Chief Executive Hessam Nadji, 50, took control of Marcus & Millichap Inc. last week. He’s catching the company at the perfect time – since going public in late 2013, the brokerage firm has ridden the rising market for apartment buildings and ventured into other forms of commercial real estate. Between 2011 and 2015, annual revenue grew 150 percent to $689 million. The firm now boasts 1,600 brokers – mostly exclusive independent contractors – in 79 corporate-managed and -owned offices in the United States and Canada. The firm handles deals for private investors, particularly those buying and selling properties in the $1 million to $10 million range. Nadji, who took over from retiring Chief Executive John Kerin, brings a background in information management to the job. He transitioned from vice president of research in 1996 to chief strategy officer and then senior executive vice president last year. He also oversaw Marcus & Millichap’s specialty divisions, financing arm, research and advisory services, marketing and finance. Nadji met with the Business Journal in his Calabasas office to talk about how his role at the firm evolved, how he leads and where he will take the fast-growing brokerage. Why is commercial real estate important? For the private individual – whether a high-net-worth individual, a family or a young person just starting out in their life – it’s one of the best and least-discussed vehicles for creating wealth. The story of Marcus & Millichap is really the story of wealth creation through real estate for Main Street. That’s what we do. You were groomed for this position. How? When John Kerin took over in 2010 as our new chief executive, I had the privilege of being tapped by John to work very closely with him as a strategy officer as well as a marketing director. We teamed up on a variety of strategies – coming up with the company’s growth plan and then going out and executing it. So a lot of what I began to do – transitioning my career to the sales management of a lot of these various specialty divisions – is thanks to his support of me expanding my responsibilities and being able to directly run different sales units. A little over a year ago, the company designed a succession plan that included me and a number of people taking on more responsibility. So it’s a process that’s been well laid out and well thought out. Can you summarize those divisions, what you grew and how? Marcus & Millichap operates within (about) 16 different specialties, whether it’s apartments, retail, office, medical office, industrial, self-storage, senior housing, etc. We’ve done a very good job of segmenting the marketplace, identifying the client base in each of those subgroups and trying to understand their needs and trying to engineer our services toward those specific client groups. You have the institutional segment that has different needs; you have the middle market that’s quasiprivate investors – a little bit of a mix between private investors and institutional investors. So we really catered to each one of these segments, and my role was to come up with the strategies and go out and execute those strategies in a way that we grew each one of the segments as stand-alone businesses. Why did the board of directors choose you as the next chief executive? If you look at how the industry has changed over time, the traditional sales process in the brokerage business has been greatly changed by technology, market research and by modern practices in what makes a broker more productive and more efficient. And my entire background happens to mirror those key trends. Over the last six years, I had the opportunity to run a variety of sales divisions within the firm, so being able to transform my career from a research, marketing and technology background into managing sales divisions, and growing those sales divisions along with our brokers and along with our managers really was the final chapter. Title: Chief Executive Company: Marcus & Millichap Inc. Born: Tehran; 1966. Education: B.S., information management and computer science, City University in Seattle. Career Turning Point: Joined Marcus & Millichap in 1996. Personal: Lives with his wife and three children in Thousand Oaks. Hobbies: Classic cars, tennis and the Beatles. Where did you grow up? I was born and raised in Tehran, Iran. I lived in Lansing, Mich., as my first entry to the U.S. and had a brief time in London, England. Then I moved to Seattle in the early 1980s and spent most of my youth in Seattle from 1980 to about 1992. One of the best – absolutely – decisions in my life was to join the firm in 1996, and I joined at a time when George Marcus and Bill Millichap and the management team were thinking about the long-term strategic plan for Marcus & Millichap. One of the key reasons I was brought in was because the client surveys and inputs from the industry basically said Marcus & Millichap was a tremendous traditional company, but the agents needed something more than the immediate transactional interaction to stay in touch with clients and to offer something of value. That’s where research was born. How did you go about building the division? I was given the opportunity by Bill and George to make sure our research was actionable. So we designed the research to be very actionable instead of esoteric, general