From the Los Angeles website: John Cushman III’s career is about to come full circle. He got his start as a broker at Cushman & Wakefield, the firm co-founded by his grandfather and uncle, fresh out of college. In 1976, he headed up its first Southern California office in Los Angeles, with his hands in many of the deals that shaped Downtown L.A.’s skyline. He left in 1978 to start his own firm, Cushman Realty Corporation, with his twin brother, Lou Cushman. When that firm merged with Cushman & Wakefield in 2001, he moved all the way up in the ranks to chairman.
Now, after selling his stake in Cushman & Wakefield as part of its acquisition by DTZ, Cushman is preparing for a return to dealmaking. He’ll be a broker in his role at the merged company, and he could not be more excited about the comeback. In fact, he’s champing at the bit.
We sat down with Cushman in his skyline-view office at 601 South Figueroa Street, decorated with an array of Western memorabilia, to chat about the merger, IPO rumors and the upcoming election.
DOB: January 16th, 1941
Hometown: Montclair, New Jersey
Family: Married, 4 sons, 4 daughters-in-law, 10 grandchildren
I see your suitcase. Where are you coming from?
I was in New York because I am the chairman of the centennial which is the 100th anniversary of (Cushman & Wakefield). It is big deal. We are 43,000 people in 60 countries, 6 continents, 250 offices. We operate 4.3 billion square feet across the world. That is the equivalent of every office building in New York from lower Manhattan to Harlem, ten times over. The company will be looking at acquisitions that fit into the battle plan of what the company wants to be doing. It is a big, big company. We had a very good 2015.
So you divested your remaining interest in the company…
Everybody did.
And how has your role change since the merger?
I am going back into brokerage, doing what I have done forever. It will not be a complicated transition. My new contract will be signed by the end of March. Before, I was involved in every aspect of the company as a director. I was on a salary and a bonus. That is all going to change when I go back to being a broker. I’m OK with that. I never really stopped (making deals). Even when I was a salary guy, I was doing it. I was just doing it differently.
What is your title now?
My title is now Chairman of Global Transactions and Chairman of the Centennial, the 100th Anniversary. So I have two titles.
So you’re going to be much more hands on now?
I am going to be a hell of a lot more hands on as it relates to transactions, yeah. I am going to be like glue, all over it.
So is it kind of a return to some of your earlier days?
Yes. I’ve had a chance to do the largest office lease transaction in the world (the almost 4 million-square-foot world headquarters of Merrill Lynch & Company at the World Financial Center in New York) and sell billions of dollars worth of buildings and I am excited (to return) to that.
Will it be hard to readjust back to dealmaking?
A lot of people probably figure that after you have been out of it for 16 years that maybe I’ll have a hard time. I promise you that they will be disappointed. I will not have a hard time. I’ll be a force right out of the block.
What are you are working on right now?
We are handling this building (motions to the $1.2 billion Wilshire Grand Center being developed by Korean Air outside the window). It will be the tallest building in the Western United States. It will open in April of 2017. The tallest building now is the Library Tower. That’s a project that I put together with Maguire Thomas Partners. This building will be incredible.
You’ll be personally involved with leasing it?
Yes. It has 356,000 feet of office space, 900 hotel rooms, a small amount of retail at the base. First of all, from the last (big office tower Downtown) that was built to this building, when it is completed, it will have been 24 years. So technology on everything has changed: structural, mechanical. The ceiling height on each of these floors is going to be 10 feet high. The ceiling height in most office buildings when I started was 8’6. So it is going to be a very exciting space. The hotel will be over the top. Intercontinental is going to run it. There will be a restaurant on the top that they will be in charge of. We have 8 serious tenants looking for office space.
Are you pre-leasing the office space?
We can’t move them in until we get to the top floor and get a certificate of occupancy for the whole building, which is projected to happen in April of 2017.
I have to ask: is an IPO impending?
Well, Brett White, the CEO, has said publicly that at a point in the next couple of years, an IPO is, according to him, a distinct possibility. The stars have to be aligned correctly when you do this. The economy has to be right. The real estate world has to be right. But the people at the company in the leadership are very bright, they know what they are doing. So I would say it could happen.
Now that you are a merged company, who is in charge of Southern California?
Well, Andrew McDonald was in charge of the LA office. He now has a new job where he is in charge of L.A. and Orange County. That is a big job. The CEO of the company is Brett White and he was the CEO of CBRE. He knows the business cold. Tod Lickerman is the global president. Tod is in Chicago, and he was the CEO of DTZ. The world headquarters of the company used to be in New York, it is now Chicago. We have a lot of new people.
How is the integration process going?
Ask anybody, integration is not simple. We merged Cushman Wakefield with DTZ and changed the name of the company to Cushman & Wakefield. But it wasn’t just two companies, they had already acquired Cassidy Turley and a few other companies. So there are several companies that need to be integrated into the system. For me, it hasn’t been difficult, but I don’t think I represent the average person at the company who maybe feels like they should be communicated with more frequently.
Sounds like a long term process. Will there be more layoffs?
We put the company up for sale in January 2015 and by May we reached agreement an agreement that we were going to sell the company to (DTZ). I was on the strategic review committee that was comprised of three people. We closed on September 1st. So we are not even a year into it. It is going to take some time. There will be a lot of overlap in areas like HR and accounting, finance, tax, legal, administration.
Is that in every area or certain geographic areas?
I think you have a lot of overlap. If DTZ had an office and we had an office, there is overlap, right? And they had a lot of offices.
Will the company be adding more brokers to its offices here?
It is very hard for brokers in some of these companies to compete (with Cushman & Wakefiled) because they don’t have a global platform. If the tenant has a requirement in Poland, what are they going to do? That was a problem at my old company, Cushman Realty. At some point I knew I was going to run into a wall with that. So the answer is, of course. We will be looking to acquire companies or business that are additive and accretive.
