
Mordecai Rosenberg (40:29):
I'm curious, you know, now Greystone Cushman,
right, there's a partnership,and you and you've also, you've
experienced working with debtpartners and capital markets,
desks, you know, within Cushman,and probably outside, when it's
working really well, like, whatwhat does that partnership look,
what is the debt partner doingto support your efforts? And
(40:51):
when it doesn't work? Well, whatwhat did that debt partner do or
not do? Yeah, that that, thathurt? Oh, that's
Mike Kemether (41:00):
a great question.
At the end of the day, it reallycomes down to the personalities
that you're working with. Andwhat I mean by that is, our
businesses are very, verysimilar. And what I mean by that
is, you can kind of do pushbutton brokerage, and you go to
the usual suspects, and you, youend up with a product, that's
(41:23):
okay. Or you can put your heartand soul into, you know, we we
get compensated by our clientsto do creative solutions to help
drive and maximize asset valuefor them. Right. So if you're
going to take the easiest path,you're probably not going to be
(41:47):
creating creative solutions forthat particular client. And it's
no different with your partnerwho's doing the debt, or your
partner who's raising theequity. If it's somebody who's
going to go the extra mile, andreally think creatively on how
best to solve this thing. That'sgoing to be a great debt
(42:11):
solution. If it's someone who'sgoing to kind of stay in the
fairway and not migrate outside,it's probably not going to be a
great solution. So it's morepersonally, I've learned it's
more personality driven. Andwhen you find the right
personality, you kind of lock onto them and you ride into battle
with them. And you could go tosome of your competing shops and
(42:34):
find amazing depth brokerswithin Greystone find amazing
depth brokers. So when you findthe right one, you just kind of
lock arms.
Mordecai Rosenberg (42:47):
Right, I think that also speaks to the
challenge that some firms havewhen they're trying to combine
to have, you know, a signedcoverage, you know, where it's
like, Well, okay, we're just youhave to allow for a certain
amount of organic development ofrelationships, people who will
resonate with each other, andthe energy will feed off of each
other, rather than you saying,like, alright, Mike, you're
(43:09):
gonna work with Mordecai, youknow, I mean, I think you and I
could work very well together.
But you But I agree. Yeah, butbut arranged marriages are like
arranged marriages, you know,some of them are okay. But you
have so many different people atan organization like one,
ultimately, when you when youfeel that block, you're going to
really create magic together.
Mike Kemether (43:29):
Yeah, and there's another part to it as well, more
to chi and that is, everythingis infinitely ease here. Once
you've met in person or brokenbread together, you mentioned
the relationship earlier, but itreally gets kind of crystallized
(43:50):
when you get to spend time inperson together. And it's a
little more difficult if you'venever sat and had a drink
together or looked each other inthe eye. So it takes time I used
to have a partner, Chris Fain,who would say that relationships
are made one at a time and I heis so spot on. And so
(44:15):
relationships take a little bitof time, whether it's with a
partner, or whether it's with aclient, or whether it's with a
partner on our team who sits inCharlotte but helps with
research, whatever it might be,you know, relationships are made
one at a time. It takes a littlebit of time. But boy if you if
(44:35):
you pour into that the return isgreat.
Mordecai Rosenberg (44:40):
I love that Yeah, listen for me one at a
time. You know I need to digestbut it feels so true, you know,
in like every area of life.
Well, Mike, I really appreciateyour time and coming on the
show. This has been a veryenjoyable conversation for me if
it was for you as well. Elon,and I'm really just, I've been
(45:00):
so blown away by your, your theteam based approach, and anyone
who has interacts with you justas like, really just, you know,
blown away by the quality of theservice and and your execution.
So it's been really a privilegeto be honest with you.
Mike Kemether (45:19):
Well, I have 49 partners, sales partners, who
are wired exactly the same way.
And, and I have 104 Totalteammates, who are wired the
same way. So I'm very fortunatein that I've bumped into people
in life who kind of see theworld very similarly. And
(45:39):
frankly, Mordecai, notnecessarily that we have the
same style, we could bestylistically different. But at
the end of the day, we really docare about the outcome. So I
appreciate I appreciate yousaying that.
Mordecai Rosenberg (45:56):
All right.
Well, Mike, thank you again.
And, you know, we'll talk we'lltalk soon.
Mike Kemether (46:02):
All right. Yeah.
Call me anytime. We don't haveto be recorded to talk. So call
me anytime.
Mordecai Rosenberg (46:07):
Absolutely, absolutely, Take care and thanks
Mike.
Hey, it's Mordecai. Welcome back to the
Origination Podcast, where wespeak to the top salespeople in
the commercial real estateindustry to try to understand
what separates the topperformers from the rest of the
pack. On this episode, I'll bespeaking with Mike Kemether,
Executive Vice Chair at Cushmanand Wakefield. Historically,
(00:37):
some of the most successfulsalespeople in our industry have
operated as lone wolf. They mayhave a support team that they
built around them. Butfundamentally, there's one key
rainmaker on the team. Mike hasfigured out how to break that
mold. There are limitations tooperating as a lone wolf. For
(00:58):
one thing, you can only beexpert at so much. If you know
one particular region or marketand your client wants to be
buying in another market. Howcan you provide them with the
best expertise, Mike has figuredout how to build a substantial
team of over 100 partners, thatall work together to provide the
(01:21):
best service to their clients.
