Now under the institutional ownership of C-III Capital, NAI Global combines greater reach with its members’ entrepreneurial spirit
By Paul Bubny
It began with a phone call. The caller identified himself as Jay B. Olshonsky, president of NAI Global, and set in motion a conversation that culminated months later in EVO Real Estate Group becoming NAI Global’s New York City member this past November.
Identifying EVO as a likely candidate for the global network didn’t start with that phone call, of course. Outreach via telephone was just one step in an exacting procedure that has helped NAI Global become the world’s largest network of owner-operated commercial brokerage firms, with 166 members, 375-plus offices and more than 6,700 professionals. “It is not just about being the largest,” Olshonsky tells Real Estate Forum. “Striving for perfection is an ongoing mission.”
Now under the institutional ownership of C-III Capital Partners, NAI Global combines expanding global reach with its members’ deeply-ingrained entrepreneurial spirit, which has been nurtured since NAI Global’s founding in 1978 as New America Network Inc. The basic model of a centrally managed network of independent owner-operators remains the same, but virtually everything else about NAI has been significantly improved upon in order to deliver greater value to members and their clients. Following NAI Global’s 2012 acquisition by C-III Capital Partners, the firm set forth on a course that moved the network from family ownership to a more substantial institutional platform. Olshonsky was appointed president and the firm’s headquarters were moved from Princeton, NJ to New York City.
“NAI Global has transformed itself into a leading player in the commercial real estate services industry since our initial investment in the company in 2012, which is a credit to Jay, his management team and our 166 member firms worldwide,” says Geoffrey H. Woodward, president of C-III Realty Services. “We have 380 million square feet of property under management, making us one of the largest property managers in the world, and conduct $18 billion of transactions annually.”
Woodward adds that Olshonsky’s leadership and breadth of experience, including running CBRE’s Washington, DC operations during his 15 years with that firm, “have been paramount to our success. He is singularly focused on enhancing NAI Global’s capabilities and brand, and delivering best-in-class services to institutional clients and owners nationally and across the globe. He has created a dynamic value proposition for our member firms and has placed the company on solid footing.”
Owners of member firms give kudos to both C-III Capital Partners and Olshonsky for helping them step up their own game.“The acquisition by C-III unlocked tremendous opportunity for who we can be and who we can do business with,” William C. Hanson, a founding NAI Global Member and president of NAI James E. Hanson in Hackensack, NJ, tells Forum. “We’re capable of playing at a different level than we were before.”
Adds Paul-Éric Poitras, managing partner of Montreal-based NAI Commercial, “We now have an owner that’s deeply involved in real estate and understands the entire real estate landscape.” Founded by investment veteran Andrew Farkas, C-III is a fully diversified commercial real estate services and investment management company with portfolio companies that include C-III Capital Partners, C-III Realty Services, C-III Commercial Mortgage, C-III Investment Management, C-III Asset Management, Real Capital Markets, US Residential Group, the Planning & Zoning Resource Co. and Zodiac Title Services.
For David A. Petersen, CEO of NAI Hiffman, NAI Global’s Chicago member since 1985, the C-III acquisition “brought a completely new set of industry relationships.” Petersen had in fact worked for Farkas, who ran Insignia Financial Group prior to its 2003 merger with what is now CBRE, and says that C-III has given NAI Global members access to “a powerful national and international network that we and our clients are both able to benefit from.”
Rachel Howitt, president and CFO of NAI Capital, the network’s Los Angeles- area member, tells Forum that the entire operation has become “far more streamlined and organized” under Olshonsky’s leadership. She adds that it has “out- sourced several functions to best-in-class service providers that it manages carefully, improving the overall efficiency and effectiveness of the support NAI Global provides to members. I’d say it has been taking all the right steps to improve upon the foundation of our network and elevate it into a leading, world-class organization.”
She adds that Olshonsky has proven himself “open and receptive to new ideas as far as marketing the company is concerned. He genuinely accepts ideas from others, rather than being the type of individual who says ’Yes, yes, yes,’ but really has no interest in listening to what you have to say.”