How do you feel about the Super Tuesday results?
Well, look, Rubio won one state, Trump won six. Bernie Sanders won four. And Hillary won a lot. I think that Hillary is going to do well. That’s a lot of states. I don’t know, I think it could be that we get to the end of the line and nobody has enough delegates and in that case we have a brokered convention. I don’t know what that means. I really don’t know what happens then. I am concerned about the process. The dialogue in the GOP debates and the low blows have not been appealing to me.
Is it safe to say that there isn’t a candidate that you are totally behind in this race?
I was, but not now. My candidate left and that’s not important who it was. But I was a big supporter and worked hard. Right now, I am thinking. I haven’t made up my mind which candidate I am going to get behind. The election for me has been a disappointment, because it has been a circus.
Is there anyone that you feel that is acting respectfully in this process?
I think that (John) Kasich has been respectful. He is not going to win. I mean it seems like everybody has some baggage. Trump, Rubio, Cruz, Hillary. I don’t know about Bernie. I certainly wouldn’t want to be in a situation where he was in charge of anything. He is just left of the socialists. If it was a popular vote, California would be really important. Because there are plenty of Republicans, there are just more Democrats. The state has so many delegates. I was a delegate from California in the last GOP convention in Tampa, Florida.
What is the biggest mistake that you see young brokers make?
Well, sadly, the one big difference from when I got into the business to today is that the word loyalty has left the vocabulary of people. People go from one firm to another. It is disappointing to me that people don’t have more loyalty.
Anything else?
Many millennials and young people live off their handheld devices and computers. They ought to know how to write a handwritten note if someone takes them out. Or type a letter. And not think the world revolves around emails. These devices are incredibly impersonal. I would never follow-up a dinner with somebody without writing them a letter. It would be like having a close friend die and writing the spouse an email. To me, that would be in such poor taste.
What are young brokers doing right?
I think young people today care much more about balance in their lives. I think that must be a good thing. I didn’t do enough of that. Where you have to balance between your family, children, your company, your extracurricular activities, the things you care about in terms of charity. I think balance is important and I would say that my four sons are doing a better job on that score than I did.
As you mentioned, we’re seeing a lot of movement lately in the commercial brokerage world. You’ve seen multiple real estate cycles. Does this often happen when there is consolidation?
I think you’ll see more consolidation of companies and more people jumping ship from one company to another company. Some of these companies are throwing out enormous amounts of cash that they are offering to brokers to move from where they are to a new company. Let’s face it, there are a lot of people that are very attracted by greed and if they can get some money they think it is attractive. With a platform and all sorts of things that they ask for, they are going to think about doing it.
You’re selling the Zaca Mesa winery you own in Santa Barbara…why?
Well, it is very simple. I’m going back into brokerage and am going to be incredible involved so it is a matter of (not having the) time. I started the winery 44 years ago with my twin brother, Lou. It was kind of a wild idea because nobody knew whether Santa Barbara was going to be a good area to grow grapes. It turned out that it was a good area. We own 100 percent of it. There are no other partners. So I tried to figure it out with my sons. My oldest son is an investment banker. He lives in Bronxville, New York and works in New York City. He can’t do it from New York. My next son is Jeff who is a very successful commercial broker with Cushman & Wakefield in the Silicon Valley, in the Bay Area. But he is working seven days a week, so he does not have the time. My third son, who lives in Hermosa Beach, Stuart, has two partners in the hotel business. They buy hotels, renovate hotels, build hotels, and he is as well too busy. All of my boys have two degrees. Stuart is helping me with the sale.
Have you seen interest?
We have people that are interested in it. I don’t want to rush. I don’t know when it will sell. I know someone will find it incredibly interesting. When you get out to our vineyard, it’s just like it was 10 million years ago. That’s not true in Napa. Napa is like being at 42nd Street in New York.
Based on what you’ve seen in previous cycles, do you think some of the major developments in Downtown L.A. could stall out in a downturn?
I would say that I think there has been a slowdown in a lot of cities. The activity in the high-end residential in New York City has slowed down. The condo pricing has dropped a little bit in Downtown L.A. Do I think it will slow down more? Maybe. I always say to my boys that the early bird gets the worm. The harder you work, the luckier you get. I think the people in our business and our company and our competitors, the ones that know the business well and work hard, they’ll have good years.
Do you expect that most of the proposed developments in Downtown L.A. will be completed?
I think that if they come out of the ground, they are not going to stop. They worked out all the loans. They closed. Could certain people in certain cities lose buildings? The answer is yes. Real estate developers take a lot of risk. The market could change where the rent that you thought that you needed for your pro forma all of a sudden goes down and you suddenly can’t meet your debt service. You are going to have a problem.
It seems like office leasing is slowing down in downtown L.A…
Well, it has been slow in downtown L.A. My activity will be in India, Mexico, London, in Anaheim, Newport Beach, Orange County, Northern California, Chicago, New York. For me, the world is my oyster. So I am going to be working anywhere. Markets change. You can’t ever generalize about markets, you can’t ever talk about the macro, you have to talk about the micro. You have to figure out why this particular situation is the right place for a tenant or a developer to build. Generalizing will get you in a lot of trouble in the real estate world.
What is the biggest problem facing commercial real estate in this area?
The state needs to make California more attractive for businesses. The taxes are too high. The cost of housing is too high. The commute is too long. The regulatory environment needs to be streamlined. These other states and cities have figured it out, not California. So we have too many people and businesses leaving California and that is sad. The biggest job if I was in charge, I would want to make sure I didn’t lose people and existing companies. Make it attractive to the people who remain and hope they grow. And then, when you really have your act together, make it attractive for new companies.