What Hines CEO Jeff Hines Wants To Do Differently Than His Father
When Jeff Hines was a child, his father, Gerald, the founder of what is now one of the biggest commercial real estate firms in the world, would wake him up early and take him around construction sites before school.
“I know my Dad has stories from walking around construction sites, probably in very dangerous situations for an 8-year-old,” said Laura Hines-Pierce, Jeff Hines’ daughter and senior managing director in the office of the CEO at Hines. “My Dad made a purposeful decision to keep us at an arm’s length from the business.”
When Jeff Hines took over from Gerald as CEO of Hines Interests in 1990, he set out to expand the rapidly growing business that his father left. But as he and his daughter explained on the latest Walker Webcast, he worked to give his children more distance from the family business than his father had given him. So, while Laura and her brothers went along for their Dad’s business trips to China in the 1990s, they never had to wake up early for a walk-through of an active construction site.
Despite Hines’ $144B in assets under management, Laura and Jeff said that Hines in many ways feels like a family business. Though they had free reign to forge their own paths, Hines-Pierce said, she and her two brothers all now work at the firm. The legacy of Gerald, who died in August, still guides much of what the company does. However, much of the firm’s recent success and growth comes as a departure from the company that Gerald founded in 1957.
On the webcast, Jeff Hines described repeatedly pitching his father on the company’s first office development outside the U.S. Moving into a foreign market was a logistical challenge, and Gerald, who had already built an empire across more than a dozen American cities, was skeptical.
“It was a two-year process for Hasty Johnson, our current vice chairman, and me to get approval to buy our first building internationally,” Jeff Hines said on the webcast. “I think Dad just got tired of us and said, ‘Sure, go buy one.’ Luckily, things went pretty well.”
Through the 1990s, developing real estate in emerging markets across the globe became a core of Hines' business, with the company opening offices in cities like Moscow, Mexico City, Prague and Hong Kong. With a presence in more than 225 cities, it is hard to imagine Hines before it was a global force, Walker & Dunlop CEO Willy Walker said.
During Gerald Hines’ tenure, the company had been almost exclusively focused on office development. And while office buildings are still some of the development firm's marquee projects, the company has diversified into a far wider range of asset classes. On the webcast, Walker asked Hines which of the 156 projects that Hines is currently developing makes Jeff the most excited.
“The obvious answer is industrial,” Jeff Hines said. “With Covid boosting e-commerce, we’ve seen unprecedented demand for industrial space, so we’re excited to see those projects deliver. The harder answer is a more complex one. There are trends that have been hugely accelerated by Covid, like real estate as a service, the technology side and product types that are merging together, where the definition is fuzzy. Those are really ramping up right now.”
The company Jeff Hines now leads looks very different from the one his father left behind, but some of his influences still carry a great deal of power, including an emphasis on cutting-edge architecture. When his father came into business, Hines said, most office buildings were rectangular and visually uninspiring. Gerald Hines pioneered a strategy of working with leading architects like Philip Johnson and I.M. Pei to make buildings that were both beautiful and financially feasible, providing unique and functional spaces for commercial tenants.
Gerald Hines’ eye for building design today informs the company’s commitment to developing environmentally conscious and LEED-certified buildings.
“I think the focus on efficiency comes from my grandfather’s background as a mechanical engineer,” Hines-Pierce said. “If you can engineer a building to be more efficient, that creates a great deal of lifetime value, which is important to us as a long-term investor. Efficiency is in our DNA the same way as great design.”
Unlike many family businesses, Jeff Hines said, his family does not exert unilateral control over the firm. Hines is directed by a 16-member executive committee, and the CEO joked that if he disappeared tomorrow, the company wouldn’t skip a beat. But Hines-Pierce said that the company’s purpose of long-term stable growth is rooted in each generation of a family wanting to pass on a legacy to the next.
“Being diversified globally across asset classes and the risk spectrum means we can pull the right lever in the right geography at the right time,” she said. “But we’re not focused on quarterly growth. We’re thinking about generational growth, about being invested for the long term.”
On March 24, Walker will host Walker Webcast with Richard Shane of JPMorgan and Richard Hill of Morgan Stanley to discuss investing in REITs and real estate more widely. Register here for the webcast.
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This article was produced in collaboration between Walker & Dunlop and Studio B. Bisnow news staff was not involved in the production of this content.
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CORRECTION, March 18, 1:15 P.M. ET: A previous version of the story misstated the number of members on Hines' executive committee. It has 16 members, not 17.
A previous version of this story misstated Laura Hines-Pierce's title. She is a senior managing director in the office of the CEO, not a managing director. The story has been updated.