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Building Client Success in Any Market

The disruptive force that was the 2020 pandemic found Marcus & Millichap continuing to innovate in ways to serve its clients better, even as other real estate services firms focused simply on riding out the storm. However, building on its history of staying a few steps ahead, the company had been gathering momentum for lasting change since 2016, when Hessam Nadji assumed the role of CEO. 

“Periodically, there is a need to refresh the vision, culture, and leadership thrust to make the company stronger with a sharpened focus on the future,” Nadji says. “This was an important period in our evolution, so we took a holistic look at the market, our position, strengths and weaknesses, and evolving client needs with a fresh eye.”   

Nadji and the company’s senior leadership saw this as an especially opportune time to conduct surveys and focus groups internally and externally, to secure input from its sales force and clients. Through this process, the team refreshed the company’s long-term strategy, which is built on four key charters: further building the company’s leadership in the private client segment; increasing its penetration in larger, institutional transactions; significantly expanding its financing service capabilities in both the private client and institutional segments and market coverage; and further expanding the advisory, research, and consultative foundation of providing client services. 

“In any given year, there are between 40,000 and 50,000 commercial real estate transactions in the U.S., of which on average 84% are between $1 million to $10 million,” says Nadji. “This micro-cap base is predominantly made up of private investors, many of which are passive individual high-net-worth investors and small partnerships as well as professional traders and private fund managers.” 

Within this universe of micro-cap transactions, the top 10 brokerage firms — including Marcus & Millichap, the front-runner in this space — represent “just 25% of total transactions, with the rest brokered by small local and regional firms, individual brokers, and many principal-to-principal transactions.” 

Given the size and fragmentation of the private client segment, “even in apartments and retail, which have been the company’s leading market segments throughout our history, there is still significant room for growth,” says Nadji. At the same time, there is also an opportunity to expand the company’s presence in other major property types, especially office, industrial, hospitality, and self-storage.

George Marcus founded the company by recognizing a major gap in service for private investors and the absence of any organized system for matching buyers and sellers. “There were no investment specialists at the time, mostly generalists,” says Marcus. “We saw the disservice to sellers who were not getting the asset exposure they deserved to maximize value, especially the private investor most ignored by major service firms.  So we created an entire company based on professional, training-based investment specialization and developed a marketing system to reach the broadest buyer pool,” he adds.  

Fifty-plus years later, the company’s signature training program, proprietary marketing system (Mnet), and a culture of collaboration have evolved to make it a highly effective platform for capturing repeat business and dominating the private capital space while creating a career track for its salesforce.

Increasing Marcus & Millichap’s presence in the institutional sector was a natural expansion strategy, Nadji explains. “About 10 years ago, we anticipated that many private investors, particularly aging Baby Boomers with significant long-term real estate equity, would seek larger, institutional quality properties as a path to consolidate their portfolios. At the same time we also expected that institutional allocations to commercial real estate would continue to grow in search of yield and alternative investment option, which has also materialized.“ 

The result of this projection was the establishment of the Institutional Property Advisors (IPA) division within Marcus & Millichap. IPA is designed to service the unique needs of institutions in terms of underwriting, account management, and multi-market service delivery while creating a channel of equity deployment into larger assets for the firm’s private clients. By 2016, says Nadji, “the initial success of IPA gave us confidence that we were on the right track and should get more aggressive about this growth strategy as we began to prove our ability to bridge the private and institutional segments and add value for clients across the board.” 

To expand the company’s financing service capabilities and market coverage, Marcus & Millichap Capital Corporation (MMCC) was created as a financing intermediary to help borrowers secure the most competitive rates and terms. “The integration of this critical service with our sales force to provide a more holistic value proposition has been and remains a clear opportunity to build stronger client relationships, capture more repeat business, and grow revenues as a result,” Nadji says.  