And their success has beenremarkable. I think you'll
really enjoy hearing aboutMike's approach to the business.
I hope you enjoy theconversation as much as I did.
So without further ado, let'sspeak with Mike. All right, Mike
Kemether, it's wonderful to haveto finally have you on the
podcast. Thank you for joining.
Mike Kemether (01:42):
Hey, Mordecai.
Thank you for having me. I'mexcited about it.
Mordecai Rosenberg (01:47):
Me too.
Well, let's start Mike, with aquestion that I like to ask, do
you think back to early salesexperience. Anything that comes
to mind, it could be when youwere just a kid in high school,
college, after college. But whatanything comes to mind in when
you think about like earliestsales experience?
Mike Kemether (02:10):
I'm a mechanical engineer by schooling, I was not
a great mechanical engineer. Sosales seemed to be a good path.
And, and real estate, a reallygood path. And frankly, if I
look back, I think about what Ilearned in engineering, which is
(02:31):
to be kind of a linear thinker,and maybe kind of being a little
bit process oriented, while alsobeing maybe a little bit more
personable than some of my peersin engineering. So taking the
discipline in engineering, andapplying it to a sales process
(02:56):
works extremely well. And so ifI look back to, you know, the 23
year old, coming out of college,I'm very grateful for having
that kind of technicalbackground, because I really
think it applies in commercialreal estate.
Mordecai Rosenberg (03:15):
When you were in a development role in
Archstone. Smith also, prior.
Mike Kemether (03:21):
Yeah, that's right. That's exactly right. So
I did development acquisitionsand dispositions for a public
greed. But prior to that, someof the sales roles, including
technical sales, within anengineering firm, and then also
did management consulting, whichwas really a sales job because
(03:44):
we consulted to engineers,architects, and environmental
consultants. We were providingmanagement consulting services.
So in order to get the business,you had to sell the services. So
all these little parts andpieces have really come in handy
in commercial real estate.
Although, had I started incommercial real estate from the
(04:05):
get go, I'd probably be retiredby now. So it was a little more
of a circuitous path.
Mordecai Rosenberg (04:12):
Yeah. Maybe you never know. You never know.
Like and what would you do ifyou were retired?
Mike Kemether (04:18):
I would be working on real estate deals.
Mordecai Rosenberg (04:21):
Exactly.
Exactly. So you want to drilldown on that. So you said sales
within the engineering firm. Sowhat did that look like? What
were you selling?
Mike Kemether (04:33):
I worked back from 1985 to 93. I worked for a
company called UnitedTechnologies, Pratt and Whitney
and it is a cutting edge jetengine manufacturer. So we were
working on some really high techstuff. And it was taking
(04:54):
technologies from that industryand introducing them like
materials. Introducing thosematerials, which were cutting
edge materials, to other areas,other industries, for example,
introducing them to gas turbineengines for power rather than
for jet engine propulsion. So itwas really fascinating. And it
(05:18):
was extremely technical. I lovetelling my counterparts in real
estate, that while at thatcompany, we would work on one
part that would fit in the palmof your hand Mortdecai. And we
may work on that one part forfour or five years. And so, most
(05:40):
real estate people have somelevel of ADD, and they're just
always amazed at, like, youwould work on one part that
that's, that's that tiny, forfour or five years. So very
different in that regard. Andthat, you know, you would really
focus on one thing and make surethat thing worked and worked
(06:03):
really well. But the sales jobwas taking technologies from the
aerospace industry, andintroducing them to other
industries.
Mordecai Rosenberg (06:13):
Very interesting. I find that in any
particular industry, there's aparticular way that people do
the business. You know, there isa way that you know, in real
estate, it's the constructionmaterials, or the way that that
a property is managed, or theway that in a brokerage, the way
(06:33):
that invest in sales is done ordebt brokerage, right. There's a
way that that people do thatbusiness, right. And within that
industry, probably like 90% isthe same, it's pretty much the
same thing. What people miss isthe opportunities to look at
other industries, some sometimesthey could be adjacent, but
(06:54):
sometimes they could be totallydifferent. Right from, you know,
your current industry, andlooking for ways to apply, you
know, a technology from anotherindustry, to your own. And so,
to have a sales job that wasreally focused on opening
people's eyes to what'spossible. Yeah, that to me is
(07:19):
very interesting.
