In this article, Kent Elliott, principal at RETS Associates, and Steve Penn, president of management services at KG Investment Properties, an asset management, development and investment firm based in Bellevue, Washington, provide three top tips for expanding into new markets.
Their tips are based on their experiences with KGIP’s recent expansion into the Bay Area, following the purchase of Parkway Properties, a boutique asset and property management firm, in Pleasanton, California. KGIP absorbed Parkway’s team and assumed its portfolio management assignments in the Bay Area.
Elliott’s Tip No. 1: Know the market and how your company can transition into it.
According to Elliott, there is an increasing demand for real estate professionals in top California markets like the Bay Area because there are many out-of-region firms looking to establish beachheads there. In turn, this is causing an increase in recruitment assignments from investment firms seeking local talent and executives. RETS believes the best thing these companies can do is hire talent that has strong local relationships and already knows the territory, the players and the tenants.
Steve Penn (SP): In early 2016, we purchased San Francisco-based Parkway Properties to begin our expansion beyond the Pacific Northwest. We were attracted to the Bay Area because there are a number of characteristics that parallel those of Seattle and Portland. First, many CRE investors and developers that are active in the Pacific Northwest have projects and portfolios in the Bay Area. This was a natural transition into a new market because many of our current clients were already in the region. Additionally, we feel there is strong connectivity with the tenant base in these three markets because all three are dominated by technology companies. Next, the talent base in the Bay Area shares characteristics with the talent in the Pacific Northwest: there is a lot of young talent attracted to vibrant, entrepreneurial company cultures.
When we acquired Parkway, we also took on their existing nine-person team. This helped with a seamless transition for our clients, Parkway’s clients and their tenants without diminishing the service delivery. Since then, we have not only successfully on‑boarded the existing Parkway portfolio, but we have gained several new assignments in the Bay Area and hired additional team members allowing us to officially launch the KGIP name in the region this quarter.
Elliott’s Tip No. 2: To attract top talent, know the types of professionals that are in the market and what motivates them.
According to Elliott, regional characteristics can greatly dictate hiring motivators for top talent – especially in the midst of the current talent war. For KGIP, this was important to be mindful of when expanding into the Bay Area because unlike Seattle’s concentrated CBD, the Bay Area is spread out into three very different markets. This greatly impacts commute times, one of the Bay Area’s top decision-making factors for talent when considering a job. Someone living in Pleasanton, for example, is not going to want to commute into the core of San Francisco, and it was important to take this into consideration in the search to bolster KGIP’s team in the region.
SP: At KGIP, company culture is extremely important to us. We want our employees to be happy, feel fulfilled and see a career path. The team at RETS has a pulse on exactly what candidates want, emphasized the importance of a short commute time and advised us to maintain search parameters to the Pleasanton-East Bay area. That insight, combined with our own desire to protect and support our teams, is what enabled us to move swiftly and make an offer to a highly qualified candidate within just two weeks.
As I mentioned, we needed to be mindful that the Bay Area is dominated by tech companies, and candidates of all backgrounds and experiences are attracted to the dynamics of that industry. RETS advised us to thoughtfully market our entrepreneurial and innovative culture to each candidate, especially because there are more available CRE jobs than there is available talent. We have learned that in tech-dominated markets, employees want to be energized and see how their career can grow. In order to attract and retain top talent, we need to deliver that feeling.
Elliott’s Tip No. 3: Before expanding, have a plan in place for business and team growth.
According to Elliott, it’s important to communicate a growth plan to candidates. For KGIP and other companies entering new markets and seeking local talent, it is a good idea to clearly lay out growth opportunities both for the candidate and company so each potential new hire has a line of sight into the stability and future success of the company. Because there are so many more jobs than available talent, candidates can be selective and will seek a company in which they feel they have a solid career path.
SP: The ability to quickly add scale was crucial for our entrance into the Bay Area. The purchase of Parkway Properties fulfilled a portion of that plan because we took on the team and existing portfolio management assignments. However, to continue to grow and achieve our business goals in the region, we agree that demonstrating a career path to a prospective new hire, rather than simply offering a job, is critical if we expect to attract quality candidates. We shared the benefits of our type of company structure, and how it would lead to more autonomy, growth opportunities and overall balance; from our recent experience, these characteristics were highly desirable to the candidate pool.
In addition to asset and property management, we are an active developer that structures joint ventures with capital partners to conceive and create institutional-quality projects throughout the Pacific Northwest. Now that we have established our management business, expanding our development business to the Bay Area is next. As we do, the tools and direction that RETS has provided thus far will be critical as we grow our team to meet the demands of our growing client base.