Of NAI Global’s current ownership and leadership, Miami member Jeremy S. Larkin says, “They know real estate. They understand how we can support them and also how we can support local communities.” Longtime president and now co-chairman of NAI Miami, and recently named secretary of the NAI Global members’ leadership board, Larkin says Olshonsky is “a street broker. That’s his heritage. So when he talks to us, he has credibility because he understands what we’re going through on a day-to-day basis and is better able to supports us.”
He adds that Olshonsky has begun pushing initiatives “to grow our local business as well as the network business under the theory that a rising tide raises all boats. And that mentality has helped by creating a level of consistency and fluidity through the system so that we’re able to present ourselves as a cohesive global network.”
While Larkin and other owner-operators point to the greater efficiencies that have been brought about by the changes in central management, they also cite the commonality between NAI Global in 2015 and the earlier years before the acquisition. “I think we are still a very entrepreneurial organization,” says Hanson. “It is really the backbone of who we are.” Given the industry consolidation that is proceeding apace, “We’ve become very different from our competition,” he adds.
Moreover, Hanson says, “The culture of NAI Global hasn’t changed. We have always been a very tight-knit group, having so much in common as entrepreneurs but also as local market leaders. New members fit right in because they share the same attributes and see our combined, exceptional commitment to clients. We like one another and we like doing business together. We like getting together. We like trying to figure out how we can collaborate to do more than any one, individual company can do.”
Howitt counts herself “very optimistic about where the business is going, where the industry’s going, where NAI Global is going. Whether you’re in a strong or a weak market, well-run, full-service, independent firms like we represent will thrive, because we’re quick with our decision-making.”
At the same time, Larkin sees both greater reach geographically and greater support for entrepreneurship in today’s NAI Global. “Eight of my top 10 clients are not based out of Miami,” he tells Forum. “Four of those eight are from outside the United States. The ability for me to connect with them is 24/7/365. I can get anywhere to connect with anybody to meet any need because of our network and techno- logical flattening. It allows firms like ours and organizations like NAI Global to be a lot more dynamic, a lot more agile, a lot more nimble so that we can turn the orga- nization and individual firms on a dime to respond to the newest issues that our clients have.”
Larkin says the entrepreneurial model encourages a “non-cookie-cutter” solution for each client. Within the NAI Global network, “we have the ability to adapt our systems to provide clients with solutions the way they want them to be delivered,” adds Larkin.
“It’s a collaborative process,” Larkin says. “We’re working in a consultative capacity to solve clients’ problems so that they can save money, they can make money, they can grow their business, which in turn helps us do the exact same thing. There’s no question: our success is entirely dependent on the success of each of our clients. This drives us every day to perform at our very best and to help clients do the same.”
For owner-operators prospecting for business, being part of the NAI Global network has advantages both inside and outside their brokerages’ home turf, says Larkin. “When I’m pitching, I have very deep resources not only locally but globally, in a way that my local competition can’t deliver,” he says. “In addition, I can generally deliver the information regarding a different local market to my prospect or client substantially faster because I know my partners.” A quick phone call will connect Larkin with Poitras in Montreal, for example, or Andreas Krone, head of NAI Apollo Group in Frankfurt, Germany. “And I’ll quickly get deep local intel that most of the national organizations would have to wait for from their researchers or their analysts if they have it at all,” Larkin says. “I’ll get it from the principals, because they’re intimately involved with the process. And I can deliver that to my client or prospect.”
Being a network of owner-operators, says Petersen, means “doing business together as friends and partners.” It means an owner’s perspective pervades and that helps us to always put the client first, he says, and it also means being able to take “a very open, direct and straight-shooting approach,” free from intra-organizational politics, when giving counsel to other members of the network. “You get honest and direct feedback from everyone you work with at NAI Global,” he says. “And that is invaluable.”
Hanson offers a real-life example of this principle in action. “We had an opportunity to pitch for the management of a large portfolio,” he says. “I called Dave Petersen and explained the opportunity to him. Even though he was in Boston, busy with his clients when I called, he said, ‘Give me a day and we’ll get right back to you.’”
In fact, Petersen over-delivered on speed of execution. “In just two hours, I received an e-mail from Dave that included a whole lot of helpful, insightful information,” Hanson says. “We ended up winning the assignment.”