Mike Kemether (07:20):
Absolutely, absolutely. And there's one guy
whose name immediately comes tomind, Stephen de Francis with
Courtland partners. Yeah. AndCortland is one of the largest
multifamily owners. But Stephenhas done a great job of hiring
outside of industry, in manycases, for many different roles
(07:43):
within his organization, forthat very reason. And pretty
unique in that regard. I thinkothers have kind of followed
suit, but he was one of thefirst, during, you know, the
last 20 years to really take alook at different roles within
the organization, and maybegoing to experts outside of real
(08:03):
estate, and bringing them in andkind of benefiting from that new
lens.
Mordecai Rosenberg (08:10):
So I wonder if, if that's translated to now,
you know, we were talking beforewe started recording about a BTR
if built around single familyhomes that developers are
getting into, that's been a newarea over the last couple of
years, relatively new area forthe last couple of years. But
(08:30):
that's, you know, looking to me,that maybe is one example of
looking at an adjacent industry.
And then saying, wait a second,there's actually more
commonality than we thoughtbetween these two, when you're
when you're talking to clients,or if you're if you know, or
anything that you're seeing inthe industry. That's, that's an
application of some innovationfrom from another area and maybe
(08:51):
the Portland partners, they mayhave some interesting things
that they've they've done ormaybe you've seen other stuff.
Mike Kemether (08:59):
Yeah, so BTR SFR has really become a pretty
meaningful part of our businessnow. And we look at it, as you
know, just a of, you know, kindof a horizontal apartment
community. You know, it's justflattened out and spread out.
(09:20):
But obviously, there's way morenuanced than that. How they're
managed, how they're built, isvery different. You can use
single family home developersrather than multifamily
developers and GCS generalcontractors. The whole process
is quite different. So we havea, a group within our team that
(09:43):
focuses on BTR SFR Cushman andWakefield has a division within
their property management thatfocuses on BTR SFR so it is very
nuanced and a little bitdifferent than weather. You're
selling or managing multifamily,it's a little bit different. And
(10:05):
so those who probably have, youknow, the creativity or the
ability to reach outside theindustry, and get insight
probably benefit was stuff like
Mordecai Rosenberg (10:15):
that. I also wonder about, if there are
technologies that we could beusing in our industry, you know,
if it's debt or brokerage, orservicing the company, they're
showing me like they have theirsupport desk function, right.
And they track all of the calls,right, that come in. So they can
they can tell you somehow itit's analog, the technology is
(10:39):
analyzing those calls, andpicking up on what was the issue
here? Like, what was their tone?
Right? And are there trends thatthey should be picking up? Right
that they can then transmit tothe, to the support team or to
the sales team to get out aheadof it? And so like, even things
like the amount of conversationsthat were that we have, with
other people and your team? Imean, think about how many
(11:02):
conversations, a VAT team acrossthe country? How many
conversations
Mike Kemether (11:08):
five, we have 105 teammates in the southeast 105
Mordecai Rosenberg (11:13):
teammates, it's remarkable. Think about all
of the conversations that arehappening every day. Right? And
I mean, that person, whoever ishaving that that conversation is
picking up that that knowledge,but there's nuance, and there's
data that that's being created,that's just kind of goes into
the ether, you know, that otherindustries have figured out what
to do, how to do fine with that.
Mike Kemether (11:34):
Do you think commercial risk, because this is
the knock is that maybecommercial real estate has been
slow to adopt various differenttypes of technology and maybe
has been a little bit behindwhen it comes to technological
advancement? Do you think that'strue?
Mordecai Rosenberg (11:53):
What I would say is yes, and no, it's no
doubt the case that commercialreal estate companies have
deployed probably lesssophisticated technology than
compared to a retail bankingcompany or retail sales company
or, you know, right now, thatbeing said, you have to ask what
the technology is trying whatproblem that they're trying to
(12:14):
solve? And I think one of theinteresting things about our
industry is that you would thinkthat it would be an inefficient
market, right? You would thinkthat because you don't have like
a stock market, or NASDAQ, orright, where things are
constantly traded, and you knowexactly what they're worth, that
it would be like an inefficientmarket. You would agree on
(12:36):
imagine that it actually seemsto be a very efficient market.
Because you know, there's verysmart people that are involved
and are pick up on a nuanced. Soit's, I think one of the issues
is that we're not really clearon the problem that we're trying
to solve.
Mike Kemether (12:52):
A that's a great point. And I would say it's
incredibly efficient. And a lotof that efficiency comes from
competition, frankly. So I wouldargue that if you like, you
mentioned that, you know, thenice thing about publicly traded
things is they have a price,they're very liquid, and they
have a price at any time, right?
You know exactly what it'strading for. But in commercial
(13:15):
real estate, that's, especiallyin the private sector, that's
not always the case. But if yougo to a market like Atlanta,
where there are a lot of goodoptions when it comes to
advisory services, valuation,investment sales, it's a pretty
scientific process for valuationof an asset. And I think part of
(13:39):
the reason it's so sharp isbecause of that competition,
frankly. So if you go to an MSAor a market, that maybe the
competition isn't as good. Iquestion whether or not the
valuations are as good. And I'llgive you an example. In the 90s
and early 2000s, there was apretty dominant brokerage shop
(14:04):
in North Carolina. And my bossat the time used to argue that
cap rates were higher in theCarolinas because of lack of
competition. Think about thatfor a second, so that you could
buy an asset in Charlotte or inRaleigh, maybe above market,
simply because there was not thebroker competition. There should
(14:28):
have been that is fascinating tome. So maybe to your point in
markets like Miami, New York,Atlanta, there's so much
competition, that it reallyrefines valuation.
