Bringing Up Leaders: Robert Brunswick

Robert Brunswick, chairman & CEO of Buchanan Street Partners, spoke with editor-in-chief Suzann D. Silverman about leadership in real estate and his efforts to inspire and train the industry’s future leaders.

Robert Brunswick, chairman & CEO of Buchanan Street Partners, spoke with editor-in-chief Suzann D. Silverman about leadership in real estate and his efforts to inspire and train the industry’s future leaders. Besides guiding Buchanan Street’s own in-house initiatives, Brunswick is teaching a popular new undergraduate course at the University of California, Irvine. Starting out as something of an experiment, the class became oversubscribed and
will be repeated again next year.

Q: Looking toward the future, you’ve expressed some concerns about a looming shortage of leadership. Where do you see the greatest shortcomings?

A: If you look back to 2006-2007, I think that you’re going to see a third to 40 percent (of the employee base) will not ultimately remain in the commercial real estate industry. Simple math tells me that the brain-drain reduction in workforce is going to have an impact on the brightest talent finding their way to our … industry. Simply, if we’re not an industry that’s hiring and growing and perceived as a dynamic industry by the new college graduates, then we run the risk, as we did back in the tech craze … where people pursue other industries and we don’t get our fair share of the talent. …

My simple guesstimate is that we’re going to have a shortfall of professional talent in 2012-2015, as most … graduates pursue other industries and leave us with a talent void. Fortunately, today, the counter to that is many colleges offer classes and degrees in commercial real estate that weren’t there when I started in the industry back in 1981. The question is, are there going to be any jobs available for those that do pursue some education in our asset class?

Q: Are there other industries from which the industry could recruit leaders?

A: As our industry has matured over the last 15 to 20 years, we’ve become much more institutional. (So) there are certainly personnel in other industries that could transfer those skills to our industry—I’m going to call them professional managers. Commercial real estate has always been what I will call limited in its professional people managers. There are other asset classes and industries that can bring those skills to bear in ours, but what they lack is the technical knowledge of how commercial real estate functions. So they’ll be at a bit of a limitation in their ultimate capabilities. I think it’ll be healthy for us to have the access and involvement of (managers) from other industries in our space to round this out. But I think probably at the end of the day where a lot of the talent is going to come from … (will be) ground-up college, homegrown on-the-job training and education.

Q: I really get the sense that investment in human capital is important to your company. How do you translate that into part of your strategy? How do you invest in human capital, and what are you really focused on achieving through that investment?

A: We have, from the start (of) the company 13 years ago, always believed in the continued need to invest in, to nurture and support that investment—I should say, the asset of human capital. If you look at our tagline in our company name, “Capital you can count on,” capital is not just dollars and cents and the dollars that we invest in deals, it’s the expertise we provide to our clients and our investors, and it’s also a corollary to our people. Our people, to me, is the “capital you can count on,” as we describe our company.

We have ongoing education that we do in our company, from active reading that we require of all of our employees to participation in leadership. Our young employees are very involved in young leader organizations—whether it’s ULI or NAIOP. We’ve actually branded some of the young leader programs. I’ve been active in teaching at those. Philosophically, I’m a big believer in (the principle that) you’ve got to give back and you’ve got to mentor and you’ve got to lead. And I’m amazed daily at the payback you get from that—both quantifiable as well as sometimes less quantifiable, but certainly it is something that just enhances the brand of the organization.

So whether it’s trips we take as a company, whether it’s empowerment, whether it’s tangible homework assignments—i.e. reading—it gets down to simply spending the time with people, which is a commitment for an organization to make from a leadership standpoint in mentoring the new young folks that you bring into your company and that you want to see continue to grow and achieve good things.

Q: What have been some of the measurable benefits?

A: The measurable benefits? Retention of employees. The measurable benefits are raising capital pursuant to an HR and a corporate philosophy that investors believe in and subscribe to. A measurable benefit was attracting TCW (Group Inc., the Los Angeles-based investment management firm) to buy a portion of our company in 2007. To a large extent, one of the key (values) that TCW saw in us was a culture that they very much wanted to celebrate and influence their own culture. So that was a really nice recognition. For the entrepreneur, (there is) tangible value that we see in our sales and it’s tangible value we see in not having to go out and hire new employees and retrain the employees; people stay here because they believe that they’ve got a future. The other tangible benefit is the regular comments I hear from customers who say, “I can always tell (Buchanan employees), from the way they present themselves to the way they articulate themselves to their knowledge and capability in terms of serving our needs.” So it’s regular recognition, I guess, that affirms to me that there is some dollars-and-cents benefit to what we do.

Q: What are the leadership skills you’re focusing on in training your people that address the needs you anticipate in the industry?

A: Despite the challenging times that we’re in, we continue to encourage and invest in our employees, and we encourage them to … challenge themselves, to put themselves in the situations where they’re going to learn … . Unfortunately—and I’ve seen it as a teacher now—people get their college degree and then they kind of stop learning or stop pursuing that learning. We believe that leaders are both born and created with a sense of purpose. What we believe is that all of our employees are leaders, there are just varying degrees of leadership and application to individual leadership capabilities. So we don’t say there are only two leaders in our company that came through the freshman class—everybody has leadership capabilities and let’s put them each into a situation where they’ve got to exhibit that. Maybe it’s leading one of our charitable activities. It just kind of depends. But we want a group of equals here that all aspire to that within the organization.

Q: What characteristics would you specifically attribute to a leader?

