The next Related/Hines?
Are there any firms that have been emerging as major players on a national and even global scale the past 5-10 years?
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Would interested to hear peoples thoughts on the next big up and coming developer as well.
I know there were a bunch of major multi family developers that started after the GFC ie mill creek,StreetLights, and others, but I wouldn’t put them at that level.
1. Honestly, I would not consider a niche developer as top of the class. Meaning if they only build multifamily, then I wouldn’t classify them as one of the behemonths - even if they do a ton of deals. Reason being is cause they have not proven their effectiveness in the other asset classes. That being said, they are more so just beneficiaries of capitalizing upon a realized niche as opposed to actually being great developers of real estate. At the end of the day, pretty sure there a lot of multifamily developers who are wealthy and uber successful - which is really what real estate is all about.
2. Wouldn’t call myself a real estate historian but one thing I have noticed is there are literally thousands of development shops in this country. Each city (depending on size) has at least 5-7 premier firms. Then there are additional mid sized firm that do great deals as well. Development is really city or region focused now. A lot of that has to do with the time it takes to finish a project and the entitlement process - some municipalities have made new development so cumbersome that you really have to become an expert in a certain area just to get a projected started. For example, SL Green, Tishman Speyer, and RXR are renowned in NY but in the south, Lennar and Trammell Crow are giants. Out west, the Irvine Company basically owns Orange County. Very, very few firms actually develop across the country - Brookfield, Related, Hines, and maybe CIM but I think CIM is mainly just NY and LA.
Hines was primarily an office developer for the first like 30 years as a firm. It’s only in the last 20 years that they have diversified to other property types significantly.
I'm not sure I understand the circular reasoning here. Why should a firm perform in every asset class in order to be considered a top player?
I would think that total transaction volume coupled with successful execution is the only important qualification. Obviously some firm doing one deal every couple years, but hitting it out of the park, isn't a major player. Nor is a firm that churns a ton of deals but is barely making overhead. But I don't see why you have to play in every sandbox, in every market, in order to be a top firm. In some ways I'd think that would be harmful - if you specialize in everything, you specialize in nothing.
On a more general note, I'd argue you'll see very few Relateds or Hines' emerge in the coming years. There is a lot more capital in the market, and I would argue that in the last few decades the barriers to building have become so high from a political/regulatory/bureaucratic standpoint that it's just not as easy to go into a new market and put in a foundation. You need local relationships to entitle land and smooth out the development/rehabilitation process that I'm not sure were needed in 1991.
You might see more regional players. Or maybe firms that have a presence in 2 or more regions.
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Nate Paul's firm is up there. My man faced some legal troubles, but he will be back on his feet soon.
Other than CBRE (who is about as diversified and more so than Hines already), is anyone even likely trying? I mean, not sure the advantage unless just want to be large for scale's sake.
Also, i'm not sure why Related and Hines top your list of those to aspire to? Those are very very different firms.
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The only one I can really think of is Greystar, as they're moving into new product types. Agree that "Related and Hines" is a weird 1-2 at the top though.
Why do you think Related and Hines are a weird 1-2? I know this isn’t the forum for rankings and also get that there are a lot of different ways to measure success in this business but who would you put on par or ahead of them?
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