Bay Area Broker Becomes Billionaire on Sub $10 Million Listings

Marcus Millichap Inc.’s website has more than 2,800 commercial properties for sale. The most expensive is a hotel on the New Jersey side of the Lincoln Tunnel for $50 million. The cheapest: a Memphis apartment building listed at $55,000.

The company’s collection of retail shops, offices and apartments has made it the country’s leader in private client transactions, which generally are below $10 million and make up the bulk of U.S. commercial real estate sales. It’s also made the brokerage’s founder, George Marcus, a billionaire.

Marcus Millichap has more listings than any of its competitors, and its brokers closed more deals than any other U.S. commercial brokerage in 2014: 7,667 transactions with a value of more than $33 billion.

“They are the industry leader,” said Mitchell Germain, a New York-based senior analyst with JMP Securities. “They have a database nobody else can replicate.”

Marcus, who has a home in Los Altos Hills, California, controls a $1.9 billion fortune, according to the Bloomberg Billionaires Index. He’s never appeared on an international wealth ranking. Gina Relva, a spokeswoman for the Calabasas, California-based business, said he declined to comment on his net worth.

Marcus Millichap’s revenue increased 28 percent in the first three months of 2015 as sales volume jumped 30 percent to $8.1 billion. The billionaire owns 55 percent of the company, which has almost quadrupled in value since its October 2013 initial public offering, outpacing larger peers such as CBRE Group Inc. and Jones Lang LaSalle Inc.

Biggest Landlord

Marcus also created Essex Property Trust Inc., the West Coast’s biggest apartment landlord, which owns more than 50,000 units from Seattle to San Diego. He controls about 2.4 percent of the $15 billion real estate investment trust.

The billionaire was born in Euboea in 1941, a Greek island about 60 miles north of Athens. The family immigrated to the U.S. when he was four and moved to San Francisco. After working as a broker at Grubb Ellis in San Jose, he left to set up his own shop in 1971, seeking to overhaul the prevailing informality and opaqueness of the industry.

“Real estate was almost a fraternity club,” Marcus said in a June 2011 interview with the Palo Alto Weekly. “Your uncle or your father or someone in the community knew you and your family and you sat at some real estate office and they told you they want to sell this building or that building and you brought them some offers.”

Exclusive Listings

Marcus sought to get exclusive listings from sellers, insisted his brokers shared information and formalized the marketing process.

“Marcus Millichap built a very good business really staying true to this idea that the most transparent market will get the best prices,” said Brandon Dobell, a research analyst and partner at investment bank William Blair Co.

Co-chairman William Millichap was one of the first salespeople Marcus hired and the duo became partners in 1976, according to a 2011 profile in Real Estate Forum magazine.

“George has been so successful because he hired the right people and let them run his various businesses,” John A. Sobrato, a California real estate billionaire whose family-owned company developed more than 15 million square feet of properties in Silicon Valley, said in an e-mail.

Takeover Target

Marcus also cultivated developers, property service providers and investment companies that comprise closely held Marcus Millichap Company. These include San Francisco Bay developer SummerHill Homes and Pacific Urban Residential, which is among the top five apartment buyers on the West Coast, according to its website.

“Service, investment and building companies don’t line up,” Marcus said at the Urban Land Institute in 2013. “Any one sector can be hurt but not all at the same time. I’ve been in brokerage for 40 years and made money in every year but one.”

As the commercial real estate industry consolidates, Marcus Millichap may attract attention as a takeover candidate given its more than four-decade track record, according to Germain of JMP Securities.

This month, David Bonderman’s TPG Capital agreed to buy Cushman Wakefield Inc., the largest closely held commercial property brokerage, for about $2 billion including debt and merge the company with its DTZ unit. TPG, based in Fort Worth, Texas, bought DTZ late last year. In January, DTZ completed the acquisition of brokerage Cassidy Turley.

The current consolidation may also threaten Marcus Millichap’s leadership position in the private client segment.

CBRE and brokerage Colliers International “both have businesses that compete with Marcus, they are just a lot smaller,” William Blair’s Dobell said. “There is a chance that they may look to build those up at some point.”

Political Donations

Marcus Millichap could respond by acquiring smaller local competitors to bolster its national platform, which was part of their rationale for selling shares to the public, according to Germain.

The low-profile billionaire gave more than $3 million along with his wife to the Democratic party in 2014, making him the eighth-largest donor, according to Politico. In July, Marcus hosted a fundraiser at his home in the Los Altos Hills attended by President Barack Obama.

“For a public person, he is very private,” said Phil Mahoney, who lives near Marcus and is an executive vice president at Santa Clara, California-based broker Newmark Cornish Carey. “He and his wife Judy are significant philanthropists but they don’t want a lot of fanfare.”

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