Q&A With Mark Rose: Avison Young CEO's Outlook For 2017
Avison Young CEO Mark Rose's firm is growing at rates “no one grows at,” now with 79 offices and $500M in revenue. But culture drives profits—not the reverse, he tells Bisnow as he assesses what's ahead in 2017.
Bisnow: Avison Young recently had its annual general meeting. What were some highlights?
Mark Rose: At our shareholder meetings, all voting and non-voting shareholders get to be part of the dialogue. We had extraordinary conversations about fee-sharing and investment criteria, and the entire group gets to have a say, from junior people to experienced principals. To be part of a democracy where there’s a dialogue about how the company should operate, and where we’re going—it highlights our differentiated, very disruptive company. Our entire peer group in the services industry are public companies; we are a private, principal-led company where everyone’s voice is heard. That was crystallized at the AGM.
We had a number of great speakers, too. Former Cushman & Wakefield CEO Arthur Mirante (who took the company from $100M to $1B), who is now our Tri-State president, spoke at our Young Guns session, and provided a tremendous amount of education. And Scotty Bowman was a keynote speaker. With all his Stanley Cup wins (nine), to hear his recollection of facts along the way, and the nuances to so many of the personalities he was associated with, it was extraordinary for us hockey fans. Scotty reinforced the fact that culture matters.
And one of our young guns, Sean Faught, is battling hard against cancer. So at the awards dinner, everyone got up on stage—it was overflowing—and we took a photo to send to him on social media, to let him know his Avison Young family is there for him. Everyone wanted to be up there to send him that message: we are behind you. That’s the company we’re building. (See the photo below.)
Mark: I was in London for the Brexit vote, and wrote a blog saying this is the greatest non-event since Y2K. Markets had plummeted. And I said by the end of the week it’ll be back up, and it was. Other than the currency shift, the UK is the fifth-largest economy in the world, people will not stop trading with it. It’s how this thing gets processed. As far as Trump goes, I cannot agree with many of his views and comments, but there’s a chance he could be a good president—no one knows. Let him get into the challenge, let him influence laws to be passed. As it relates to real estate, he’s a real estate person, so that’s not bad. He’s a CEO, so that’s not bad.
Interest rates are effectively at 0. To use a baseball analogy, people are wondering are we in the seventh inning, ninth inning. I think we could be in the seventh inning in a 20-inning extra ballgame. Even if rates go up to 2%, yields on real estate are still phenomenal against alternative vehicles. So our industry has solid underpinning regardless of Trump or Brexit.
Because the pound has fallen so far, it’s my prediction you’ll see a North American buyer make a large acquisition in London to take advantage of a city that’s basically on sale. Smart capital finds its way. All Brexit did was create opportunity. If you dislike the politics or financial world under a Trump presidency, it’s just going to be an opportunity. Something will rise and something will fall, and it just works itself out.
Above, legendary NHL coach Scotty Bowman keynoted the Avison Young AGM, stressing the importance of culture to organizational success.
Bisnow: What’s your sense for how 2017 looks for Canadian CRE? What are the challenges and opportunities here?
Mark: What Canada has is stability, stability, stability. As far as challenges, oil is recovering. Energy, oil sands—there’s a direct correlation between how far provinces like Alberta can rise on the price of energy. Vancouver has been the beneficiary of investment from Asia, but if Vancouver cools you could see Alberta come up. And Toronto is stable—the financial system is here, decision-makers from pension funds, many are here. Population growth is here. So it’s been less meteoric and less unstable on its climb up.
Covenants for occupiers in Canada are much stronger than for occupiers in the US. You have stability of enterprise and low interest rates, and there’s no reason to believe they’re going up here, even if they do go up in the US. And institutions are flush with cash. So when something comes available, there’s capital to invest. If there’s a dislocation in the market, there will be capital that fills that. Again, smart money finds a way to move in. This is a country with an awful lot of smart money, and that’s behind the stability. So if there are no events like terrorism, I think it remains stable. Maybe, hopefully, it’s excitingly unexciting.
Mark applauds his troops at the AGM in Toronto.
Bisnow: What’s ahead for Avison Young in 2017?
Mark: We’ll be doing exactly what we’ve been doing. It’s so methodical. We started in Canada, built out Canada. We moved into the US, thought we’d build 10 offices in major markets, now we have 53. We moved into Europe, with five offices in Germany, four in the UK, and you’ll see a fifth shortly. Then the rest of Western Europe. We’ve also opened in Mexico, and we’ll be expanding there.
So it’s really just more of the same. We know what’s available and it’s been methodical to stay disciplined to our approach and geography. Now it’s largely about expansion into Europe. That’s what I’ll be talking about. That’s my focus.