Mordecai Rosenberg (14:44):
Look, I think there's something to be
said for that. I also think itis very different 15 years ago
than it is today coming out ofthe financial crisis after
Lehman Brothers that was when Ifeel like institutional
investors There's discoveredmultifamily, right as mean, it
used to be that either pensionfunds would have some small
(15:06):
amount that would be allocatedto real estate and multifamily
was like very, it was all mount,you know, mostly Mom and Pop
owners. And then some, likelarge institutions like
Archstone Smith, or, you know,these REITs like to have it has
a real allocation, I think itwas when the rest of the market,
you know, fell apart, and peoplelooked at multifamily. It's
like, wait a second, everyoneneeds a place to live. There's
(15:26):
some good fundamentals hereprobably have become more
efficient over the last 15years.
Mike Kemether (15:31):
No doubt. No doubt.
Mordecai Rosenberg (15:34):
We talked a couple weeks ago about your team
based approach. When peoplethink about a salesperson, I
think what might come to mindfor people is this idea of the
rugged individualist, a lonewolf out there just on their
own. You've proven that there'san alternative model that can
(15:56):
work very, very well. So Can Canyou talk a little bit about your
philosophy around your team? Andlike how you've done that your
approach to team building?
Mike Kemether (16:06):
Yeah, absolutely.
First of it, say, collectiveeffort with I have. There's
about 50 of us salespeople, andthere's 105 of us on the team
plus or minus, okay, it kind ofcame from the spirit of listings
beget listings and a largerteam, especially in times when
(16:31):
there are there isn't completeclarity. larger teams can be
really advantageous. Becausewe're all on text threads, we're
all on emails, we see Oh, whohas a 1031 exchange, who has the
hot money, migrating money fromone state to another, brokers
(16:52):
can tend to be a little bitcovetous. So by coming up with a
shared model, where everybody'sleaning in, everybody's working
hard, and we're all connected,especially in times like today
where there's not completeclarity, it really is
beneficial. And the biggestbeneficiary, Mordecai is the
(17:14):
client, right? Because we'removing buyers. Oh, Savannah, we
just sold a deal in Savannah.
Well, guess what, Savannah has alot like Mobile port city
similar in size. So there aresome similarities. So that buyer
is Mobile buyer, they just don'tknow it yet. So that gives us
(17:36):
the opportunity to tell themabout the benefits of being in
Moil, as well as Savannah orCharleston, for example, or
Jacksonville, it's workedextremely well. It takes a
unique personality to kind offit in the model. It's not for
everybody. But if you canimagine, think about a two
person shop right now in themiddle of nowhere, trying to
(18:00):
understand multifamily capitalmarkets, they have no idea
what's going on, they're seeinga couple of data points. We're
seeing dozens and dozens of datapoints each week. So it really
makes the world a lot clearer,at least for me. And it also
comes from just enjoying workingwith others rather than being
(18:23):
kind of a me guy that's morefocused on self and maybe a
little bit more covetous.
Mordecai Rosenberg (18:31):
In some ways, when you're looking to
hire a broker to lift yourasset, you're the greatest
strength can be the greatestweaknesses. Also, if I have a
property in Charlotte, and Iwant to list it, I'm going to
find the guy who's in Charlotte,right? The Charlotte guy, right?
Who knows that market backwardsand forwards knows exactly who's
buying and selling. And what'shappening is that the market,
that's great, so that's my guyfor selling in Charlotte. But
(18:54):
now if I want to take my money,and go buy something in mobile,
or that route, now, where am Igoing? The salesperson was so
valuable to me because he knewCharlotte, but he also knows
nothing about that route. Youcan't be a national generalist
where you know, every singlemarket in the country, right? So
(19:16):
you've kind of you kind of solvefor that.
Mike Kemether (19:18):
How about the Charlotte guy and the Baton
Rouge guy or or woman are bothincentivized to help you? So you
get it. Do you have anymultifamily apartments that
you're interested in selling? Wecan help you in the southeast.
Mordecai Rosenberg (19:34):
Thank you.
Yeah, there's nowhere else Iwould go.
Mike Kemether (19:38):
Good, good. Good.
Yeah, we got that. Right. Great.