In growing the MMCC platform, two key strategies became clear: growing capacity by adding experienced, accomplished financing professionals and teams and acquiring complementary financing firms; and building out service capabilities, notably agency lending for multifamily and loan sales, which are complementary to the company’s existing financing activities. Investments in marketing, technology, and widening the lender network were additional strategies to bolster the company’s private client financing capabilities and to better support its organically grown financing professionals.

Behind Marcus & Millichap’s high transaction velocity — averaging 50 per business day in the first nine months of 2022 — is “an extraordinary amount of research, market and financial analysis, performance benchmarking, and data on pricing and buyer demand that our nearly 2,000 professionals provide to owners and investors daily,” Nadji says.

These factors go back to the reason Nadji joined the firm in 1996: “to help set up a unique, research and advisory service-based connectivity between our sales force, owners, and investors while shifting the brand to a leading source of market intelligence and research. We have come a long way toward accomplishing this goal, but given the rapidly increasing sophistication of the client base and the opportunity to position every one of our professionals as a long-term, trusted advisor, there are many ways we can further build on this concept.”  

“An increasing number of investors are also coming directly to the company for research, consulting, and analytical work as they look to develop strategy before executing transactions,” he continues. “We see this trend as another growth opportunity.”  

Once the business strategy was refreshed, it became critical to design the right execution strategy and priorities for getting there. “We had, and still have, the same fantastic foundation in our unique business model, culture, and personality of the firm,” says Nadji.  “But everything else was in need of a major push out of the comfort zone. “ 

This push required refreshing the company itself and updating plans, resources, and, most importantly, priorities, Nadji says. The process entailed the following strategies: 

  • Reshaping and expanding the leadership and management teams. 
  • Re-energizing the collaborative culture of the firm and pride of association. 
  • Increasing productivity and ease of doing business for the sales force by significantly increasing investment in technology, innovation, support personnel, and systems. 
  • Advancing the firm’s market-facing technology to enable investors’ connectivity to our industry leading inventory, sales force, and research content.  
  • Elevating direct client content, information flow, and knowledge-based brand awareness.  
  • Complementing the company’s traditional organic growth model with select, targeted acquisitions as well as recruiting experienced professionals and teams without disrupting the highly valued and respected existing sales force the company is built on. 
  • Enhancing sales force training, internal communication, and best-practices forums.  
  • Attracting and retaining the most talented sales and support professionals by making the company a great place to work through individual care, development, and diversity and inclusiveness initiatives that expand the talent pool. 

“My first order of business was to reshape the leadership team,” Nadji says. “We retired a number of legacy partners with honor, opening the field up for the next generation of in-house best of class leaders and bringing in outside talent to supplement our thought leadership and benefit from executive expertise from other industries. Our leadership team today reflects this massive reshaping.”  

The reshaping in turn facilitated the execution of the other seven strategies. “This set the foundation of how we navigated the pandemic in 2020, achieved record results in 2021 and 2022 and are now navigating the current challenge of the market disruption caused by the Fed’s extreme measures to fight inflation,” says Nadji.   

In 2020, Nadji says, the company made four key acquisitions and achieved healthy earnings despite a major market disruption as transaction volumes collapsed in the early part of the pandemic and moderately grew its cash reserves. “We went completely virtual within three business days amid the economic shutdown and did not lose or delay a single transaction,” he says. “Our team across the organization really pulled together, and the interconnectivity empowered our sales force to stay focused on solving problems for clients and helping them navigate the shock of an economic shutdown. The pandemic was a real test of our technological advancements and cohesive leadership execution. We simply focused on the client, supported our sales force, pumped best practices and idea sharing at extreme levels, helped our staff operate virtually, and stayed on the offense by acquiring and adding talent.”  

The sheer volume of transactions that we do allows us to see the largest part of the marketplace. Our teams are better able to see and better able to position and price assets according to where the marketplace is. 

