In October, Cushman & Wakefield named Washington, D.C.-based James M. Underhill chief executive officer of the Americas, the company’s largest operating region. The move is a significant shift for the company as the first time that any executive outside of Cushman’s New York City power base has led the global real estate services firm’s North and South America operations, which bring in some 70% of its annual revenues.
Underhill oversees the company’s operations in the U.S., Canada, Mexico, Argentina, Brazil, Colombia, Ecuador, Peru and Venezuela, reporting directly to Glenn Rufrano, the firm’s president and CEO. The 25-year real estate veteran has been with C&W for more than five years and previously served as executive vice president and area leader for the firm’s Mid-Atlantic and New England regions.
Underhill was part of a wave of Texas-based real estate firms that established operations in the Washington, D.C. market in the 1980s and ’90s. First with Trammell Crow Co. and then joining former Dallas Cowboys’ quarterback Roger Staubach’s real estate firm, founding its Northeast division in 1987. He grew the operation from a single person to more than 100 professionals, transforming it into Staubach’s largest and most profitable unit outside of Dallas, overseeing Staubach Co. offices in D.C., Northern Virginia, Philadelphia and Boston. During his time with Staubach, Underhill negotiated deals with a combined value of more than $1 billion, totaling more than 3 million square feet.
The following is an in-depth interview with Jim Underhill for an that ranged from the company’s U.S. growth strategy to its plans to compete for market share and recruit professionals to Cushman’s U.S. operations, which include 141 owned and alliance-linked offices and account for 70% of the company’s revenue.
Now that you’ve been on the job as CEO/Americas for a few months, what priorities have you set for this year? Where do you see opportunities for growth?
Jim Underhill: The main reason I was excited about taking this role was because of the growth initiatives we’re embarking upon. Like most companies, not just in real estate but in every industry, we were cautious in the downturn and certainly weren’t looking at aggressive growth. But that has all changed. Coming out of 2010, which was a strong year for us, we have a very ambitious five-year plan to grow significantly.
Most of that growth will not involve increasing the number of locations around the world. We believe we’re in all the major markets we need to be. The growth will come in continuing to both broaden our services and our depth in existing markets. For me, that’s the number one priority. You can’t do that without continuing to have a clear focus on client service. You need to make sure to support growth with the appropriate infrastructure and touches to the clients.
One of the challenges for me personally has been getting my arms around the number of markets we have in the Americas. I oversee an area that stretches from Brazil in South America, which has perhaps the most robust economy in the Americas or even the world right now, to the far corners of Canada. We have ambitious growth plans, but it’s all about being able to prioritize opportunities. For us, the challenge is being thoughtful and making sure we make the right decisions in our expansion, and not just expand for the sake of expansion. It needs to be the right place at the right time. And most importantly, with the right people that fit our culture and our vision.
Can you tell us more about the types of opportunities you plan to prioritize?
Absolutely. We’re in all the markets we intend to be in within the U.S., but we want to extend and deepen our expertise in those markets. We look at each market as we would Washington. There are probably 15 submarkets here and we want to have experts in every submarket of the major markets. It’s about drilling down into the communities to deliver the quality of service and information that clients are looking for.
Also debt and restructuring has become a much more significant part of our business, given the pressures we still have on property values. That’s a service we have in probably half our U.S. locations, and it’s an easy one to import because the flow of capital is not location-based. So, we want to have [debt and equity] advisors in every market. Changing conditions are driving us to look at expanding services on a market-by-market basis.
There have been a number of changes in terms of the major players. This past downturn in particular has seemed to spur quite a bit of musical chairs, including the formation of Cassidy Turley and aggressive hiring on the part of Jones Lang LaSalle and Colliers in particular.
What are you doing to protect and increase market share?
We’ve consistently been at the top of the industry for decades, and that’s true if you look at revenue or the volume of sales and leases completed over the last few years. CB is naturally larger than everybody. We’re not chasing size for size’s sake. We want to enhance coverage in all our markets but we have generally not grown by acquisition like the other firms. We’ve generally grown organically and we will continue to do that. There may be some acquisitions along the way, but it’s not our goal to become the biggest. With size comes a greater challenge to maintain quality. It’s paramount that we remain one of the best firms in the world. Scale does matter and we’re going to continue investing in the firm and grow it, but being the right-size is really the driver for us.
