Joe Sciolla
Title: Managing Principal, CresaPartners
Experience: 15 years at Cresa, 30 in the industry
Education: Harvard

Joe Sciolla, a former managing partner at Cushman & Wakefield, joined CresaPartners in 1995. Back then, the brokerage employed 10 people in one office. Today, it’s the largest tenant representation brokerage in the nation. Sciolla sat down with Banker & Tradesman to talk about its growth and its future.

Why did you first come to Cresa? What’s special about this place, and the way this firm does business, that attracted and has kept you around?

I saw an opportunity to build another brokerage company in Boston, but with a purely tenant-rep focus. I saw the corporate landscape changing in that there seemed to be more conflicts of interest, where tenants were saying, “Geez, I really want somebody to represent my interests, to avoid the potential conflicts of a real estate broker representing a landlord and a tenant in the same transaction.” I always say it’s analogous to an attorney rep a plaintiff and a defendant in the same trial – pretty tough to do.

Why rep tenants exclusively, rather than landlords?

You’re appreciated more by the tenant who, most of the time, does not have the real estate experience, and finds your advice and experience to be of great value. Landlords are real estate practitioners. Much of why they need brokers is really for market information, market trends, understanding where deals are being made in the marketplace. Let’s face it, landlords know how to do a real estate lease or sale, but they need that information to make sure they’re getting the highest amount of rent they can get for their property – that’s what they’re in business to do. I like being on the tenant side to make sure that the tenant gets a fair deal, and has the power of information to be able to compete with a real estate pro who’s on the other side, whose main objective is to get the tenant to pay as much as he can for the space. It’s a fun game. And I like the action.

There’s been a trend in the industry toward a consolidation of brokerage services, and you’re on the outside of that.

We are a specialist. We specialize in one thing, we do one thing great, and that is, we act as a corporate advisor to commercial tenants. Our interest was specifically to be a corporate advisor, as though we’re an employee of that company, and protect them and make sure their interests are always in the forefront of their real estate needs. We don’t have a fiduciary responsibility to the landlord client to make sure that we’re taking tenant clients to their spaces. Therefore, the objectivity is what we sell to our client, to find the best solution, and not ever be in a position of being compromised by the landlord, because either the landlord’s a client of our firm, or, we’re trying to chase a listing with that specific landlord in the future. Objectivity without compromise is our business model.

Are you able to drive better deals because of that?

We’re going to reach for every nickel we can without fear of retribution or compromise. We can drive a more aggressive deal because we don’t have those restrictions hanging over our head.

Is that the same story with your market outlook? Lately, they seem to be more stark than most.

I like to use the word realistic. I’ve been doing this for 30 years. The reality of it is, a real estate broker who lists property, he’s a little compromised in the sense that he’s trying to get as much as he can for his landlord’s building, which is his job. However, you can’t start talking to the press about how bad the market is, rents are going down, because you’re compromising your client’s position. It’s a difficult tightrope to walk.

There are a lot of great brokers out there, I’m not questioning my competitors’ integrity by any means, but I understand the restrictions they’re under. I’m not. So therefore, I’m going to be much more realistic about what’s going on in the marketplace without fear that I’m going to upset a landlord because I’m predicting that rents are going to continue to decline. It’s really a different mindset because I’m on the tenant side, versus the landlord side.

You’re more active than anyone else saying market research numbers are months old, so they’re not an accurate representation of what’s happening on the street right now.

Statistics are yesterday’s news. Statistics don’t become finalized, quarter to quarter, until 90 days have passed. So you’re working with old news. The market is moving so quickly, it’s even hard to use the last comparable lease to say, ‘That’s the market,’ because it’s moving downward so quickly. You’ve really got to keep your pulse on it day-to-day, and a lot of it’s measured by how much tenant velocity is in the market. That’s what drives the market. Supply is supply – it’s a static inventory. What drives the market is the number of tenants looking to lease space.

So where are we right now? How far has the market dropped since the end of December?

We’ve seen another at least 10-15 percent downtown and in the suburbs in rental rates, and free rent has increased by a couple months more, tenant improvement dollars have probably increased by at least 10 percent more. I foresee that, by the end of this year, we’re probably going to see another 5-7 percent decrease in rental rates, and a 5-7 percent increase in tenant improvement dollars and rent concessions. And then, I think we stay on the floor through 2010.

Joe Sciolla’s five most satisfying accomplishments:

1.) Learning how to rope a steer and branding it.

2.) Using lessons from the horse training in business. “You must communicate with a young colt thru non-verbal body language. It has helped me be a better communicator and coach with people.”

3.) Rounding up a couple hundred head of cattle with a couple of cowboys and driving them across the North Dakota prairie without creating a stampede.

4.) “The ranch has been a great place to bring our Cresa employees and foster team building. Teaching and coaching young people to build their real estate advisory practice gives me the greatest sense of satisfaction.

5.) Built a horse ranch in North Dakota nine years ago. Raises Paint and Quarter Horses for trail riding and cattle work.