J.D. PARKER, COO, Eastern Division 

In 2021, the company achieved records “by helping investors move a record volume of capital across markets and product types, take advantage of record-low interest rates and put capital to work,” says Nadji. “The company set milestones in revenue, earnings, productivity, and the introduction of new tools. These achievements further boosted our fortress balance sheet, which positioned the company to continue with key acquisitions and initiate a dividend policy in 2022.“  

One of the drivers of growth and change has been a series of key promotions and hires. These include naming Richard Matricaria and J.D. Parker as co-COOs and Greg LaBerge as chief administrative officer. Both Matricaria and Parker “started as investment brokers, became managers, and grew to oversee multiple offices,” Nadji says. “They lead seven outstanding division managers who have extensive tenure at the firm successfully running major offices, and who now oversee over 80 brokerage offices.”  

“This generation of sales leadership is highly in tune with our sales force’s needs, understands technology and branding, and passionately advocates change,” he continues. “The COOs also oversee our specialty directors, who are veterans within each property type and bring technical expertise and client relationships to our sales force. This integration has been instrumental in bringing out the best of coordinated support and management to our sales force.” 

As CAO, LaBerge oversees the company’s infrastructure, technology initiatives (in partnership with CIO Ken Sayward), administrative support, and research. A company veteran with roles as an agent, manager, and specialty director, LaBerge came to Marcus & Millichap with an extensive consulting background.  

The company further appointed Evan Denner, an industry veteran with 30-plus years of real estate capital markets experience, as head of capital markets last year. “Our new CFO, Steve DeGennaro, is a veteran Silicon Valley technology executive with extensive M&A experience,” says Nadji. “Our chief legal officer, Mark Cortell, comes from the private equity world and also has significant M&A experience. To round out the leadership team, we added chief marketing officer Andrew Strockis, a high-ranking marketing executive at Schwab and a strategy consultant with Accenture before that.  

“The combination of in-house tenure, cultural knowledge, and fresh thinking is helping us take the entire growth vision and its execution to the next level in a relatively short amount of time,” he continues. “For me, it’s great to watch the dynamic among these thought leaders as we foster a culture of consensus and free thinking to explore ideas and encourage debate but execute with a high level of alignment.“ 

Among the firm’s key advantages, and the foundation that enables it to be nimble and innovative, is “the structure of our local management,” says Matricaria, COO of the Western Division. “Our regional managers are all former investment sales professionals and understand the brokerage business exceptionally well.”  

The key to success is having a highly focused management team that listens to client and sales force needs and a technology development group that partners with management on priority-setting instead of making decisions in a vacuum.

HESSAM NADJIPresident and CEO 

“In contrast to their counterparts at other organizations, our managers are not administrators, competing player/coaches who take commissions, or general managers,” Matricaria says. “Instead, they are market leaders tasked with partnering with our sales force to provide the best client service; develop a leading local brand; and hire, train, and retain the best of the best. Having a dedicated management team whose success is measured by local office sales force growth, excellence in client service, and retention of talent differentiates our model. Our management team is compensated on office and company financial and non-financial goals and results, which reflects this philosophy.”    

The company has also grown through a series of initiatives: adding many experienced investment brokerage and financing teams and individuals, establishing an auction platform in 2022, and developing a loan sales platform and alliances, such as the relationship with M&T Bank that was announced in 2021. Parker, COO of the Eastern Division, says the initiatives have been very successful “because they fit well with our core business. They came about as the result of a deliberate and specific strategy to augment and supplement our core brokerage and financing service, not overlap with them.”  

The auction platform, he says, adds another marketing channel suited for particular situations and assets. “It functions as another layer or extension of our traditional marketing system, which effectively exposes each exclusive listing to the largest and most qualified buyer pool selected for that particular property.”   

Denner says, “The loan sale platform enables the firm to widen the breadth of business opportunity with major lenders. As we drive volume to many lenders as an intermediary, we can help the same lenders buy and sell loans or pools to fit their strategy and portfolio needs.”  

