Commercial Real Estate Brokers Talk Networking Tactics During COVID
Commercial Observer took a call from a broker one evening in mid-December. The broker didn’t have long to chat as he was going to a holiday event.
“An in-person holiday event?” we asked.
“People are safe and wearing masks, for the most part,” the broker said. “But, you do what you have to do to keep in front of people and … you know … schmooze a little.”
Schmooze (verb). To talk with someone in an intimate way.
The word “schmooze” is derived from the Yiddish shmuesn, “to chat.” And the delicate art of schmoozing is the lifeblood of a certain vital group within commercial real estate: brokers. If the industry is a heart, and the groups who keep it beating represent its four chambers, this particular atrium surely derives its oxygen from the ability to network and mingle.
For many brokers, it was the raison d’etre for REBNY’s January banquet. To see a figure stride past in a tuxedo and realize that it’s Steve Roth, or elbow your way next to Gary Barnett at the bar could be extraordinarily valuable.
When COVID-19 forced even the most gregarious of this social pack indoors, competitive deal-making strategies had to change, fast. So, how does a leopard become an indoor cat overnight and still make a killing?
Run for cover
“In March and April, when New York got punched in the nose — for lack of a better term — I was one of the few people coming into the office,” Dustin Stolly, vice chairman and co-head of capital markets, debt and structured finance, at Newmark, said. “Most people retreated to suburban homes or somewhere out of the city, so there wasn’t much networking. For me, it was a unique mix of, ‘Oh, shit, here’s another crisis,’ and, ‘I’ve got to figure this out.’ I was busy on calls trying to figure out how it was going to affect the economy, where the opportunities were, and how we could help our partners and clients. We worked 18-hour days for months, including Saturdays and Sundays.”
Stolly rented a house on Long Island, returning to the city in mid-July, as the first inklings of social activity in the industry started to emerge.
“As restaurants reopened, we started meeting small groups for dinner, depending upon how comfortable people were,” he said. “No in-person meetings with outside visitors were permitted at Newmark, so any meetings were in these newly-created outdoor cafes which — when the weather was great — was really nice. Jordan [Roeschlaub, also co-head of capital markets, debt and structured finance, at Newmark] and I probably did three to four of those meetings per week, and then stepped outside to have coffee or lunch a couple of days a week as well. Just with folks that were comfortable with it.”
Of course, the weather isn’t quite as balmy now. Stolly had client cocktails the night of CO’s interview in early January. “It’s 30 degrees outside, so we need two coats plus a stocking cap,” he said and laughed. “Our dedication in the next couple of months is certainly being tested.”
Assessing clients’ comfort levels — which, understandably, vary dramatically — and working around them to close deals is a new science that brokers have had to master.
“The biggest challenge has been working with different people and knowing whether they’re paranoid or if they’re comfortable,” James Famularo, president of retail leasing at Meridian Capital Group, said. “You find out really quickly during the meeting, depending on whether they take down their mask or if they shake hands. I’d say probably 20 percent of the people still shake your hand. Then, a lot of people do fist bumps or elbow bumps.”
Generally speaking, “the people that have had COVID already feel like they have the antibodies, and are a little more comfortable,” Famularo said. “Then, there are guys I deal with who are locked in their house and not leaving — and I really respect that. I have a great immune system, and I haven’t been sick in over 20 years now. But I am very careful, I don’t touch things, and I sanitize everything.”
Like Stolly, Famularo’s workload only increased during the pandemic. His team starts its day at 7 a.m., “and I can’t remember the last time we ended it before 8 or 9 p.m.,” he said.
Famularo — whose purview is retail leasing, an area of the market that received the equivalent of a stiff punch in the mouth during COVID — has been in the office the entire time since the crisis hit.
“We feel that our clients need us now more than ever,” he said. “And, although certain segments of the market have been obliterated, the majority of the tenants that we work with — like food and beverage, cafes, service-oriented businesses like salons and dry cleaners, and some day care centers — are all bullish. They’re optimistic about the future.”
Drew Anderman, a senior managing director at Meridian Capital Group, echoed Famularo’s sentiment that a good broker is more valuable than ever today.
Anderman wears masks when in close proximity to clients or showing indoor spaces. “We take precautions; we have a protocol here in our office, where we take everybody’s temperature and we make sure everybody is tested on a regular basis,” he said. “But we feel our clients need us now more than ever. So, it’s not the time for us to be hunkered down in our weekend house.”
Then, there’s the other end of the spectrum, where people are very comfortable mingling.
Case in point, in-person conferences are beginning again. Yes, you read that right.
On Jan. 10, the Multi-Family Owners Summit took place at The St. Regis Bal Harbour Resort in Bal Harbour, Fla. Amit Doshi, a senior executive managing director in the investment sales group at Meridian Capital Group, attended the event, for which more than 400 people registered.
“It was quite an experience,” he said. “But, believe it or not, it was actually fantastic. I think roughly 99 percent of people I spoke with had already had COVID, and they were walking around as if nothing was happening. I’m not going to say it was business as usual, but there were a lot of people down there and they were all talking about how to move the state forward, the country forward and the buildings forward.”
Does an in-person event today feel like the good, old pre-COVID days?
“No,” Doshi said. “Nothing feels like old times, because people have masks on.”
When the pandemic first hit, Doshi and his team got to work helping provide market commentary and data for his clients. “There were such conflicting messages, not from the real estate industry, but from the [NY] governor’s office and from the [NYC] mayor’s office. It was very confusing,” he said. “We decided: Listen, we’ve got to cut through the confusion, because if we are confused, then our clients will be confused. Believe it or not, the clients were looking around for input from brokers, because they saw their real estate go down precipitously in value — although nobody was even thinking of values in the early stage. People were completely taken back, as if an 18-wheeler bus had hit them.”
