Elizabeth Hart, Newmark’s New Head of North America Leasing, On the Market Now
San Francisco-based broker talks flex space, return to office, hybrid's impact and the symbiosis between investment sales and leasing
By David M. Levitt February 28, 2023 9:00 amreprints
To lead a company during times of great turmoil (like these) you have to have heart.
And, if you’re Newmark, you have to have Hart.
Newmark, one of the world’s largest commercial real estate brokerages, placed Elizabeth Hart in charge in early February of leasing for North America. Hart’s remit covers all types of leasing, including industrial and retail, but it’s office leasing that’s drawing the most attention three years into the pandemic. The promotion of the San Francisco-based broker, who just turned 40, comes at a time when companies worldwide are re-evaluating their office space needs. The buzzword is “hybrid,” and workers realize they might have more power to decide where and when to work than they previously thought.
Thankfully, the consensus seems to be firming up around the idea that companies still need a place to call their own to impart training, collaboration and esprit de corps. Moreover, workers should be compensated with some hospitality, like good lunches, cozy and comfy workspaces, and amenities to treat their spiritual and bodily needs, such as gyms and access to yoga classes. The aim is to attend to the whole person, not just the working drone.
But companies are still trying to figure out just how much space that requires and where. This is the world that Hart is jumping into, as she becomes Newmark’s president of leasing for North America. She jumped on a Zoom call within two weeks of her promotion to explain her new role.
Her remarks have been edited for length and clarity.
Commercial Observer: So this is a newly created position within the firm. What made them think they needed to have a president of leasing?
Elizabeth Hart: There were obviously some very large changes and how our clients on both the tenant and landlord sides started viewing their portfolios due to the changes that were happening during and after COVID. And the trend that we saw is that our clients are far more interested now in the interplay between multiple different markets and how those relate to each other. So, while we have amazing talent in every individual location and they have deep expertise in local markets, we want to make sure that we’re also delivering really valuable insights that are more comparative in nature.
This role can help do that with our tools, technology and research, and then also drive the interconnections between the multiple aspects of the leasing business. As you know, we have retail, industrial, office, R&D, and how do those really connect together? So we have deep specialists, but what is the connection point between them? And where are the opportunities to deliver insights to our clients based on those inner connectivities?
What did you do before you became president of leasing? And why did you want to direct leasing?
I’ll start at the beginning. I started off right out of college in commercial real estate at this firm as a broker’s assistant. That was an entry-level, junior position role, and the beginning part of my career was very much focused on the tenant business, on the technology side primarily. Then, about mid-career I switched to representing both landlords and tenants. For the last two years, I’ve been the leader of our technology and innovation practice group, which is a group of about 20 advisers across the firm that work very closely together to deliver those kinds of insights that I just discussed.
We really functioned more as one team in pursuit of business and understanding the markets. So it became logical to think about the space that a tenant occupies — outside of just the technology practice group — and what other sectors of our business would benefit from having this kind of connection.
Leasing has become such a cause célèbre these days. This is a particularly fraught time to become a president of leasing, since now companies are looking at themselves and asking, “Do we really need all this office space?” There seems to be an impetus toward downsizing. Given the pandemic and the changes in technology, it seems like you’ve been given a chance to run the show when running the show may not be such a great thing.
You’re saying I like a challenge? Look, there’s no question that we are in more difficult economic times right now. There is a great reset happening — probably a generational reset in how we work and how we think about where we work. That’s certainly occurring. So I acknowledge that.
But from our day-to-day perspective, we’re seeing some different trend lines that aren’t exactly consistent with that. We’re seeing an increased return to the office and an increased return to retail. There’s a lot of great retail that’s done exceptionally well. And there’s a lot of reason for optimism.
There’s also a lot of opportunities where that interconnection becomes more valuable. As an example, if you’re managing hybrid work, you might need a different layer of technology to help assist you in that. We see that as a real opportunity for new markets to succeed because we have such amazing talent that can help drive the types of products and solutions that we’re going to come forward with to solve today’s problems.
