Last month, Marcus & Millichap Real Estate Investment Services named John Kerin as the firm's new president and CEO, succeeding Harvey E. Green who retired following a three-decade career at the firm. Kerin, who has been with the Encino, Calif.-based firm since 1981 and served as a senior vice president and managing director, took time to talk with Multifamily Executive about his new role and his future goals and expectations.
MFE: How did you originally get involved in real estate and the multifamily market?
KERIN: I always wanted to be in a business without limits other than my own, and commercial real estate brokerage very much fit that. At that time [the beginning of my career], there was no formal training or structure which forced me to learn the business from the ground up. I have been in the business for 32 years, first as an agent with another firm for three years, then as an agent for Marcus & Millichap which involved many multifamily sales. As the company grew, I was tapped by Harvey Green, who was my manager and mentor, to get into management. My experience with multifamily investments grew rapidly because it made up the vast majority of Marcus & Millichap’s transactions and even though we diversified into other real estate segments quite a bit as part of becoming a national company, we have been the largest broker of multifamily properties in the country for quite some time.
MFE: Besides your recent appointment as president and CEO, what do you think has been your greatest achievement at Marcus & Millichap?
KERIN: I am very proud of my sales record as an agent. I was a top 10 agent for multiple years in a very competitive market. As the manager of the Los Angeles office, I took the operation from one of the laggards in the company to a top office within a few years, which is also something I have always been proud of. Mostly, I am very proud of the agents and managers I helped to develop over the years. As part of management, your job is to develop others, set performance expectations, and be a coach along the way. You also have to make sure that clients are getting better results than they would anywhere else. I had the chance to work with many agents and clients and to oversee many of our offices throughout the country as we expanded and that gave me a great perspective.
MFE: How has Marcus & Millichap survived the recession; what separates the firm from its competitors?
KERIN: We tout the fact that a difficult market brings out the best in us and in our system. Marcus & Millichap was created to offer a unique system of marketing real estate, not through mass marketing but through target marketing the right property to the right buyers. We set up our entire internal operations to support information sharing and harnessing buyer relationships of over 1,200 agents to match one property at a time. It all starts with understanding the clients' needs and approaching each situation as a problem solver. We are fortunate to have many agents and managers who have been with the company over several cycles and have the right skill and attitude. Still, we had to retrain a large portion of our sales force and have come out of the downturn financially strong with higher market share. Many of our competitors had listings that they could not sell over the past two years because of their general approach and broad marketing, and we ended up taking them and selling them because of our relationships and the system I just described.
MFE: What are your plans and goals for the future of Marcus & Millichap? What are you most excited about?
KERIN: We have become the largest investment brokerage company in the business with a very consistent platform from market to market by opening our own offices, hiring and training investment brokers, and providing a very local focus on quality control through our regional managers. We are very well-positioned to accelerate our growth in major transactions, expand faster in different product types, and to also look at ways we offer more financing-related services. We are introducing a new platform dedicated to major private and institutional apartment owners called Institutional Property Advisors (IPA). We are looking at international expansion as well. I am most excited about taking our message to the market by letting as many owners and investors know that we can help them through our research, financing, and sales. The point is to develop a long-term relationship with every owner in our market areas and make sure we are there to help them strategize; analyze their situation; maximize their returns during a hold period; acquire the right real estate; and, at the right time, market their properties for them.
MFE: What advice would you have for an up-and-comer in the multifamily world?
KERIN: Stick to the fundamentals—they work, even if at times they don’t seem important, those times are pretty much always short-lived. It’s a cliché, but we are all living it. Whether you are an investor, lender, or broker, it applies. That doesn’t mean you should be closed to opportunities; it’s a matter of being realistic about the risk. In fact, those people who stepped up and bought good-quality properties a year ago at the deepest point of the economic downturn have already been rewarded. Another key point is to be patient, especially for people coming into the brokerage business. It takes time to develop your expertise and craft, and it takes time to absorb the subtleties of the business. This is in some ways similar to having to go to medical school to become a doctor—it doesn’t happen overnight.
MFE: What do you think the future holds for the multifamily industry?
KERIN: All of our research points to a period of tightening vacancies and rent growth for at least the next three years starting with concession burn-off this year. The reason my optimism is more about the next three years than let’s say the next five years is that we don’t know what the supply side will look like in 2012 and beyond. With financing becoming more available and vacancies tightening, developers could get busy again and overbuild. On the demand side, the picture couldn’t look better from the standpoint of demographics, immigration, and reversal of the homeownership rate. The biggest risk is waves of home buying as employment improves and lending qualifications ease, but there should be plenty of back-end demand entering the market to more than make up for the loss of renters to home buying. There will be a shortage of quality rental housing once the economy really starts to expand, which is probably about a year off, especially in high-density metros like Los Angeles, Chicago, the Bay Area, New York, Miami, and Washington D.C. Even markets like Denver and Seattle will do well as they burn through their oversupply condition.