January 31, 2017
In this article, Kent Elliott, principal at RETS Associates, and Steve Penn, president of management services at KG Investment Properties, an asset management, development and investment firm based in Bellevue, WA, provide three top tips for expanding into new markets.
Their tips are based on their experiences with KGIP’s recent expansion into the Bay Area, following the purchase of Parkway Properties, a boutique asset and property management firm, in Pleasanton, CA. KGIP absorbed Parkway’s team and assumed its portfolio management assignments in the Bay Area.
Elliott’s Tip No. 1: Know the market and how your company can transition into it.
According to Elliott, there is an increasing demand for real estate professionals in top California markets, such as the Bay Area, because many out-of-region firms want to establish beachheads there. In turn, this is causing an increase in recruitment assignments from investment firms seeking local talent and executives. RETS believes the best thing these companies can do is hire talent with strong local relationships, and who already knows the territory, the players and the tenants.
Steve Penn (SP): In early 2016, we purchased San Francisco-based Parkway Properties to begin our expansion beyond the Pacific Northwest. We were attracted to the Bay Area because there are a number of characteristics that parallel those of Seattle and Portland. First, many CRE investors and developers that are active in the Pacific Northwest have projects and portfolios in the Bay Area. This was a natural transition into a new market because many of our current clients were already in the region. Additionally, we feel there is strong connectivity with the tenant base in these three markets because all three are dominated by technology companies. Next, the talent base in the Bay Area shares characteristics with the talent in the Pacific Northwest: there is a lot of young talent attracted to vibrant, entrepreneurial company cultures.
When we acquired Parkway, we also took on their existing nine-person team. This helped with a seamless transition for our clients, Parkway’s clients and their tenants without diminishing the service delivery. Since then, we have not only successfully on‑boarded the existing Parkway portfolio, but we have gained several new assignments in the Bay Area and hired additional team members allowing us to officially launch the KGIP name in the region this quarter.