by Dan Rafter In Legends of the Industry, Midwest Real Estate News profiles the commercial real estate veterans who've made the biggest impact in the commercial real estate business during their long careers. We start this regular feature by profiling Dennis Hiffman, chairman and chief executive officer of Chicago-based real estate services firm NAI Hiffman. During his commercial real estate career, which has lasted more than 35 years, Hiffman has seen the business evolve from notepads and ballpoints to smart phones and laptops.
Midwest Real Estate News: What led you to this field? Dennis Hiffman: In 1969 I was a high school teacher. I was ready to change careers. I went to a man who I knew who was involved in the business. We belonged to the same church. That man happened to be Jack Gearen, former chairman of the board at industrial brokerage Nicolson, Porter & List. He got me started in this business. He told me where to go to talk to people. At the time I got into the business, you basically had to be born with a silver spoon in your mouth, which I didn't have. You had to be recommended by someone else in the business or you had to have spent 10 years at Xerox for a commercial brokerage to consider talking to you. It was a very small, very close community.
MWREN: It sounds like a big difference from the way the business operates today. Hiffman: It was. After I was hired and became part of the commercial real estate community, I became the 100th or 98th broker who joined AIR (the industrial real estate association). There were only 100 brokers at the time. That's amazing. There were no retail brokers and no office brokers. It was just industrial. Building managers made the office deals.
MWREN: What were some of the other changes you saw in this business? Hiffman: The farthest out we would go was to Itasca. Actually, Route 53 hadn't been built by then. It wasn't even there. To go to Itasca meant that you had to pack your lunch and plan your whole day. We had no cell phones back then. When you were in your car, you were out of touch. I don't know how we survived without those cell phones, but we did. Our listing systems were all manually kept, too.
MWREN: It must have been fascinating to witness all the changes that came to the industry. Hiffman: The number of brokers that we have today and the vastness of the geographic area that we over are the big changes that I've seen. The size of the firms, too. There weren't a lot of big firms around. Then there is the size of the deals today. If someone made a 100,000-square-foot deal in the '70s, that was a huge deal. That was like making a million-square-foot deal today.
MWREN: What do you enjoy so much about this business? Hiffman: I have fun. I enjoy the business a lot. I work every day. I work a lot of hours. I just enjoy the business. It's always a challenge. It's always different. I'm not a person who likes to be tied to his desk. I like meeting the people. I like to see the companies that grow and succeed. I enjoy the people I am around. That keeps me going in this business.
MWREN: When you look back at your career so far, what are some of the accomplishments that you're most proud of? Hiffman: The thing that I continue to be happy about is the reputation that we have enjoyed, both my personal reputation and the company's reputation. It's very important to me. We guard our reputation very closely. And we really do have a philosophy of having our people treat people how you would want to be treated. That makes a world of difference in how people approach the business.
MWREN: Are you ever surprised at how large NAI Hiffman has grown? Hiffman: I'm less surprised as time goes on. Knowing the quality of people whom we have hired over the years, and who are still with us, it's no surprise. They are the best people around. Why wouldn't the company grow and prosper? We are always looking at hiring the best people. We want to hire people who are in it for the long haul. We are in our fifth generation of people who are with us in the company. I enjoy seeing that. When we started, a lot of these kids were fresh out of college. They were unmarried. Now they are family people, responsible people, part of the community. They have grown so much. I have seen their families grow and prosper. I enjoy seeing that. Our company will continue to grow. We will absolutely continue to grow.
MWREN: You've obviously seen many different markets during your time in the business. Do you have any advice for people who've never experienced a market like the one we're going through now? Hiffman: The people I see who are hurting the most are those who didn't save or plan for any downturn in the future. It's the people who thought that everything would always go the way it was going. The people who are hurting the most are those who are in the 30- to 40-year-old age range. They have taken on large mortgages. They have families to support. And many of them didn't put money away. We have always coached our people to put six month's to a year's carry, whatever it costs you to live for that period of time, away and not touch it. Some took the advice. Some didn't. Those who took the advice are in much better shape than are those who didn't.
MWREN: What would you tell the people who are struggling now? Hiffman: We will eventually come out of this thing. The problem is, we don't necessarily know when. I think we have hit the bottom, or at least we're bumping along the bottom and are starting to rise back up. I don't think it will get back to where we were, though, any time in the foreseeable future. In other words, things aren't going to turn around in the next three or five years and be sailing along the way they were three years ago. There has been a fundamental shift in how deals are done and how things are structured. I do think there will continue to be some fallout in the industry in terms of the number of brokers. I think the better brokers will become stronger. The weaker brokers will fall by the wayside. I do see an awful lot of opportunities to grow our business and become a better company. The brokers who fight their way through this will come out the other end as better brokers. They will go back to the basics of doing deals, as opposed to waiting for the phone to ring. The ones who waited for the phone to ring are the ones falling by the wayside. Those that make the phone ring will be better brokers. They will come out stronger.
MWREN: How does this market compare with the other slumps you've seen? Hiffman: I have never seen it as bad as it is now. It's the banks. The banks must loosen up. They are choking everyone. Until they start lending money again, it's going to keep a lid on things. I see them almost going in the other direction now. They need to loosen up and get back to relationship banking as opposed to banking by the book. I think we might end up with monster banks that do it by the book and don't care about the people. And then you'll have very small community banks that will go back to the relationship business.