The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
If you’re planning to grow a hundred million dollar commercial real estate development firm you’ll need to begin with building a strong foundation first. Get experience in all scenarios, get to know the nuances of the market, and make plenty of mistakes that you can grow from as time goes on. When you’re ready to begin building your firm, stack your company with those who have the knowledge, talent, and passion for your projects that drive you to success.
What does it take to grow a hundred million dollar commercial real estate development firm? This is a funny question, Richard! It takes probably 20 years of experience grinding it out is what I would say. It just takes a lot of experience; I mean you have to have done it so many times, seen and gone through so many different deals and scenarios of things going wrong, or having to fix things, or rescue deals. It’s just, there’s no replacement for experience I would say is the most important thing. And then secondly, that would be experience at the top, the developers the principals of the firm have to have done this for a very long time. They have to understand construction, they have to have a background in construction, they have to have a background in finance, they have to have experience in finance, they have to have done things and been in the market for a long time, and really understand the nuances of the market, all those are critically important.
And then from there once you have that sort of foundation, I would say that the next step is just hiring a really really sharp team. Really bringing in specialists, really bringing in a chief development officer like we did who really understands this particular asset class and has very very deep experience in this one particular asset class, and then letting them manage that entire strategy and do their role. And then bringing in a CPA, MBA to be your VP of finance, like we did, in order to bolster our financial underwriting capabilities, our capital markets capabilities, and so really just bringing on very good people who share the same culture as you, who are very growth oriented, who are incentivized, who are bonused, and aligned, and investing in projects. That’s another key, I would say, if you don’t have everybody from the assistant and front desk receptionist to the property manager to all your high level VPs, and everybody on board and invested in your projects, like we do, you don’t have sort of everybody paddling in the same direction really taking that ownership mentality.