Mordecai Rosenberg (19:41):
Now listeners who are in sales, who
are originators or brokers, theywould say they might say, Well,
yeah, that's well and good. Butwhat about commissions? That's,
I think a lot of times wherethese things fall apart, but you
guys have figured out a modelwhere you know, everyone have a
share in the success of thatteam. Yeah, we've
Mike Kemether (20:03):
created a model where there's it is a shared
model, folks are focused ontheir regions. But it is a
shared model to allow the freesharing of information of
clients. So it's, it worksreally, really well. Again, it's
not for everybody, if you'rekind of an eat what you kill
(20:27):
kind of person, you would notlove this model, the biggest
beneficiaries, candidly, areyoung brokers really benefit and
ramp up much more swiftly thanif they were working in a small
shop. And maybe it was a littlebit more focused on you know,
(20:49):
the deal you have around thecorner that you absolutely,
positively have to sell thisyear, otherwise, your, your
spouse is not going to betalking to you. So it allows
young brokers to have productinteract with sellers, and
(21:11):
really build up a book ofbusiness in a healthy way, I
would argue they're the biggestbeneficiaries. And and again,
it's not for everybody, becausethere are some very, very good,
very successful brokers who do agreat job and a great fiduciary
for their owners, their sellers,but they are more solo artists,
(21:37):
they do a great job. But thismodel really appeals to me. It
appeals to 49 other partners,candidly, from a brokerage and a
n a staff standpoint, from astaff perspective, very little
to no turnover brokeragestandpoint, I think, my guess
(21:58):
is, if you looked kind of acrossthe country, at broker turnover,
we would we would be on the lowside, it's certainly not zero,
but it would be low.
Mordecai Rosenberg (22:09):
How does it work, let's say you're a younger
broker, I don't know, let's sayyou're just out of school,
you're coming in as just animagine you're not going to be
made a partner like from dayone, get to earn your keep first
or you know, produce a certainamount before you're, you know,
for your wedding.
Mike Kemether (22:26):
Many of the brokers who have ended up on our
team have started as staffmembers, maybe they're doing
production, putting pitchestogether. So probably the
majority kind of work throughthe ranks here and became
brokers that way, there are someexceptions to that. And brokers
(22:48):
we've hired from other shops,but probably the majority
started on a brokerage team as aas as a salaried employee and
work their way through that.
That's probably where most ofthem have come from. That's a
guess, on my part. But the waywe've structured it is that we
all are kind of yoked togetherand we all benefit every time a
(23:14):
deal closes, we don't benefitthe same way. When you close we
close 360 deals last year, in2022. So it does eliminate some
of the risk of being a twoperson shop in Bloomington.
Right. So it is really a goodsetup for a young gun who wants
(23:37):
to build up a book of business?
And so the question I usuallyget is, well, what if somebody's
not leaning in, we have methodsof kind of reviewing who's on
first and who's doing what froma procurement and execution
(23:58):
standpoint. And we just have aculture that is really driven,
and you know that there aren'tmany people taking plays off. So
the concern is someone getscomfortable in a shared model.
And we do not let people get toocomfortable, frankly, and
(24:21):
actually haven't really had aproblem with that.
Mordecai Rosenberg (24:25):
I think in some ways, when you're sharing,
it puts more of a magnifyingglass on that.
Mike Kemether (24:32):
You know, it's funny you say that because we
had one person leave. This was acouple of years ago, great guy,
and he left and it was pressurehe was putting on himself to
perform in this type of a modelbecause you have a team and
teammates are reliant upon you.
And he was doing a great job bythe way, but he felt pressure
(24:54):
that he didn't want and he wouldprefer or to be more of a, you
know not to use that analogy.
But as solo artists, he was justhappier kind of doing a more of
an eat what you kill model. AndGod bless him, he's he and I are
still great friends. He did notwork in the Atlanta region. But
(25:16):
he's a great guy, and he's asuccessful broker. And so when I
mentioned that the model doesn'twork for everybody, that's true.
Mordecai Rosenberg (25:26):
It also works better at scale, because
now you're really getting thepower of various markets. How do
you start? Let's say, if youhave, you know, if you're a
broker today that maybe you're,you know, a lone wolf
salesperson, and you see thebenefit in this, right, but
everyone in your firm is likelone wolf, how do you start? Is
there one conversation withanother person say, hey, why
(25:48):
don't we team up? Or is it likea whole group that gets
together? Like, how do you startthem?
Mike Kemether (25:52):
Mordecai, I'll just say two things. One is,
again, the biggest beneficiaryis the client, because they get
the benefit of 49. Others, aboveand beyond my Kenneth are
working on their assignment.
That's pretty powerful. Andclients feel that the truth of
the matter is, our model isreally, really hard to
(26:14):
replicate, frankly. And it hasto do with a lot of things. One
of them being ego driven, it'sjust a very hard thing to
replicate for some of thereasons you're mentioning. And
it's really hard to get started.
So we did a merger of two teamsback in 2016. And it was almost
(26:42):
the only way that we could alllock arms. So we got a taste of
it when we did that merger. Andwe've just expanded on that
model quite a bit. At that time,it was probably a team of 16.
And now we're a team of 50. Butthat's that's how we got
(27:02):
indoctrinated.