A: Certainly there are many … they have a commitment to discipline, commitment to being purposeful. They have a vision and they can share that vision so that others will follow them. What I look for in leaders—and (what) I’ve always prided myself on—is getting people to believe in you and follow you. Most people are not leaders. Organizations—whether it’s schools, whether it’s our government, whether it’s business—are, unfortunately, very light on leadership. … I think we’re all continually disappointed in some of the behavior we see in our leaders, and it, unfortunately, can create a lot of apathy, and cause a lot of people that might otherwise have leadership capability not to pursue it.

So what we try (to) do regularly is celebrate leadership and celebrate people for taking on that leadership, and … try (to) encourage, and foster, and celebrate that initiative that gets taken. … I absolutely believe that we can do a better job as a society—and we speak to this at our company—of training, and encouraging, and uncovering leadership. Because I think there’s much more that many people have in this area than we actually utilize.

Q: Tell me about your approach to teaching the real estate class at UCI.

A: It was quite a rewarding experience for me, and … I was able to probably bring a fresh-look, high-energy, out-of-the-box teaching approach to the class. And with that I think it resonated with the kids. My teaching style is to have the kids very much engaged and involved, from (interactive) presentations to teaching one another, so they were quite challenged. And to that end, it was really a different format than I think what I’d call a standard classroom setting. I found that to be more impactful with the kids. They were challenged often by having to get up and speak in front of their fellow classmates, to (prepare) presentations, to have an opinion on what they were presenting that was backed by some research. For many, that was initially uncomfortable … but I saw tremendous growth in just three months in these students—(in) their ability to communicate, to present, to be constructive with idea sharing. And that was what I’m going to call a life-training experience, above and beyond teaching about the bricks and mortar and IRR and debt-service coverage.

Q: How did you draw on your own experiences in teaching them and in what you passed on to them?

A: I’ve been in real estate my entire life. I’ve had different types of jobs within commercial real estate, from development to finance to brokerage to really my last and current job (as) an entrepreneur. I think I was really able to give (the students) a broad brush of the industry from my own experience, and supplement that with actual case studies and resources that I’m personally acquainted with that were able to bring to life some things that … reading a book sometimes doesn’t. (Among our guest speakers,) we had developers, we had pension funds. … We had the head of the UC Endowment’s real estate program come talk to the kids about asset allocation and selection of managers and balancing their portfolio and the purposes of real estate within their portfolio. So that was quite valuable. We had developers talk to them about entitlements and financing—obtaining debt and equity, having a deal go sideways and having to fix that transaction.

I think they got exposed to so much more than just an academic presentation on the asset class, which was very valuable. For myself, that’s the way I’ve learned, so I wanted to pass that on to the students with that type of interaction.

Q: Is there anything in particular about real estate that you have found students really respond to?

A: I think the common response by many of these students who’ve had virtually no exposure to the asset class was they did not realize the influence, impact and integration of commercial real estate in our daily lives. They take for granted the shopping experience, the office environment, the warehousing of all the products or where they might live on a day-to-day basis. They don’t take into consideration the thoughtful urban planning, traffic flows, income underwriting and just all the things that go into commercial real estate. But then, for many, the investment side of it was most intriguing, recognizing that it’s a very significant asset class … and it can generate some very interesting risk-adjusted returns as part and parcel of an overall investment portfolio.

Q: Do you think real estate programs in universities are attracting the talent the industry needs?

A: It was a cowboy industry. And as such, there was much more of a question as to the talent pool going there. But now, with schools like Wharton and the University of Chicago and Stanford and (UC Berkeley) and UCI and others providing this training, you understand going into college that this is a career path and an opportunity for you, and as such, you’re going to (attract) people. It can be a very financially rewarding business, so I think that attracts certain talent. I think the entrepreneurial spirit, the creativity—all those things get their attention.

Interestingly, 50 percent of my class was internationally based. I don’t think that’s a direct correlation to UCI’s student mix; I think that has a lot to do with the views of real estate country by country. That’s certainly something that I think is healthy for our future asset class and our industry, because we’re getting a very diversified base of future employees and leaders—which to me marries up directly with our society.

Q: Are university real estate programs doing a good enough job in attracting students so that they’re really playing a strong enough role in bringing the new talent into the industry—or is it something that they could be doing better?

A: If you look at the cross section of students in all the commercial real estate classes in the U.S., they’re much more balanced by gender and ethnicity than they are in the real world. So I would tend to believe that that bodes well for the future balance of our employee base in our industry. I’m hoping that that translates to more of those people. So I think, to your point maybe, the universities need to do a good job of continuing to pique the interest and maintain the interest of all of them along the way.

Q: How has your own company evolved in recent years? How are you shaping it further?

A: As an entrepreneur, I’m constantly underwriting and evaluating change and opportunity to be responsive to the ever-changing market conditions. Look at the past three years in our industry—it’s so telling. My own belief has always been that the healthier companies have a good balance between exploitation and exploration. You really need to have your base business that can maintain your day-to-day needs, but if you’re not constantly thinking about the R&D department and reinventing yourself and the new-new and how you can stay current, you’re going to be at risk for long-term survival.

I constantly describe us today as Buchanan 2.0, and for me that just means a continued evolution of our principal role, our direct operating capability, which to me aligns with what investors want. There are a lot of people in real estate today that are really focused on the asset allocation side. Some of the bigger hedge funds and the bigger investment shops—they’re allocators first. We certainly are an allocator and we’ve come from that background, but today we have much more emphasis as an organization on the operations side—the bricks and mortar, the boots on the ground. Because I think that’s ultimately your differentiator. Allocation is great in certain cycles where you want to allocate and just get into the space, period, but I think as evidenced by the problems we had before, you’d better have an ability to operate, underwrite and understand the base real estate.

So we’re starting to buy properties direct much more actively in conjunction with our lending business and in conjunction with our joint-venture equity business.