Denner calls the partnership with M&T “truly groundbreaking on the agency lending side. One of the best lending platforms in the multifamily business is now our partner in helping major multifamily owners and buyers access the agencies seamlessly and competitively with no added cost to the client. The partnership works because as the leading broker of multifamily assets, Marcus & Millichap and our IPA division generate a tremendous volume of sales each year and a high level of interaction with major owners regarding capital needs, refinancing, and recapitalization. Our loan originators can now bring M&T’s agency licenses, expertise, and execution to these clients, which they could not do before our partnership was set up.”   

Nadji adds, “We are just getting started on these supplementary growth initiatives, their scaling, and expansion. It’s really exciting to see the possibilities and that they are working as envisioned.”  

Within commercial real estate, the pandemic accelerated the adoption of technology at many companies. Marcus & Millichap, though, has always been there. “Technology is in our DNA,” says Nadji, pointing out that the most basic founding principle of the platform — exposing each exclusive listing to the largest pool of qualified buyers — was “ripe for automation, technology, and efficiency” from the start. 

“Our late co-chairman Bill Millichap was a major advocate for real estate technology from the beginning,” says LaBerge. “By the late 1970s, the company already had a central electronic inventory system and databases that tracked properties, sellers, and buyers. Our proprietary internal inventory and buyer-seller matching system, Mnet, is rooted in that original application with countless upgrades and replacements. We were the first firm to embrace the Internet. Our website went live in 1994 displaying inventory online, and we even invested in new platforms such as LoopNet and several other real estate startups.”

“Over the past five years we have quadrupled technology investments and introduced an array of automation tools internally and for our clients,” he continues. “The latest examples are major website upgrades during the pandemic that made it much easier for investors to access our inventory, which were then followed up last year by a new tool called My MMI. This is a client application that allows each investor to have saved, custom searches for inventory that continually look for listing matches with automatic alerts and access to our research content. We are already working on the next series of upgrades to this and many other tools.”    

Marcus & Millichap started the first large-scale apartment rental directory in 1996 and named it “AllApartments,” which was renamed “SpringStreet” and eventually became part of Realtor.com. “In addition, we were the first firm to introduce an automated internal system for preparing market analysis and opinion of value as listing proposals and marketing packages for clients called Mnet-Offering,” LaBerge says. “This automation empowered our sales force to offer more relevant information produced more quickly to each client than ever before. It, too, is constantly undergoing refinement, upgrades, and replacements.”  

Nadji says, “The key to success is having a highly focused management team that listens to client and sales force needs and a technology development group that partners with management on priority-setting instead of making decisions in a vacuum.” 

Just as a tech-forward approach has been in Marcus & Millichap’s platform from the beginning, so has a client-first approach. “Creating a client-centric business model was George Marcus’ founding vision for the firm,” Nadji says. “This meant doing something that had never been done in starting a company that specialized in investment brokerage, financing, research, and advisory services.  

“The real estate investment specialization cornerstone has morphed over the past five decades by organizing the sales force by product type and market area specialization,” he continues. “The premise of this is the belief that a dedicated specialist will accumulate a higher level of expertise and seller, buyer, and lender relationships, all of which result in doing a better job for the client. This is how Marcus & Millichap has earned the top investment broker slot for many years and is top brokerage firm in apartments, retail, self-storage, and hospitality and is among the top in office by transaction count. This market leadership creates an advantage for our clients because they benefit from the depth of information and relationships we bring to them.”   

On the financing front, “the same dedication to specialization empowers our loan originators to craft capital markets solutions covering all property types, price points, and client groups,” Nadji says. “MMCC has evolved into a top financing intermediary as a result and predominantly serves our private investor clients in the $1-$20 million price point, a growing portion of which is being executed in partnership with our investment sales force.” 