Observes Petersen, “Whether you’re in Saint Louis or Chicago or Detroit or Houston or Dallas, you’re seeing the NAI sign, so you recognize it as a player. But you can also communicate to that customer that while they’re getting the benefit of an independently owned company, there is also this connec- tivity to the national and quite frankly international platform too.”
Half a world away from Chicago, the strength of the global plat- form behind him has stood Richard Laery, CEO of NAI Harcourts in Australasia, in good stead. “It’s the network and it’s the tools,” Laery tells Forum. “When I first came aboard, the NAI Global brand wasn’t well known in New Zealand and Australasia, and we still had to push back on that.” However, once Laery laid out the NAI Global concept—he runs NAI Harcourts but is connected to an international network of 6,700+ consultants—he found a receptive audience. “They’re very impressed with our global network. We win business because we’re able to compete with the top players in the game.”
NAI Harcourts, now 100% owned by Harcourts International Ltd., was established in mid-2009 by NAI Global and Harcourts, and was launched to the market in 2010. At the outset, Laery says, “The business was next to nothing; very, very small. I was appointed to run New Zealand, and then Australasia. Today, we’re just shy of $1 bil- lion in transactions. So from virtually nothing to that since 2010 is pretty neat.”
What Olshonsky calls the “fierce independence” of network members, coupled with their connectivity to one another, stands as a strong selling point when negotiating with current and potential clients. “The world has become very small from the way people do business through technology, telecommunication and transportation,” says Olshonsky. “So certainly being associated as a member of NAI Global allows a very small and local business with exceptional local market expertise to be part of a global brand. But I will caveat that 90% or 95% of commercial real estate at all levels—and I include my past experience with large companies—is still local.” He says quite a few of the network’s members count the majority of their business as local, with the rest taking place across multiple markets, “whether that be state to state or country to country.”
Keeping eyes open for such multi-market opportunities is some- thing Olshonsky and his team encourage. “Let’s say you call on a retailer and the retailer has multiple stores—it might be great if you do one deal for the local office, but we always encourage our members to ask the follow-up question: ‘Where else can we help you? If you were happy with our services here, we can help you next door or across the country, or across the globe,’” he explains. “That’s a critical benefit our members enjoy: they can pick their head up from their local market and say ‘I’m part of a global company; I’m part of a regional company; I’m part of a state-to-state company,’ and that is how we see our members helping each other.”
As part of a series of initiatives to encourage inter-office collaboration, NAI Global offers economic incentives to members, says Olshonsky. Such collaboration is “really the lifeblood of a member- ship organization. We say to our members, ‘If you’re just going to be part of us to operate as a local company, that’s fine, but you’re missing a whole component of the company that could be income-producing for you and the rest of the business.’”
A more formalized vehicle for collaborating is the members’ leadership board, which NAI Global says is intended to provide proactive leadership “to increase the profitability, professional- ism, technical capability, integrity and stan- dards of practice that reinforce and breed mutual trust and respect throughout the enterprise. It fosters and promotes activities, education and communication that elevate the level of engagement and productivity of members, agents and the net- work at-large.” Poitras, the current chair- man of that board, says its two main goals are “to share best practices within the member firms and drive business within them. The emphasis is really on those two things as well as validating the brand.”
Petersen sees the sharing of best practices as “one of the great exchanges we have within the NAI Global platform.” He notes that as a firm grows—in the case of NAI Hiffman, from 10 brokers to 55—“you have a whole different set of management requirements.” That runs to managing brokers as well as data, market research, the documentation behind listings for sale or lease and “all the legal dynamics” behind the transactions.
Participation in groups such as the leadership board is strictly voluntary, and Larkin offers some insights into the thinking behind such participation. “If you want the organization to be more successful, you have every opportunity to speak up and con- tribute. If there’s something that you want the membership to consider that we would all benefit from, or you believe something isn’t working right, we welcome member input with open arms. We want our members to bring to the surface new ideas and opportu- nities as well as point out issues and propose solutions. We are dedicated to excellence and want to tap our membership’s vast experience to continuously improve.”
Larkin began with involvement at the state level—he organized what were 12 chapters throughout Florida into one statewide organization. As secretary of the leadership board as well as serving in other capacities, he has moved onto the national and, eventually, global stage as C-III came into the picture and brought about “a significant change in attitude,” as he put it.