Mordecai Rosenberg (27:04):
I think it's a good protective mode. Because
if you are at whatever nationalbrokerage firm, yeah, and they
operate with your kind ofindividual office lonewolf
model, like good luck. Trying tocreate it like it almost has to
be either. Yeah, it has to befrom scratch with a lot of
(27:24):
people that are starting withthat mindset. So I think if
you're you mentioned your theturnover rate of your staff, I
think that's probably part ofthe reason is that if they want
to if they want to replicatethat team based approach, there
probably aren't a lot of otherplaces you can go.
Mike Kemether (27:38):
No, and it is unusual in this regard. How can
I say this tactfully? If mychemother got hit tomorrow by a
beer truck, we don't miss abeat, frankly, we have a team
that kind of absorbs the workand absorbs the client, which
makes it a great model for thebrokerage shop, frankly, whereas
(28:01):
if the lone wolf gets hit by atruck, that business dissipates.
Mordecai Rosenberg (28:06):
I mean, I love that focus on the customer.
I mean, in theory, like we're ina sales business, and we're in
we're both in like servicebusinesses, it should be obvious
that the focus should be aroundhow do we provide the best
experience for the client?
However, that's not always firstin mind for
Mike Kemether (28:25):
Well, well, everybody says that, everybody
says it. They everybody,everybody says it. But to do it
is tougher. And I believe in myheart of hearts that clients
feel the difference. And they'vecommunicated that, by the way,
it's this model is not withoutits complexities and issues,
(28:46):
there's been a growth in it,just the number of things you
have to deal with. And there'sjust a host of things that come
up, we have a very strongadministrative team, that helps
a lot. We're led by Morgan Berg,from an administrative
perspective, because we alldon't always see eye to eye. So
(29:08):
that's been incredibly helpful.
So having a really strongadministrative team has been
helpful. But I don't want topaint this kind of picture
where, you know, there thereare, you know, daily things we
deal with, that are complex,and, you know, things are not
always perfect, but by andlarge, this model has worked
(29:32):
really well for us.
Mordecai Rosenberg (29:36):
Well, there's always complications,
Mike Kemether (29:38):
no doubt, no doubt.
Mordecai Rosenberg (29:41):
I'm curious how you're advising your clients
today, and we're sitting here inFebruary 2023. No one really
knows where the market is.
Today. Still, I mean, I thinkyeah, there's questions about
where the where rates are going.
And I'm curious, like, let'ssay, let's start with like a
(30:03):
brand new client, let's saysomeone who you've never
actually transacted with, right?
So this is a prospect, someonewho you're you've been
introduced to, what are yousaying in that meeting that
first meeting to them?
Mike Kemether (30:17):
So Mordecai, one of the benefits of being a large
team, is you're bumping into alot of clients, and maybe you
have a little bit more on yourshelves, right. So, so we showed
up at the big nationalMultifamily Housing Conference
with 120 deals that were eitherlaunched about to launch or we
(30:40):
were working off market, that'sa lot of data points, it's a lot
of product, bigger team. So it'sa little bit misleading, right?
You know, it's hard for a twoperson shop to have that kind of
inventory, we do have a prettygood sense for what's going on
in the market at any given time.
Even right now, we do feel like2023 Each month that we get into
(31:02):
this year, there will be moreclarity in terms of debt,
markets, capital markets, andthere'll be more deal volume. So
I mentioned that because in someof the larger MSA is like
Atlanta, Atlanta, we had a callfor offers yesterday on a deal,
and we just set the record fornumber of tours on that
(31:26):
particular deal. And as offerscontinue to come in, the number
of offers will maybe set arecord, I think the number of
tours already did. That doesn'tmean that pricing on that deal
is back to March 2022 levels,what it would have been worth in
(31:47):
the first quarter of last year.
But it does mean like we'regonna have a fist fight for that
deal in the best and final,almost by definition, given how
many offers and interestedparties there are.
Mordecai Rosenberg (32:02):
Let's say that this group that you're
sitting down with here for thefor the first time, right, they
have a portfolio, they're notsure what they want to do with
it, they're thinking aboutselling, but they've been
working with, who knows CBRE orMarcus and Millichap or new mark
like for they have an existing,strong existing relationship?
What's your pitch to say, here'swhy you should give, you know my
(32:25):
team, and that means Krishnan,but it also means just you know,
my chemists are like their, youknow, and team. What's What's
your pitch for? How do you getthem to open up in this kind of
a market where maybe people aremore reluctant to try something
new? Or maybe the idea of like,Look, we're not trying to
actually land a deal today. Butwe're gonna just try to build
(32:47):
trust today in the hopes ofinvesting in future possibility?
Mike Kemether (32:51):
Well, it depends on the portfolio or the specific
deal because there are some,some deals that are ready for
primetime right now. And mybenefit from the dearth of
product on the market right now,my guess is in the third and
fourth quarter of this year,maybe there's a little bit more
(33:11):
clarity. But you're probably ifyou're launching a deal, it's
probably competing against a lotmore product. The reason we just
sent that rep set that record inAtlanta, is because of scarcity
of products. So there'll be ascarcity premium on that deal.