and just in white papers. If you look at our research, it’s very specific, it’s very local, it’s very product type oriented. And it’s short. We wanted to take a position and help the client get educated in a very short amount of time. Then the research became part of the brand and my responsibilities expanded to be the brand manager – really the head of marketing for the firm. What personality attributes do you bring to the chief executive position? Service orientation. My entire career has been defined with trying to figure out the clients’ needs, the brokers’ needs and bringing the two together through what the company does. So whether it’s technology initiatives, whether it’s research or sales techniques, it boils down to service. If you have a value-add approach to everybody you interact with, you’re going to make them more successful and they’re going to want to integrate you in their business. So the path to growth for me was helping others grow and I put that together very early on. How do you balance life and work? I’ve never had the life-work balance issues, in that there’s a total buy-in in my family as to the amazing culture of this company, and how this company is the vehicle for building a good future on the family side. Do you have any hobbies? I’m a huge Beatles fan, if you can call that a hobby. I play tennis with my son, and I am also an avid classic car fan. What is your leadership style? I start with wanting to make sure that everyone who works for me has a very clear idea of where we’re going, what’s expected of them and where they fit in. Because I’ve always found that if people had a clear idea, and they could relate the ultimate goal to their part in it, that they would have higher morale, more productivity and actually believe in something. I do everything in my power to enable talented, eager, motivated people who want to do something special to be able to get to work instead of losing time in inefficiencies or confusion or conflicting goals. What are some issues impacting Marcus & Millichap’s markets right now? There’s been an overreaction to the possibility of a recession in our opinion. The stock market was very volatile and that really spooked people. And automatically after six years of a very strong run, people start to assume that we must be due for a major correction. It’s clear we’re in a cyclical economy, we’re in a cyclical business, and the cycles will have ups and downs. But if you look at the fundamentals of both the economy and real estate – we kept analyzing this for quite a while – we’re not overbuilding most property types. We don’t have overleveraging debt that led to the 2008 and 2009 finance crisis, and the U.S. economy is on very strong footing whether it’s job growth, retail sales, home sales – they all indicate a fairly steady modestly growing environment. So the overreaction to all of the overseas-generated negative headlines is something we saw in our clients and the overall investor sentiment. We expect a slower growth environment, but a sustainable one. What are the top items the board has tasked you with? Marcus & Millichap is the dominant broker in the private client market – typically the $1 million to $10 million price range. We have the dominant brand, yet we have only about an 8 percent market share. We have a number of initiatives all geared around continuation of market share gain and growth within our core business. A second strategy has been the continuation of expansion of these specialty segments. Every one of these segments we talked about earlier offers additional growth opportunities. And the more we penetrate those markets, like self-storage, or senior housing, or student housing, the more our platform enables investors to consider different property types and different investment strategies. Third is our financing arm – Marcus & Millichap Capital Corp., our finance intermediary and mortgage broker. We don’t carry any debt and we shop for the most attractive financing – that part of the business can grow. We are planning on playing a larger role in the midmarket – the $10 million to $20 million price range – and more institutional, $20 million-plus markets. Is Marcus & Millichap international? No. We have three offices in Canada. International has been on our radar, and could be a future strategy in certain countries, but not on a broad basis. A very important strategy for us long term is more mergers and acquisitions. On the finance side, there are a number of players that could add value and be synergistic for Marcus & Millichap Capital Corp., and that’s one of the growth opportunities for us. Any changes you plan to make within Marcus & Millichap? We’re looking at a variety of management changes, and then these four key initiatives – technology, human resources, training and broker support. Do you ever foresee a time when the brokerage process could become automated so that brokers get pushed aside? The answer is no, but the influence of technology is going to increase, and only increase at a more rapid pace. Every asset has its own nuances – every situation, client situation, ownership situation. The loan that’s on a property has its own universe. You can’t paint the whole picture with a brush or cookie-cutter the buying and selling of commercial real estate.
Multi-Manager