What is it that distinguishes Cushman from your main competitors?
Our brand is recognized worldwide. No one has more or better brand recognition. We feel our people are the primary differentiator. As we’ve grown, we tend to view our people as hand-picked. By choosing to work with alliance firms in secondary markets, it has allowed us to focus all our resources and energy on being the top or one of the top firms in all the major markets.
Are we seeing the demise of the referral network model with the rise of Cassidy Turley and FirstService/Colliers?
Our clients are telling us it’s becoming more and more important for them to work with a single, global firm. They value having a unified advisor under common ownership. We think it will be more challenging for firms that are not 100% owned and under the same umbrella to compete for many opportunities. There’s a place for all sorts of firms as niche players and opportunities in local markets. But, our customers are telling us that having a company and leadership that has control over all their locations is important. Let’s look back in a few years and see how successful some of those other firms have been in rolling up under common ownership, or whether it’s just temporary.
I believe your firm has acquired outright a number of firms that were previously affiliates through the C&W Alliance. What governs the decision to operate a corporate-owned office in a market versus an affiliation with an independently owned firm?
The alliances we’ve formed in local markets typically have been with the best firms in those marketplaces. As certain markets evolve, there may come a point where we feel having a wholly owned office might be the right solution. Very often the best way to find about a firm — not just their market coverage and technical performance but how good a cultural fit it is — is to have them as an alliance partner before it becomes a full Cushman office. We feel that it’s a thoughtful way of expanding with a partner.
If we find one we think is the right fit at the right price, then we have the ability to execute. With organic growth, we feel we have the greatest control over the quality of the talent we’re bringing in along with the ability to properly integrate it into our culture. We’re going to look at any and all opportunities that will make Cushman a better firm, but there aren’t any specific opportunities to talk about right now.
How important is it for the major service providers to have a strong capital markets presence and what are your plans for remaining an active player in that space?
Capital markets are a top priority for us and an area where we expect to be very active in the coming year. Our business really is a three-legged stool — the leasing, property management and capital markets pieces. All are vital to providing clients with service. We made a statement by hiring Greg Vorwaller in Chicago six months ago just before I arrived to oversee our capital markets growth globally. We’re looking at every market to see if we need to add resources. In some, we’ll be adding additional debt and equity and advisory capabilities. New York is a very important market for us and we’ll be continuing to look for opportunities to expand.
What specific steps are you taking to increase collaboration and discourage territorialism between the capital markets and brokerage teams?
We have transformed as a company. It didn’t happen overnight, but we are committed to having all our professionals operate in a collaborative way. Anyone we bring in needs to be committed that they’re going to work in a team environment, that the interests of the client come first. It all begins with messaging. When someone isn’t collaborative and team-based, it jumps out.
We’ve made some personnel moves to make sure that all the people at Cushman & Wakefield are committed to it. Some of those aren’t easy decisions to make. But at the end of the day, you’re a better organization if you’re a unified team and everyone is behind one central goal, which is delivering the best services to the clients. Brokerage is an individual, commission-based business but we also have measurements and bonus programs that are tied to the success of our performance and client satisfaction as a company.
C&W’s recent earnings release was unusual for a private company. Should we read anything into this push for increased transparency on the part of your firm?
Since our parent company [Exor] is public, there is a requirement that certain financial information be disclosed. That’s been the same since the beginning. We have no plans for a public offering. There’s been a lot of chatter about that, but our plan is to continue to grow the firm and be the best that we can be.
What steps is C&W taking to diversify the firm’s revenue stream?
We aren’t driven by that, we’re much more focused on responding to market opportunities. I expect our non-transactional revenue will grow at a higher rate than our transactional business, but we anticipate growth in all of our service lines. Our global consulting business is an important one for us. Our investment banking capability doesn’t get a lot of attention, but they’ve been involved in some of the biggest transactions in the country. The bread-and-butter fee business is property management, project management, and I anticipate there will be significant growth in those areas also.
What is C&W doing to retain and recruit top brokers across the country?
We think top professionals want to work for a firm that’s got a quality platform and a culture that will support what they’re trying to accomplish. For us, it’s all about making C&W a great place to work. If we do that, the recruitment and retention will take care of itself.(credit , r.drummer-co-star)