Now, what will, what will thingslook like in the third and
(33:33):
fourth quarter of this year? I'mnot sure. But I do know if
there's more product, we'reprobably not doing the same
number of tours on thatparticular on that same deal. So
I think the story, each deal,there's there's a story and it's
deal dependent, as to the besttime to go. But what I would
(33:55):
make sure that that owner leftthe room understanding is
instead of having a bunch offiefdoms, where maybe other
brokerage shops talk aboutworking together, but maybe
aren't great at it. Always. Inthis instance, we would be we'd
(34:16):
have if they hired Mike Kenneth,or if they hired one of my
partners doesn't matter whoyou're really hiring an army of
50 people who are focused ongetting that deal done because
we're all incentivized to get itdone.
Mordecai Rosenberg (34:31):
To get 50 People for the price of Yeah,
one thing you're paying
Mike Kemether (34:35):
the same fee, you're paying the same fee.
Right. Some of my partners havedone a great job on the top end,
providing some pretty deepadvisory services, not to get
too into it, but into the weeds,but really providing advisory
services again, there's one fee,but maybe they're good Adding
(35:00):
maybe the clients getting someadvisory services over a period
of time, that could be very,very helpful.
Mordecai Rosenberg (35:06):
What kind of advisory? Oh, there's,
Mike Kemether (35:08):
there's, there's 100 things that it could be but
but, you know, it's interestingbecause owners don't have the
same lens that we do as brokers,maybe that owner is seeing a
half a dozen deals across acouple of southeastern states,
(35:28):
we closed 360, I don't even wantto think how many deals we've
been exposed to. So helpingclients with a host of things,
whether it's in lease up, orwhether it's rent structure, or
whether it's, what do you do inthe two months for operations
(35:49):
prior to launch? Are there somethings we could do as the owner
that would help maximize ourvalue? The answer to that
question is yes. And some ownersdon't even know to ask the
question. But I would argue I'msurrounded by partners, who are
very good at the advisory partof the business, who can really,
(36:10):
really help clients and ownersmaximize value by possibly
setting setting the stage priorto hitting the market. Yeah,
that is that makes sense.
Mordecai Rosenberg (36:24):
Right, helping them, helping them
prepare to do the right thing toposition themselves for maximum
proceeds when they do
Mike Kemether (36:32):
that try and it's not all intuitive ease, either.
Even for someone who's doneproperty management for a while,
setting something up fordisposition. It's not always
completely intuitive, what thebest move is, and that's where
we can help.
Mordecai Rosenberg (36:51):
Yeah, I think that's, that's very
valuable in terms ofconversations with clients. You
know, might you might my fatherhas like, one kind of question
that he likes to ask, which is,you know, how dumb Do you feel
if you're wrong? It's like,well, you know, interest rates
are so high, they're at five anda half percent cap rates like
this, maybe, maybe the marketwill come back. It's like, okay,
maybe, but how dumb Do you feelif you're wrong? Yep. People are
(37:14):
treating this, like a, like areal downturn, you know, because
interest rates have crept up.
And yes, the Fed has raisedrates faster than they ever have
before. That being said, I don'tconsider that. I mean, this
isn't, isn't slower. It's not adownturn like we've seen in the
past downturns in the past.
(37:35):
You've seen art quick, sudden,right? No one saw them coming.
The issue is unrelated to themultifamily market. It could be
the Russian ruble crisis. Itcould be the subprime loan
crisis. You know, it could be911. Right. But something
happens in the or your long termcapital management, right?
(37:57):
Something happens that hooks themarket, and then liquidity is
nowhere to be found. Yes, therearen't as many loan lenders that
are chasing deals today, you canstill find capital, you know,
there's still capital out there.
Right. So what happens if youknow something happens, and I
don't know there's war breaksout with China, and now spreads
blow out by 500 basis points,and there's no buyer for the
(38:19):
paper. Right now you've gotright now you feel really dumb
it You didn't take your loan atfive and a half percent and sell
it at your 5% cap rate. Whenthere's no liquidity in the
market,
Mike Kemether (38:32):
no doubt, no doubt. And just to put things in
perspective, last year, 2022 wasour second best year ever from
an investment sales standpointin the southeast in our on our
11 State team, we see this yearas kind of being a mirror image
of last year. So last year, themajority of the business got
(38:56):
done in the first half of theyear. And then it dropped off,
especially in November,December. But the first half was
the best six months we had everhad. We see this year as being a
mirror image of last year,suggesting that the first six
months we'll replicate the lastsix months of last year. And
(39:19):
then this year being prettyweighted towards the second half
of the year. We haven't seenanything to discourage that
prediction yet. And just to putthings in perspective, in 2008
and 2009, when we were sellingdeals, there was no debt
available. We the deals that wewere getting done and getting
(39:42):
across the finish line, werebeing sold to all cash buyers
for the most part in eight andnine. So if you look at all of
the debt options availabletoday, and you look at the
equity that's available, andwaiting There is plenty of
business to be done for folkswho are willing to lean in and
(40:06):
and focus on the business. Yeah.