“One of the big initiatives I wanted to help the global network with was bringing more deliverables to the members,” he says. That included a new branding campaign for use worldwide that allowed for regional tweaks. Drawing on his experience with putting together marketing materials for NAI Florida Region agents to use, Larkin was “intimately involved in the design and orienta- tion” of the marketing materials alongside the professionals from an outside vendor.
Los Angeles-based investment firm BH Properties, which specializes in turnaround programs, can attest to both the breadth and hyper-local expertise of the NAI Global network. “Our east- ward expansion led us into new states, and a lot of secondary and, in some cases, tertiary markets,” Steve Jaffe, chief investment officer and principal at BH, tells Forum. “That led to us meeting a lot of NAI Global brokers over the years, and a lot of those shops really were the right guys on the ground in some of those secondary and tertiary markets. They had deep history and knowledge of their community. Historically, NAI Global has done a really good job of identifying quality local and regional shops to bring under the NAI banner.”
He adds, “If I call the owner of NAI Partners in Texas, I’m not dealing with some giant corporate behemoth. I’m dealing with somebody who is a business owner. He or she may have 100 bro- kers under management, but it’s the responsiveness and the connection between the owner of the shop or the brokers that we deal with, and that makes the NAI Global model click. There’s way more accountability in the relationship, and that, to me, is very important. In the end, I’m not buying a brand; I’m buying the brokers.”
At the annual Global Market Outlook event, scheduled for June 17 in Chicago, NAI Global members will hear from Olshonsky, guest speaker Sam Zell and Dr. Peter Linneman, the network’s chief economist. Principal of consulting firm Linneman Associates and emeritus professor of real estate, finance and business public policy at the University of Pennsylvania’s Wharton School of Business, Linneman has served in his present capacity for nine years, although his association with NAI goes back two decades.
Over the years, Linneman met a number of the NAI affiliates,“and they were kind enough to invite me to a couple of education sessions for their fellow affiliates and to speak at some of the programs,” recalls Linneman. That evolved into a relationship that now has Linneman providing economic insights to the members via a number of avenues, including special events, regular reports and proprietary thought leadership white papers. “As Jay retooled the model, and as the new investor came in, the relationship has gone forward very nicely,” he says.
Linneman says that for the members of the NAI Global net- work, he aims to present his views on the economy and capital markets with as much clarity as possible, not to assert that his is the “right” way to look at an issue, but to spur their thinking. “The issues that I discuss affect each of them a little differently,” he says. To cite one example, “What does the drop in oil prices mean? It means something very different if you’re Denver, Houston or Dallas than it does if you’re the rest of the country and you’re the beneficiary.” Presenting these viewpoints, Linneman believes, also helps network members in discussions with their clients, “because these are also the things that are on their clients’ minds, and they can have a more intelligent, more focused, more informed view when their clients ask them about these subjects.”
As Linneman sees it, “the challenge of the industry” at present is: “How do you have the entrepreneurial spirit that’s necessary for the business and, at the same time, the scale and scope that’s necessary for the business? The whole industry has been grappling with this issue for the past 20 years or so. What I think NAI Global has done very effectively is keep the local entrepreneurial dimension of it, while overlaying a national and international frame- work of transaction and cooperation and the sharing of ideas and clients.”
Continuing to grow the scale of the NAI Global network is among the priorities for Olshonsky and his team as they look toward the future. He acknowledges that the network shed a few affiliates at the time of its change in ownership, for reasons ranging from retire- ment of the owner to a buyout by a competing firm but since then, it has begun growing again.
“We have identified over 100 open markets in North America where we could add a member, and an additional 100 markets globally,” he says. “Some of our future growth will depend on how we screen the new members that approach us. Certainly we don’t want to add members just to add members; we want to grow logically and selectively among firms that share our values, our passion, and our commitment to clients.”
