The Office Market Arborist
Jotham Sederstrom Nov. 23, 2009, 11:06 a.m.
The Commercial Observer: You’re the president. How’s it feel?
Mr. Falk: It’s really been a lot of fun. I think both internally and externally. Internally, I think people were excited. Someone like myself, who was a broker and started out in the bullpen, is going to be involved in making decisions and leading where the company is going—because I, like them, want certain things, and that’s to have someone who knows what a broker wants and what environment they want.
How do you balance your position as a broker with responsibilities as a president?
My position is a hybrid. It is. We’re not a big public company so the difference is I am not an administrator sitting in my office managing the brokers. I have my own team of a terrific group totaling, including myself, seven people. And I think we have a very, very strong, effective team. The way I manage that team, we’re trying to export that out to the whole firm, where it’s very cohesive and special.
You have a relatively small team. Does that work for you?
Some people think three people is a lot. I wanted a balance. I didn’t want to have a team that has so many people, there’s no close relationship. Everyone on my team I would choose to be personal friends with. I couldn’t have someone on my team who didn’t want to play in the same sandbox. We work really hard and we play hard together. So seven is the right number because if it gets a little bigger, than I’m spending less time with certain people—and that’s not what anyone wants.
Are you seeking to expand personnel-wise in New York?
One of my strengths in the brokerage business is that I know a lot of people. I happen to have personal relationships, because in our business, all you have is your reputation. That’s all there is. And I’ve always treated brokers with respect. First of all, you have to sleep at night, but it also helps get deals done. So over the many years I’ve been in the business, I’ve developed really good, strong relationships. So when this happened, all the sudden I was getting so many phone calls from people saying, ‘Now that you’re involved in this, I’d love to talk to you about Newmark.’ So right now we’re talking to, I would say, at least 10 people that we are negotiating agreements with to come over here. And these are people who would be really good fits in the company. And what I do learn, by the way, is I’m hearing a lot about the sagas that are going on in the other firms. It’s interesting, but it’s not surprising.
So there’s going to be some poaching?
There’s always poaching. It’s very hard to have someone leave another firm. You know, you think about it. I really believe that when someone is making a lot of money at a firm, obviously it’s hard for them to leave, because they’re entrenched. So I really believe that the only reason they leave is ego and emotion. Brokers have big egos, and either they don’t feel they get any internal respect, or they feel slighted, or there was a compensation issue on a deal, [and] they leave. But if they’re doing well and they’re happy, it’s very difficult. I mean, what are you going to say: ‘Come over here; We’re nice guys’? I mean, it doesn’t work that way.
Why is it that they have such egos? They’re very sensitive, too, aren’t they?
Because to be a really good broker you have to be very competitive. If you’re not very competitive and you don’t have that internal desire, this nonstop competitiveness, I don’t think you’re going to be a top broker. And if you think about it, that’s why athletes also have egos. You know, why do you think an athlete gets upset when another athlete who’s in another team hears about the salary another guy’s making? He says, ‘I’m better than him and I should be making more.’ So there is this competitiveness, both internally and externally. We all want to be the best. So there’s a type of person who gets attracted to this business. If they’re mild-mannered and they’re not competitive, I don’t think they’re going to be a star.
What’s the longest real estate title you’ve ever seen? How many words?
Mine is getting long. You know what, to tell you the truth, I don’t pay any attention to the titles. As a matter of fact, when I’m talking to some of these guys coming over here, and we’re talking about titles, and they say I want to be senior managing director or executive managing director? Listen, titles are so inconsistent. When I started in the business, though, for some reason there was some consistency. When I started in the business, if you made $100,000, I think all the firms had this standard that you could be called an assistant vice president. And so people knew: ‘Oh, you’re an assistant vice president!’ And that was really meaningful. Now, if you wanted to go to a firm with 10 people, you could be a vice chairman. I don’t think it’s relevant.
As the economy improves, what do you expect to change in the marketplace?
In my opinion, the first thing that changes is not going to be rent. It’s going to be the tenant improvement allowances. I think that you had a lot of these large banks subsidizing some of these big deals, and the tenants were taking advantage of receiving allowances. It could be the $80-a-foot range, which is unheard of. I mean, typically, in a lousy market, the highest you were seeing was $55 a foot in work. So this is beyond obscene. I do think what’s going to happen, and I’m starting to feel it a little, landlords are saying, ‘I’m not going to do that deal.’ They’re holding firmer.
Are there landlords who are still stubborn?
There are some landlords that aren’t even in play. And they haven’t been for years. They’re either out of touch with the market, or their buildings are in such trouble that you can’t even show them. So it’s funny. When a broker puts together a tour he may stay away from a number of buildings because of the financial health or the landlords are out of touch. When a broker represents a tenant, he wants to do a great job for the tenant, but he also wants things to be in an orderly process. If a landlord has a reputation, or his agent has a reputation, of being rigid, he’s not going to show the building. So you kind of focus in on, ‘I can see doing business with these people.’ So it’s not just the rent. You’re putting someone there for a long term.
Are you as busy as you were 15 months ago?
What I always tell my team is that our business is like a tree with branches, and every person you meet, or deal you do, is another branch; and that’s going to lead to another twig, and another twig, and that’s how you build a business—when it’s filled up with law firms and accounting firms and technology. Because everything you do helps you go to the next piece of business. You have more credibility. So we are busier because the tree keeps on getting thicker. And that’s a good thing.