An Interview With: Eric West
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On April 15, the firm celebrates its 10th anniversary. With 16 employees, it focuses on representing tenants and local owners, as well as acquiring property for users and investors. A third-generation Washingtonian, West grew up in Bethesda. His personal specialty is assisting non-profit organizations, and personal clients have included the National Council on the Aging, American Forest and Paper Association, American Iron & Steel Institute, the Pew Research Center, the Competitive Telecommunications Association, Hewitt Associates, and the Fireman's Fund Insurance Company.
Bisnow on Business: You say the way your firm was created is unique. How so?
Most new brokerages are spin-offs of other firms. What you usually find is a large team of senior agents leave a firm and start a new one. They leave one day and take their operating style, culture, contracts, paperwork, contacts, and clients with them. In essence, they simply move their division to another building, but the only thing that changes is the phone number and letterhead. We’re different in that our firm is the product of individuals who came from two non-related companies.
How’d that happen?
Rich Lane and I grew up in Bethesda but did not know each other until we met at Tulane. Then we went to work at different firms. He worked at Barnes, Morris, then at Grubb & Ellis, and I worked at Barrueta & Associates. After ten years working at our different firms, we decided to team up.
We figured going out on our own would help our reputation regardless of whether or not the new company was a success. Also, we figured that, over time, decision-makers at potential clients would be our peers. Gary Schlager and I worked together at Barrueta for nine years and he came over 18 months after Rich and I had started. This gave Rich and me time to create our own working relationship and the firm's culture.
It was harder starting from scratch?
Yes, because you have to create everything. We each had different clients and specialties. Rich primarily represented law firms, while I primarily represented not-for-profit organizations. So we couldn't just open shop one day and operate essentially as we did at our old firms. We had to integrate all new systems and clients that came with us, and the clients only knew half the team. The first year was challenging. In fact, my wife gave birth to our first child six months after we opened shop. But at the end of the first year, the results were actually better than if we had simply spun off.
How did you stumble into real estate?
Both my mom and my dad’s family are from here. My dad is a tax and corporate lawyer. Many of his clients were in real estate and I was always interested in what they were doing. I just found that much more interesting than law, although I never thought I would get into real estate. So I had a business in college that I even ran for a year after college. Then I left that and I was thinking about what to do. A friend of my family was in commercial real estate and said, “You want to try it and get into it?” And so I got in.
What was the business you had in college?
In my junior year, a buddy of mine and I created an equipment leasing brokerage company
That sounds pretty sophisticated.
Well, my uncle owned a manufacturing company for restaurant equipment. And my friend’s father was a big distributor of restaurant equipment, some of which was stuff my uncle made. My uncle couldn’t sell enough and he leased a lot of it. My buddy’s father’s problem was he couldn’t lease enough of it. He couldn’t find the right financing from local companies. So what we did when we were in college is we went around the country and found all these various finance companies: Private leasing companies, large banks, investment banks. And we put all of their lending requirements on a computer database. Nobody had this sort of centralized information. We then went to all the equipment manufacturers and distributors and we said, “Hey, let us find better pricing for you, people who are willing to do different types of terms, different types of credit.” It would have been very successful, but when we graduated in 1986 they changed the tax laws. Equipment leases used to be a true write-off; there were great tax advantages to it. After the ’86 tax change that all went away, so the business dried up and died.
What was the first thing you did in real estate?
I got a job with Baruetta, which at the time was about a year old, and I was one of the first people they hired. They were a spin-off of Smithy Braedon. And they had a really incredible training program on all aspects of commercial real estate brokerage: sales, finance, legal and leasing issues, and the market. That’s what interested me in that particular company. I worked there nine years and by the mid ‘90s, I really saw a change. I saw sort of a gap between what real estate brokers were providing their Washington clients and what these clients needed.
And what was that gap?
Accountability and control. The clients in Washington by and large didn’t have in-house real estate departments. But the finance heads of companies were taking on real estate assignments every five or 10 years. And so real estate brokers were helping them on a deal-by-deal basis. It was transaction-centric. What the Washington market really wanted and needed was some long-term strategic planning.
So you’re saying you wanted to become, in a sense, more of a retained firm rather than a contingency firm.
Yes. And that was exactly the model we started our business on 10 years ago. We’re all about being a trusted partner to our clients.
That was unique?
Yes. It’s what we call the client-centric model. If what we do produces a transaction in a year, that’s great. If what we do produces a transaction in five years, that’s great too.