His group didn’t lose any transactions they were in contract on during COVID.
“We actually closed our first COVID deal in New Rochelle, closely followed by a deal in — wait for it — Corona, Queens, in April,” Doshi said. “A lot of brokers were crying tears of blood, because they’d lost deals they were working on, whether they were sales deals or leasing transactions. I think the leasing brokers suffered a lot. Every deal had to be tweaked, and had longer closing periods. But, fortunately for us, we did not lose any deals. I should say knock on wood.”
So, how much is actually lost from not having the in-person, face-to-face meetings that brokers depend upon?
“We’ve always had great success in doing dinner with clients, probably three to four nights a week,” Stolly said. “You can’t replace those personal connections that you make when you’re sitting across from someone having a meal or having a purposeful meeting. Technology is fantastic, and it’s here to stay, no doubt. But there’s a personal connection that you can only make when you’re meeting folks in person.”
The beauty of a face-to-face rendezvous is, “you’re able to uncover deals and transaction flow that you’re definitely not going to uncover over a six-minute phone call,” Stolly said. “That’s how I built my career; I work with men and women that I like really personally, as well as professionally, so a lot of my best friends are real estate professionals.”
And, for Anderman, an in-person meeting is also a sign of respect and commitment to a client.
“To be able to see someone in person, whether it’s for half an hour or an hour, or whatever the time might be, shows an effort to go in and meet somebody,” he said. “When the world’s back to normal, you get on a plane, and you fly to go meet someone for an hour. It’s just what we do. I think it shows an effort.”
The past year has also been devoid of many highly anticipated gatherings, including one staple event that heralds the end of every deal coming to fruition: the closing dinner.
CO has heard multiple anecdotes about closing dinners taking place remotely during COVID. One lender said he ordered steaks and red wine to deal parties’ houses, so that they could at least feast and celebrate together via Zoom.
As for in-person closing dinners, “That part of the business is on pause, especially, being in New York, where there’s only outdoor dining right now,” Anderman said.
On the plus side, schmoozing-related expenses have plunged dramatically for most firms.
After all, people aren’t traveling as much, if at all. There’s no entertainment, or golf trips, or ski trips, or anything of that nature this year — probably a good thing, given that several industry participants traced early positive COVID statuses back to two industry ski trips that took place in March 2020.
The majority of the industry is behaving and exercising caution for the most part, Stolly said. “There’s no underground speakeasy hosting gatherings,” he said. “But, then, what people do on Saturdays and Sundays, I have no clue.”
Stolly describes his own weekends and downtime as “really, pretty vanilla at this point, especially with a young daughter and a new baby on the way.”
I just called to say I love you
While the past year, obviously, hasn’t been ideal for brokers, “we learned early on to try to adapt as best as we could,” Anderman said. “We did a lot of Zoom calls with people we had existing relationships with, and we also used it as an excuse to establish new dialogues with groups that we hadn’t had a relationship with in the past.”
An interesting twist is the pandemic has reinvigorated a renewed appreciation for the common phone call.
“I think it’s forcing everyone to pick up the phone and call people more often than not, versus relying so much on email or text,” Anderman said. “It’s an old-fashioned way, but also a quicker way of communicating effectively.”
“There’s no question in my mind that any broker who reached out did well. I’m including myself here, because if I go any deeper with my clients, I’ll be family,” Doshi said. “Clients always appreciate when you reach out to them during these times. It felt good, morally, to go out and reach out to them. And the conversations during this period were really meaningful.”
But it’s the brokers and owners and lenders who have been out and about, safely communicating with friends and clients, in addition to hustling on the telephone, who are going to come out stronger on the other end, Stolly said.
“There are a lot of people who aren’t aggressively networking for personal or private reasons,” Stolly said. “Maybe they’ve got a family member that lives with them who’s high risk. We’ve been very sensitive to people’s sensitivities, but we’re still weathering the storm.”
A new normal
Whether the decrease in travel and in-person meetings will be a lasting effect of the pandemic when the commercial real estate industry returns to normal remains to be seen, but is also pretty unlikely, brokers said.
“I think Zoom is here to stay,” Anderman said. “But the real estate business is still very much a people business, and people appreciate in-person meetings so they will definitely increase. But whether they’ll ever get to the level they were at two years ago, I’m not so sure about.”
But, as we all patiently wait for a time when vaccines are fully distributed and life can return to normal, brokers CO spoke with are optimistic about a speedy rebound in the not-too-distant future.
Famularo harks back to the 1918 flu pandemic in his forward-looking forecast.
“Back then, they would literally inject people with cocaine and heroin to try to help them,” he said. “That was with no technology and no vaccine, and that pandemic lasted two years. We’re almost at the one-year mark, and we’ve got five vaccines, so we feel like the rebound is going to be straight up.”
And, after that pandemic, came the Roaring 20s and a 10-year run of a building boom. “I’m still amazed at how many buildings were built in that time period,” Famularo said. “It’s horrible that so many businesses had to suffer through this [crisis]. But I think we’ll experience something of a renaissance and a business boom in the next few months.”
Here’s hoping. In the meantime, like so many other parts of our everyday activities, commercial real estate brokers are showing that, while it’s not preferred, schmoozing can successfully continue remotely until we can all be outdoor cats once again.
The takeaway: Don’t snooze on the schmooze.