And by the way, if you've got ahuge pie, right, and the pie
gets a little smaller, butyou're grinding, there's plenty
of pie. And and frankly, there'splenty of business to be done
right now. And we're starting tosee it in launches, and in
closings, so it's it's alreadyhappening.
Mordecai Rosenberg (40:29):
I'm curious, you know, now Greystone Cushman,
right, there's a partnership,and you and you've also, you've
experienced working with debtpartners and capital markets,
desks, you know, within Cushman,and probably outside, when it's
working really well, like, whatwhat does that partnership look,
what is the debt partner doingto support your efforts? And
(40:51):
when it doesn't work? Well, whatwhat did that debt partner do or
not do? Yeah, that that, thathurt? Oh, that's
Mike Kemether (41:00):
a great question.
At the end of the day, it reallycomes down to the personalities
that you're working with. Andwhat I mean by that is, our
businesses are very, verysimilar. And what I mean by that
is, you can kind of do pushbutton brokerage, and you go to
the usual suspects, and you, youend up with a product, that's
(41:23):
okay. Or you can put your heartand soul into, you know, we we
get compensated by our clientsto do creative solutions to help
drive and maximize asset valuefor them. Right. So if you're
going to take the easiest path,you're probably not going to be
(41:47):
creating creative solutions forthat particular client. And it's
no different with your partnerwho's doing the debt, or your
partner who's raising theequity. If it's somebody who's
going to go the extra mile, andreally think creatively on how
best to solve this thing. That'sgoing to be a great debt
(42:11):
solution. If it's someone who'sgoing to kind of stay in the
fairway and not migrate outside,it's probably not going to be a
great solution. So it's morepersonally, I've learned it's
more personality driven. Andwhen you find the right
personality, you kind of lock onto them and you ride into battle
with them. And you could go tosome of your competing shops and
(42:34):
find amazing depth brokerswithin Greystone find amazing
depth brokers. So when you findthe right one, you just kind of
lock arms.
Mordecai Rosenberg (42:47):
Right, I think that also speaks to the
challenge that some firms havewhen they're trying to combine
to have, you know, a signedcoverage, you know, where it's
like, Well, okay, we're just youhave to allow for a certain
amount of organic development ofrelationships, people who will
resonate with each other, andthe energy will feed off of each
other, rather than you saying,like, alright, Mike, you're
(43:09):
gonna work with Mordecai, youknow, I mean, I think you and I
could work very well together.
But you But I agree. Yeah, butbut arranged marriages are like
arranged marriages, you know,some of them are okay. But you
have so many different people atan organization like one,
ultimately, when you when youfeel that block, you're going to
really create magic together.
Mike Kemether (43:29):
Yeah, and there's another part to it as well, more
to chi and that is, everythingis infinitely ease here. Once
you've met in person or brokenbread together, you mentioned
the relationship earlier, but itreally gets kind of crystallized
(43:50):
when you get to spend time inperson together. And it's a
little more difficult if you'venever sat and had a drink
together or looked each other inthe eye. So it takes time I used
to have a partner, Chris Fain,who would say that relationships
are made one at a time and I heis so spot on. And so
(44:15):
relationships take a little bitof time, whether it's with a
partner, or whether it's with aclient, or whether it's with a
partner on our team who sits inCharlotte but helps with
research, whatever it might be,you know, relationships are made
one at a time. It takes a littlebit of time. But boy if you if
(44:35):
you pour into that the return isgreat.
Mordecai Rosenberg (44:40):
I love that Yeah, listen for me one at a
time. You know I need to digestbut it feels so true, you know,
in like every area of life.
Well, Mike, I really appreciateyour time and coming on the
show. This has been a veryenjoyable conversation for me if
it was for you as well. Elon,and I'm really just, I've been
(45:00):
so blown away by your, your theteam based approach, and anyone
who has interacts with you justas like, really just, you know,
blown away by the quality of theservice and and your execution.
So it's been really a privilegeto be honest with you.
Mike Kemether (45:19):
Well, I have 49 partners, sales partners, who
are wired exactly the same way.
And, and I have 104 Totalteammates, who are wired the
same way. So I'm very fortunatein that I've bumped into people
in life who kind of see theworld very similarly. And
(45:39):
frankly, Mordecai, notnecessarily that we have the
same style, we could bestylistically different. But at
the end of the day, we really docare about the outcome. So I
appreciate I appreciate yousaying that.
Mordecai Rosenberg (45:56):
All right.
Well, Mike, thank you again.
And, you know, we'll talk we'lltalk soon.
Mike Kemether (46:02):
All right. Yeah.
Call me anytime. We don't haveto be recorded to talk. So call
me anytime.
Mordecai Rosenberg (46:07):
Absolutely, absolutely, Take care and thanks
Mike.
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