Do you see yourself being involved in landlords’ decisions to reposition their properties if they don’t work as offices? Are you willing to say to a client, “Look, this isn’t going to happen. You need to make this building apartments or something else?”
Absolutely. Because the job is advising our clients on the absolute best solutions to meet their business objectives. And, in a changing time, it’s entirely possible that keeping it one product type will not be the right solution. I actually live in an office-to-resi conversion, ironically, and I’ve had a great experience. I think that that is going to be something that happens across North America, going forward to a certain degree.
I think that is generally a very good thing, because there are many markets that do have a housing crisis, and we can convert buildings that are the right kind of buildings to that. That would be to our collective advantage. For Newmark, specifically, as you know, we have a very strong capital markets team, and a debt team that can partner with our leasing agents in order to really identify which of those opportunities are viable, and how we should proceed on those opportunities.
I noticed your capital markets team just got a little stronger when you picked up Doug Harmon and Adam Spies. How does them coming aboard help you in your leasing role?
I saw them in person this morning. It was great to be able to connect with them and start to have those discussions, and we’re thrilled to have them. As [CEO] Barry [Gosin] said on our earnings this morning, our goal is to be the No. 1 capital markets player in the space. I think this was the next big step in that direction.
As to how that connects to leasing, they very much work hand in hand with each other. When our leasing advisers understand the market in detail, they can help the capital markets team understand the market dynamics to drive their capital market strategy. And the reverse is true as well — when they have insights from a capital markets perspective, that can help drive our tenant and our landlord business by understanding that landscape more fully. So, the intention to be collaborative and join forces, which is one of the core values of Newmark, is very much present.
Do you guys see leasing as a growth area? Why or why not?
I do think that overall leasing is a growth market for Newmark. We’ve made massive strides to gain market share across our other service lines, and we think we’ll be no different going forward.
We are seeing as market conditions improve a return to more certainty around the leasing process. The most uncertainty we felt was September, October of last year, but the clients that we’re interacting with now have acknowledged a reset in pricing and are prepared to move forward with decision-making, which is very helpful. The hardest part is when people are in a pause and are unsure of what’s going to happen in the future.
I’ve had it explained over and over to me that people are saying that maybe our workers are going to want to come in only three days a week, not five. But, if that’s the case, then the office still has to be good, attractive, a place that people want to come to. People are more attuned to the quality of the office rather than the quantity.
I think that’s exactly right. That’s why you’ve seen an increase in trophy and trophy-like properties across the United States.
There are other asset classes that are going to struggle more because they’re not delivering that same experience. And there’s more choice in most of the markets because there is higher availability than there was pre-COVID in almost all markets. So now is a great opportunity to think about what are the attributes of the buildings that are going to attract tenants? And to make sure that you are building for that.
Or, if you’re on the tenant side, how do you customize your experience and make it consistent with your brand and reinforce your connections between your employees in order to meet your business objectives? One thing that’s interesting to me is that we’ve had several clients who have gone back to mandatory three, four, or five days depending on their specific situation, and they’ve seen quite limited attrition of employees, if at all. So, I think, as things become more stable, and new habits are formed, I think there will be a greater return to the office.
Like most things, people don’t snap out of their habits too quickly. This will be a process of returning to a more office-oriented work environment over time for many companies.
Seems there’s a lot more interest in flex and coworking environments. Companies are considering options they would not have considered years and years ago. Are you seeing that?
Yeah, absolutely. And I’m not sure if you’re aware, but last year Newmark launched a flex practice group, which focuses on this exact part of the market. That actually was part of the technology innovation practice group that I previously led before taking on this position.
So flex is 100 percent top of mind for us. How do we integrate that into portfolio management to make sure that we’re making the right decisions for clients? What we’re seeing is there are many companies that do have a fixed portfolio. But then there’s also opportunity where they would like more flexibility — whether that’s on a daily, monthly or an annual basis — through a service office provider. And we’re developing relationships with providers like the WeWorks of the world.
I know Newmark had a relationship with Knotel, a competitor to WeWork, and that didn’t go so well. I take it you have moved on from that.
We are relaunching the brand in a different way. They’re open in London, they are doing very, very well there. There’s more to come on that in the future.