But don’t other people do that? For example, I talk to people, let’s say Audrey Kramer of Cushman or Tom Fulcher of Studley, to take two examples, who tell me how they have been engaged by a WilmerHale or an Advisory Board to undertake long-term studies about office space requirements, even before a transaction is on the drawing board. How does that differ from what you’re saying?
Because WilmerHale was 500,000 square feet. These are the largest tenants in the market. And what we provide is to tenants in the mid-market range between 10,000 and 100,000 square feet. So all of that level of insight and accountability and planning we bring to the mid-market. Every project that we do is based on our “strategy first” model, not just the largest projects or clients.
Is there really no one else doing that in the mid-market?
Nobody else is formally doing it.
So suppose you’re hired. What do you do? You arrive on the scene, what do you do?
We start every project with an intense client focus. In other words, we work to understand the client’s plan, their market trajectory, who their peers and competitors are, and then benchmark it. The second thing we do is create the strategies. These are long-term plans that indicate how they can get to where they want from a real estate perspective, taking into account where the market is now and where it’s going.
And typically you are hired for the purpose of finding space?
No. We’re hired well before that to help clients understand the full spectrum of their real estate opportunities and alternatives, the benefits and pitfalls, the total project costs. We benchmark those against their peers and competitors. From that analysis, certain alternatives will come up that they may want to pursue. And if they want to pursue those, they typically hire us to execute them. Real estate is a big deal. And our clients need to have some level of accountability, efficiency, and control in that area. We found out that, if you are a 500,000 square foot tenant, you’re going to have this because you bring in lots of different consultants. However, if you’re only a 30,000 square foot tenant, you probably won’t have this. We try to provide this counsel on a long-term basis, because senior decision-makers come and go. And every few years, people come in and evaluate all the decisions of contracts in place. So they might say, why are we leasing space here? Or why don’t we own a building? Why do we have so much space? Why is our space so expensive? And the staff can go say, look, four years ago when we were making decisions, this was the context of the real estate market. These were the decisions that were made, and this was why.
How many people are you, and what do you all specifically do?
We’re 16 people, out of which we have 11 senior brokers. The average level of experience at our company is 14 years. So we look at ourselves as a boutique in the sense that we have a very intense market and product focus, but not in the sense that we’re a small company. If you look at our firm as a team, we’re as large as our largest client’s biggest management team.
And do you have a geographical focus?
We’re specialists in Washington, DC, within our core set of services, which is leasing and acquisition and sales services for commercial tenants and investors. We work on managing complex and multi-dimensional projects, and we’re at the high-value end of the spectrum.
Examples of clients?
The National Association of Security Dealers (NASD), Boston Consulting Group, The Bill and Melinda Gates Foundation, the Pew Research Center, the Ocean Conservancy and law firms Nixon & Peabody and Heller Ehrman, Dewey Ballantine.
The Gates Foundation sounds jazzy. What’d you do for them?
They opened up their office in DC in 2001. They leased space and thought was going to be adequate, but by 2004 they were out of space and needed to double in size. They were using a national firm forever, but felt like they weren’t really giving them the level of insight that they needed. We were referred to them, and they hired us. The first thing we realized was that they could double in size by just expanding into their adjacent space. We looked at it and did a strategic plan for them before we even started looking for space or considering the adjacent space. We learned two things that were really important. The first was that even though they were going to double in size within two years in terms of staffing, their growth projection would likely exceed the amount of space that they could lease by the end of the decade. The second was that they work collaboratively. So that for each project, offices may change, and the way people work may change. When we took those facts and looked at the building they were in, and the configuration of their space, we realized that even though they could add space today, and it would work for four years, they would have to move because the shape of the floor was going to preclude this collaborative working. And so we looked at alternatives for subleasing their current space, and moving to a building that could house them for their needs today. We could get planned expansion in the future, to augment and enhance their collaboration. And that’s what they did.
Where are they located right now, and where are they going?
They’re at the Homer Building now, and they’re moving to 1300 I Street.
Where do you see your firm going over the next five to ten years?
We're very excited. We spent the last ten years developing our base, defining the right lines of service for our clients, creating a collection of talent, refining our process, and positioning the firm. But we've kept a low profile. You work hard and have a gut feeling that you're doing the right things, but the proof is getting hired. We're now seeing the market respond favorably. So, with all the pieces in place, we're ready to significantly increase our presence in the market.
How are you going to celebrate on April 15, assuming you’re not doing your taxes?
We are planning a number of client events over the year, not just one blowout. Some of the events are going to be specific to industries in which we have a particular expertise. Others will be thank you celebrations for both current and past clients. In all cases though, the events are going to be a lot of fun. :)