The Retailer-In-Chief: Cushman & Wakefield Chief Executive Glenn Rufrano
Jotham Sederstrom May 29, 2012, 9:30 a.m.
During the International Council of Shopping Centers’ RECon in Las Vegas last week, Glenn Rufrano, Cushman & Wakefield’s chief executive, was a consistent and notable presence inside his company’s busy booth on the convention floor. The Commercial Observer spotted him several times in the middle of a constant pack of brokers and retail professionals congregating at the firm’s booth, in the midst of meetings and socializing. Although top-tier executives abound at ICSC, Mr. Rufrano was perhaps the highest-profile leader from a major real estate services firm to attend the conference and participate in such a hands-on manner. The Commercial Observer spoke with Mr. Rufrano last Tuesday, the last full day of the conference, in a private meeting room in C&W’s booth to get his take on the show and his plans for the future.
It seems like the conference is beginning to thin out, but you’re still here working away.
I leave here and head out to Houston tomorrow. It’s actually to meet with the staff. I meet with the leaders. Houston is a very productive market for us. The company’s second-highest producer last year Tim Relyea works out of Houston. He was second to John Cefaly from our New York office. John’s hard to beat. But Tim, I think in 2010, was number one, and it’s very hard, by the way, to be in that ranking from Houston because the fees and rents are not as high as New York. He did the largest deal in the U.S. that year, for Shell Oil, about 1.2 million square feet. So I am going to go down and Tim and I will have breakfast, we’ll talk about how things are going. I’ll speak to the whole office and give our expectations for 2012, review the strategy, talk about where we are and where we’re going, the brand and the value of it, and the great clients and culture of the firm and how we’re moving toward achieving our goals. We’ll do a Q&A—the best thing about brokers is they’re opinionated, which is great, because we’ll spend a half hour and hear from the seniors in the office. Then I fly back to New York on Thursday.
This is random, but we hear you don’t eat lunch, which must be convenient at ICSC because the food is bad.
You know some people like food, they enjoy it. I’m not a food person. If someone could give me a pill and make it simple, I would take it. I don’t care about food. I do eat lunch with clients, but, if I don’t have a business lunch, I usually don’t even think about it. I’ll be busy working and then suddenly it’s time for dinner. Maybe I’ll snack on a protein bar.
So that’s how you maintain your trim figure?
I run a bunch, very slowly, of course. I love jogging. This morning I was out, going up and down the strip at 6:15, and I saw [C&W retail broker] Matt Win running, and some of the folks from my old firm Centro.
You run up and down the strip?
For years I’ve done it. Wherever I go, I always bring my running stuff. I like running up and down the strip at 6 in the morning and looking at the real estate.
What is your takeaway from the International Council of Shopping Centers conference this year?
My sense is that attendance is up from last year. I think we’ll have about 32,000 to 33,000 people, which is better than last year’s 30,000 attendees. So that’s good. I was having a conversation with the board of trustees for ICSC, which has most of the major tenants and owners, and the talk is upbeat. Tenants are complaining about high rents and landlords are complaining that rents are not high enough to build new development. Whereas two years ago rents were nothing and there wasn’t even a thought of new development. So that’s progress in how people see their businesses moving. A big question now is how much use do I make of the Internet? I was on a panel here and there is this new word: omni-channel. The use of the Internet and social media and bricks and mortar. You put them together and make more money than you would if you had just one or the other. That’s really the conversation and it’s a good conversation retailers think about distributing merchandise. TJ Maxx can distribute through strip shopping centers or a mall or a free-standing site. What they really want to do is sell, whatever the distribution channel, and so why not the Internet, too?
But won’t that cause stores to shrink and create vacancy and hurt the retail leasing market?
I don’t think anyone will know what the impact will be. New development might be curtailed and C-grade real estate that is not well located or is antiquated will maybe see some impact.
How important is retail to your plans for the company? You seem really involved at ICSC.
I have come to ICSC for, I think, 25 years now. Starting back in ’83. Wow, that’s almost 30 years! I started with Jerry O’Connor [who passed away in 2010]. Jerry was my mentor. He was a property investor who built one of the finest shopping center portfolios as a chief investment officer at Corporate Property Investors, which is where I began. When he left I joined him and we invested for pension funds and endowments in retail-oriented projects mostly. We built The Westchester [to this day, a successful mall in White Plains] and then sold it to Simon [Properties]. At New Plan in 2000 we were predominantly involved in shopping centers. So I was CEO of companies that were all retail, and so retail is important to me. I feel it. And at C&W we’re making it an important part of our business. Our goal at Cushman is not to be everything to everyone. In retail leasing we’re focused on urban cities and that’s a real specialty. Whether New York or Chicago or San Francisco, Miami or Houston.
The conversation that we never want to have with a client is to go in and simply ask, ‘What’s for sale?’ Anyone can ask that. When you work with a public company, though, all of their assets are public knowledge and can be researched. We could find out everything about them, exactly what their strategy is, what their growth should be, what their balance sheets should look like, so we can go in and understand a company and ask them and suggest to them how can we help them achieve their goals and add value. As a CEO at a company like Centro, that was the kind of pitch I wanted to hear.
So is retail becoming a focus of yours at Cushman?
Look, overall we want to focus on all our service lines and property types.
You’ve mentioned in recent months that you want to grow Cushman & Wakefield’s real estate investment fund business. Is that still a priority?
We have $5 billion of assets under management and we’re starting to think about how to grow those more dramatically. We started a fund called “Pure Retail” that raised $100 million euros to invest in high street retail in Europe, and we just closed three transactions with that money this year and last.
Are you going to try to ramp that up in the States?
That’s been my background, but you need a real organization to do it and it’s not easy raising money today without a track record. Blackstone can raise money because they have a track record. We’re looking to do it by exploring joint-venture partners that can create a better product or merge our fund business. But we don’t have anything planned yet.
Joe Harbert and Arthur Mirante just left the New York office. Why did they leave, and what impact will it have on Cushman?
Arthur is a lovely man and he was very helpful to me when I became CEO. Remember, in most businesses when a new CEO comes in, the old one goes. In brokerage it’s different. If I were with New Plan or Centro when I left, I would leave. In brokerage it has been different. Guys become brokers and Arthur tried that. But he decided, I think, that he liked being in management, and I wish him luck. This is a great position for him to grow a company. He’s 67 and healthy and looks great; he’s a young 67 and for him to get a new start is great. I told Arthur that we hate to see [him] leave but we understand this is a good spot for him and if for some reason it doesn’t work out, he should come back and talk to us.
Joe has been with us eight years and I like Joe a lot, but I think Joe was looking for something else and less sure about why. I think maybe he just needed a change, and that’s O.K., too. We wish him luck. The truth is no one is indispensable—not me, not anyone. In the brokerage business right now, there is a lot of meaning read when someone leaves. But it’s only one person, and too much is read into it.
Recent reports suggested Cushman was profitable for 2011, but less so compared to peers. What has made the company lag?
In terms of the first quarter, revenue was fine. Overall we’ve had more expenses than peers because we’ve been investing in the company, and we’re fine with those investments because we’re not just here for 2012. We’re here for ’13, ’14 and ’15, and we plan for growth over time.