What is going on with Hines?
I’ve been hearing from multiple people that Hines is letting go of a lot of employees and seems to be losing key business. From what I’m seeing and hearing, it feels like more than just a routine restructuring—it seems like the firm might be facing serious challenges.
This is surprising given their reputation, but the scale of the layoffs and the tone from people inside suggest something bigger might be going on. Are they in financial trouble? Losing major clients? Has leadership changed direction?
Would appreciate any insights from people closer to the situation. And honestly—given everything going on—would you still consider it a good firm to join right now?
I mean they're traditionally a trophy office player. It shouldn't be a surprise that they're struggling.
Traditionally yes, but they're way more diversified now. Their latest Houston development is stabilized.
Meh. In Europe they mostly do everything but offices
Hines is doing fine and still an amazing brand to work for. On the development side they used to be little fiefdoms across the world that each worked on their own stuff but from what I’ve heard management wants to make the firm more cohesive and give it a more institutional feel. Also their PE business is doing fine and has a ton of dry powder.
A number of people I know have left the firm in recent years because of economic conditions. At a shop like Hines when you become senior you end up taking a deal cradle to grave which takes years. A number of senior guys finished up deals after 2020 and haven’t been able to identify what’s next so they’ll either retire or move onto new things. Not exclusive to Hines btw. The economic slump has provided motivation for senior people all across the industry to move or strike it out on their own.
The firms probably hurting from reduced fees on the development side but they’ll be fine.
How are they changing their structure in regards to each city? I always liked their model but it’s hard to grow a national platform when one office exclusively does retail in a region but go 6 hours north & the team only does office. How are they making it more cohesive?
Development has slowed nationally. They make money from development fee income. Doesn’t surprise me to hear about this. Most developers are having problems right now.
Their restructure c2018 fucked them up. They became fees orientated rather than focusing on dela success. This meant doing a lot of risky big ticket deals with a primary focus on fee generation. A lot of those deals went bad as they were underwritten poorly and some of the senior leadership are/were completely out of their depth. Theyre now losing a shit tonne of money and relationships being soured with capital partners
Source - worked there for 3 years
Underwritten poorly? Or just didnt foresee COVID, inflation, et cetera?
Underwritten poorly
No model becomes reality, so please elaborate.
Do you genuinely not understand the difference between a deal being underwritten poorly from its onset and the natural budget evolutions between a deal’s conception through execution?
If I’m hand making pasta and add a bit too much flour by accident, I’m going to need to fix my egg ratio. Not the end of the world—just takes some critical thinking skills and finesse.
If I’m hand making pasta and my dog jumps on the counter, swallows half of the dough in one bite, and then takes a steaming shit on the remaining half, it’s a bit more complicated. Probably won’t be fixable.
No model becomes reality, but the quality of its ingredients or inputs can make a huge difference in how salvageable it is when things inevitably change.
Yeah so expound and elaborate you fool. Stop acting like we’re physicists at SpaceX…
First off, this example is kind of disproving the point you want to make. Your dog eating all your pasta dough is analogous to COVID, not a bad underwriting. Poorly measuring your ingredients is bad underwriting. It's bad preparation and diligence which turns out to fuck over a deal. Something that practically speaking can't be predicted is COVID/inflation/etc.
However, this is also indirectly reinforcing something I try and tell people on this site all the time - underwriting is the least important part of real estate. It's a marginally useful guidepost for a very unimportant part of the deal's life cycle which becomes completely useless the second the deal closes and construction/rehab begins. People are way too focused on it and not nearly enough on actual deal execution. Unsurprising on WSO, a site heavily focused on finance, but worth pointing out nonetheless.
Since the original analyst who worked there didn't elaborate it's hard to tell exactly what went wrong. If they hit their budget, everything was built on time, leasing was exactly on schedule, etc, but rents were like 20% lower than they thought, that's an underwriting issue. No amount of deal execution can save you from bad revenue expectations.
If they hit their rents but everything else was wrong it's one of two things, either more bad expectations (i.e. underwriting) since they didn't realize how long things would take/cost, or it was bad execution. You could have great execution but if someone is putting in a 24 month timeline for something that really can only be done in 30, you're screwed either way.
You are trying to seem super smart by stating things that we all already know: the model is not going to be accurate for the life of the deal. Fine. Nobody is arguing that. But the primary model is hugely important because that is the original business plan which all future decisions are anchored to. Purposely being deceitful in your first underwrite to enhance returns and bring in fees is a very poor business practice. Regardless of what happens with Covid etc, these deals were doomed to fail upon inception.
Some Examples:
this is a phenomenal analogy
The famous Buffet quote hits a little different if you excuse everyone for not knowing the tide was going to go out.
“And honestly—given everything going on—would you still consider it a good firm to join right now?”
Are you anything more than an analyst or associate? Because if not, how the firm performs doesn’t really matter to you as long as they can still make payroll. You aren’t sniffing promote, lost or outsized, either way.
Nice thx
You responded to the wrong comment, moron.
Maybe worry less about Hines and more about Marcus & Millichap
I completely agree. Arguably you learn a hell of a lot more when things are going badly as opposed to everything being rosy.
Anecdotally - Hines has been relatively active on West Coast with Multi Acqs. 4 deals in the last year and will likely do well on them
Turns out that this "Hines" shop is still pretty decent!
Hines has definitely taken a hit. Not sure why they went cheap on their last couple of analyst classes but it’s resulted in sub par talent. A lot of their home grown talent has jumped ship too. They need a culture makeover for sure
I wouldn’t put the blame on the analysts
I wasn't blaming them I just observed that as a indicator they aren't getting the best talent like they used to.
I don’t think they went cheap on their analyst. Hines pays slightly above market comps for juniors
What position
What office
How much
Their IM business is humming which is a segment that is extremely high margin which is likely supporting segments (development in particular) that are struggling in current environment.
You can't execute on reputation alone, they need high quality folks w experience on the ground. That is lacking in certain cases.
The Atlanta shop is notoriously underwhelming for such a productive region. They’ll do a cool deal like the heavy timber office building every now and then, but the real killers left over a decade ago to start their own thing.
Ooh a heavy timber office building that best case breaks even.. wonder why the killers left.
Don’t know the full details but heard that the Atlanta office did pretty good on Fenton
I worked with them very closely when I was in rx on a big CRE port that featured some government properties. Those auctions went horrifically, non-gov went well.
The prop managers who managed the gov props were all let go, maybe that’s it. This port has a few properties very very close to the pentagon and a few other critical sites so the valuations were pretty boilerplate.
It did end up being another valuation fight tho.
LPs on a lot deals are screwed. Hines got their fees. No chance on the promote.
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