Partners Trust CEO on LA’s luxury market
Partners Trust CEO Nick Segal, the nephew of TV star George Segal, was a struggling actor in Los Angeles doing commercials for Hostess pudding pies before he dove into real estate. Today, his firm Partners Trust sells homes to not-at-all-struggling actors, film financiers, entrepreneurs and celebrities. Its name is attached to some of L.A.’s priciest residential sales.
Partners Trust has more than 200 agents in eight offices across Los Angeles, plus one in Shanghai. We caught up with Segal to chat about his windy road to real estate and what drives the luxury market today.
How much of Partners’ business is celebrity real estate?
Between in front of the camera, behind the camera, and the financing that creates movies, I would say 50 percent is the entertainment business.
What was the most memorable celebrity property you’ve sold?
I’d rather not say. They come back to me if I don’t talk about them.
Where did you grow up?
I grew up in Westhampton Beach, Long Island.
How long did you live on Long Island?
From 1961 to 1973. It was kind of a small town feel with the flavor of New York City in the summertime. Because my father lived in the city, in the West Village, I got more of a sense of the world. My mother was French and born in Nice and when I was nine, we spent a year in London and the south of France.
What was your childhood like?
I had an eclectic childhood. Both of my parents were artists. There was always the smell of oil paints and provocative subject matter. My father was a writer.
And your mother was a painter?
Both were painters. My mother was also a photographer. Our garage was a darkroom.
So is it safe to say your family was not involved in real estate?
That is a very safe comment. I remember when I was a very little kid, sitting on the steps of our house and watching the sun, thinking, “I’m going to be a businessman behind a desk.”
Was that it — did you go directly into being a businessman behind a desk?
No. I studied drama in high school and college and became a working actor in L.A. for five years. I played the drums and loved to paint. But I got tired of the artist’s life. I was doing a commercial with a friend of mine who had gotten into real estate, and he told me about it. I got licensed soon after.
What was the commercial?
We were doing a commercial for Hostess pudding pies. We did one for vanilla and then they flew us to Florida to do chocolate. They weren’t very good. It was like eating sugary glue.
Where did you get started in real estate?
I got started at a firm that sold to Sotheby’s in 2004. I was there until the middle of 2009 when we created Partners Trust.
You started a company during the downturn. Where do you think we are now in the cycle in L.A.?
I think we’re towards the top of the cycle. Unless there is dramatic economic data from a global perspective that pushes us, I think our (downturn) will be far more diminutive in terms of loss of value of property, because we are insulated by equity. A lot of homeowners are sitting on equity positions north of 40 percent. National appreciation has come up on top of that.
How did you get Partners Trust off the ground?
We put our own money up. The first ad we put out said, “Proudly serving the community…since last Thursday.” We knew that the four of us, based on our clients, could keep the lights on. We laughed a lot. We had a good time.
Why did you want to start your own firm?
It was a very aspirational goal to see if we could raise the professionalism in our business. You survive by the deals you close, and (your results) speak very definitively to your conduct. If you look at how the business model is set up, buyers don’t have to be loyal. When there was a shortage of properties, buyers were going directly to listing agent, and loyalty went out the window.
When did you start to see that happening, buyers going directly to listing agents?
As soon as the market started getting better, in 2013, 2014. But now that the market is settled, people are looking for an agent who is in contract with the seller and not the buyer.
You have an agent in Shanghai. Is he referring clients to properties in L.A.?
Sean Mei. He uses the referral business we developed three years ago. It’s our sister company, Leverage Global Partners. Sean talks to people in Shanghai who want to buy property in the U.S. Once we identify the client’s needs, we look for a property, but it’s not always in L.A. We use our referral network to find properties in New York, all over (the country).
What trends are you seeing in L.A. in residential real estate?
Tremendous development in both the single family home space and the vertical space. We’re getting more density. Can the market consume all the new product and is there a demand for all this luxury product? That is what remains to be seen.
What is your guess?
My guess is that some of (the developments) are going to have trouble because we are so far into the cycle. If the global economy was doing better and the U.S. dollar wasn’t so strong, it would be different. Our calling card used to be that we’re cheap and now we are not as cheap, relative to currency, so we will see.
It seems like there are a lot of new brokerages. Does this worry you?
There are 28 real estate companies in Beverly Hills alone. That’s a lot of noise. It will be interesting if you and I were to speak three years from, to see how many players are still around.
Who are the buyers of the luxury properties that Partners sells — what’s the luxury buyer profile?
People who want convenience and status. There is an aspirational component no matter how much money you have. People want to flaunt it in strategic ways, and to be in locations where their friends aspire to be. Also, I think we’ve got an issue with the 405. People west of 405 want everything — schools, restaurants, movie theaters, proximity to friends— all west of 405, and east of the 405 it’s the same thing. That’s because getting stuck in the iron curtain of the 405 can zap life out of you.
Where do you live?
I live in Santa Monica. I’ve lived there for almost three years.
What is your favorite thing to do in L.A.?
From a meditative space, looking out at the ocean and the crashing waves rejuvenates me. Get me on a beautiful golf course and that works too. But I also love to write. Three hours can go by and it’s like, “Oh, I guess i should eat.”
What are you writing about?
Value Conscious Negotiating, it’s a three part book about the holistic nature of negotiations.
Do you have any vices?
My grandfather, George Segal, created a hops business and now my cousin Johnny runs it, so beer has always been part of the equation at the Segal households. I love a good beer and a good tequila and I smoke about six good cigars a year.