Both domestically and internationally, NAI Global zeroes in on open markets according to the strategy that makes the most sense in terms of geography and coverage. Once a market has been identified, “We identify how many independent firms there are in that target market, research and then reach out to them through marketing efforts,” says Olshonsky. The company also identifies all of the commercial real estate players at all firms operating in that market. “How do we know—especially with all of the changes going on in commercial real estate today—that there isn’t some- body at one of the big three, big five firms sitting around, thinking, ‘I’m not sure about this merger and acquisition; I’m not sure about the direction my global big company is taking. Maybe I would like to be independent, and I can start my own thing and run my own company.’” NAI Global deploys a variety of outreach media to reach commercial real estate players in a given market, including email, direct canvassing with phone calls “and going to different cities and setting up meetings with people,” Olshonsky says. The organization is also heavily involved with the Society of Industrial and Office Realtors and leverages that relationship to reach prospective members. “I’m actually an SIOR and NAI Global has the second largest collection of SIORs in the industry. Our goal is to have the largest number of SIORs on a global basis.”
Although Olshonsky does his share of one-on-one outreach— at SIOR events and at industry conferences such as ICSC Recon in Las Vegas and MIPIM in Cannes, France—other team mem- bers further the recruitment initiative as well. Mauro Keller Sarmiento, executive managing director of international business, does outreach globally. Domestically, Simon Hartzell, NAI’s director of membership, heads up a team that’s tasked with researching prospective members and setting up calls.
“The other thing that we do, and it really speaks to the strength of NAI Global’s members, is to encourage our existing members to refer to us people that they know,” says Olshonsky. “That’s generally the best source for a new member.”
Once members come into the fold, “We enter into multiple-year membership contracts,” Olshonsky says. “They average three and a half years, but we have contracts for as long as 15 years out and some as short as one year. We’ve been renewing well over 95% of our exist- ing membership stock.”
By whatever means, “we could potentially double the number of members we have on a global basis,” Olshonsky says. “We’re trying to grow at a 20% to 25% clip per annum on membership.”
Poitras expresses confidence that this will happen. “There’s an objective at NAI to grow the platform, to get more member firms involved and I think it’s natural and it’s going to grow by default,” he says. “Given the industry consolidation, a lot of firms in different markets will find they want to remain autonomous and independent, but also sharing in all the tools that the big firms have. There’s going to be an interest to join NAI Global in order to be able to compete more aggressively in their local market.”
Along with growing the size of the NAI Global network, the company also wants to increase “the transactional volume that’s flowing within our organization,” says Olshonsky. “If you think about how our members intertwine with us, with each other and with our parent company, C-III, there is real deal flow between the members, in tens of millions of dollars of commissions that flow between them.”
“There’s also deal flow, mainly in the United States, but not exclusively, from our parent company,” Olshonsky says. “Our members work with our parent on receiverships, property management, leasing, sales and auctions.” He says this aspect of transactional volume will grow over the next few years.
Increasing the pool of clients from without is another means of increasing transaction volume. “We’re constantly working with owners and users, trying to find an owner or user that has a commercial real estate services need that we can then fill,” says Olshonsky. “All commercial real estate will have a property address, and there is always a local component, and when we have 375 offices globally, we should be able to match up a member somewhere along that chain. So we try to send business to our members on a regular basis and try to grow their businesses that way too.”
The third area for growth, Olshonsky says, is “potential merger and acquisition of similar or like-kind firms. Today we don’t own any of our firms”—the network has divested any interests it once held in a few membership firms—“but it might make logical sense to look at acquisition, in some cases, to grow. It might also make sense to look at a merger or acquisition or partnership to expand in product types and service lines.” In the area of corporate services, for example, NAI might choose to merge or associate with a standalone firm in that sector, or organically grow that line of business in-house.
Some of that in-house growth in the corporate services arena is already occurring, Poitras says. “It’s a competitive environment in that world,” he says. “There’s competition among the firms that want to get that business. Your fees are also under pressure from the brokers. But our network allows us to get our share of that type of business.”
Moving forward, Hanson says, NAI Global is “growing on its strengths. We had a very strong foundation built on a highly competitive entrepreneurial spirit and a culture of achieving excellence for our clients, and we continue to build off of this today. Given all the change and uncertainty in the CRE brokerage market, we are moving into a sweet spot in terms of culture, commitment and our strategic focus on growth. We have truly become a global force to be reckoned with.”
Laery sums up the network’s potential to excel on its own terms. “All the businesses are independently owned, so it’s a matter of everyone actually networking and connecting with each other to grow great businesses,” he says. “I’m a firm believer that it’s a mat- ter of where we take it. If we want to take it to the next level, we can
do that with this network.”