“IPA capital markets is growing rapidly within the higher price points and targeting larger private investors and institutional clients,” he continues. “The key is collaboration across these divisions and parts of the company that happens real time in the way our sales force connects buyers and sellers, borrowers, and lenders and provides a steady flow of research and content to the marketplace.”  

In terms of the transaction volume this client-centric model generates, the numbers speak for themselves. “In the 12 months ending September 2022, the company closed a record 14,000 transactions and over $100 billion in volume,” says Nadji. “Over 47% of best and final buyers came from out of market as illustration of our ability to ‘make a market.’ MMCC closed over 2,400 financing transactions totaling $14.2 billion in financing volume, which were executed through 460 separate lenders.”   

Specialization has been a founding principle from day one. We’ve found it very effective to do a drill-down into each property sector of what a client needs from us as a service provider. 


Specialization by both product type and service is a concept that Marcus & Millichap references frequently. That specialization operates in tandem with “the entire company’s resources and scale of relationships across an entire platform that is harnessed one transaction at a time,” Nadji says. “Value is created through not just exposure, but by strategic exposure to the right buyers or by going to the right lenders in the case of securing financing. Our interconnectivity, technology, and real-time communication means our clients are as close to the real market as they can possibly get.”   

“Our mantra has always been to create the most value and certainty of execution through a great experience that makes our clients want to continue doing business with us,” he continues. “We value the long-term relationship above all, and that means advising clients not to execute a transaction if the time is wrong for the asset or due to market factors. The fact that we can offer the most comprehensive and effective marketing machine to sell investment real estate, an auction platform for the right situation, competitive financing, and a refinancing or recapitalization path if a sale is not the right strategy brings the best of all worlds to our clients.”

Starting in the third quarter of 2022, “we began to see the impact of the Fed’s most dramatic and steep financial tightening since 1980,” says Nadji. “The steep curve of successive rate hikes broke down real estate valuations, dried up financing options and caused transaction activity to fall dramatically as bid/ask spreads widened. Our industry faces a new challenge given the disruption and uncertainty in the market place. Our playbook is stronger than ever, and we are approaching this chapter with the same formula of a client-focused, advisory approach to help solve problems for investors and continuing to enhance our platform and market position.”    

The year 2021 saw Marcus & Millichap not only reaching record levels of transactions, but also celebrating its 50th anniversary. Over the half-century of the firm’s history, the commercial real estate market has gone through numerous cycles and hence has offered ample opportunity to prove out the firm’s ability to “make a market in any market.”   

Nadji provides insight into how that concept plays out. “Making a market in any market means that no matter what the market conditions may be at a given time, the goal is to achieve the best possible results for the client,” he says. “For example, in a disrupted market, when buyers are harder to secure, knowing who the real buyers are, how to increase the probability of a successful close, and who the most likely lenders are makes all the difference. You can’t throw an asset to the marketplace and hope it generates offers.  

“Market conditions going into 2023 will once again put a spotlight on our ability to get deals done in a very tough environment,” he continues. “Pricing, financing, and bringing buyers and sellers together face a lot of headwinds because of the interest rate shock imposed by the Fed, and it will take time for pricing to adjust. Until then, sales and financing volumes will be hampered. We are starting to see easing in the inflation rate, and the Fed should be getting closer to the end of its tightening cycle in the first half of 2023. At the same time, I anticipate evidence will be pointing to moderate job losses and not to a major recession. The combination of these factors should result in an improving capital markets environment in the second half of the year.”  

For Marcus & Millichap, it’s about building for the long term. While the firm takes pride in its longevity, it’s also continuing to look ahead. “Our 50th anniversary was a fantastic milestone in celebrating how we have differentiated our client services and results,” says Nadji. “It was also a key point of recognizing and protecting the best of the company’s history, culture, and achievements but mostly importantly, of knowing where we need to improve, modernize, and perpetually innovate. We are also excited to evaluate other business lines that are complementary to our business and further deliver a value proposition to our clients and salesforce. We are constantly thinking ahead.”