Lee & Associates adds new layer to commercial real estate industry

Familiar names have long held steady on the list of Central Pennsylvania's top commercial real estate agencies.

Make room for a new name: Lee & Associates of Eastern Pennsylvania LLC, which is opening its first commonwealth office, one in a series of recent East Coast expansion moves for one of the country's largest broker-owned commercial real estate firms.

With veteran industrial services professionals Brian Knowles, Jack Shepley and John Van Buskirk at the helm locally — the latter two formerly of top midstate firm NAI CIR — Lee & Associates Commercial Real Estate Services' Pennsylvania office is taking aim at the region's upper echelon.

NAI CIR finished 2014 with more than $454 million in local sales and leases, more than $200 million ahead of No. 2 firm Landmark Commercial Realty Inc., according to Business Journal records.

“Our goal is to be a tier one operation as soon as possible in every vertical market we're in,” Knowles said. Lee & Associates of Eastern Pennsylvania will cover Central Pennsylvania, out west to the Interstate 99 corridor, east to suburban Philadelphia and New Jersey, up to New York and south into Delaware.

The industrial market will be the early focus for the regional Lee & Associates office, based in Lower Allen Township. Out of the gate, it's marketing a proposed two-building, 2-million-square-foot logistics distribution center in the Carlisle area for Goodman Birtcher.

Meanwhile, the principals are working quickly to expand talent in other major asset classes, including office, retail, multifamily and investment sales.

Knowles and Van Buskirk previously worked together at Jones Lang LaSalle, where they were tasked with building a regional real estate brokerage team. Shepley and Van Buskirk founded the Industrial Properties Group at NAI CIR. Now, they are looking to recruit other seasoned professionals in a competitive commercial market, which has fewer agents compared with residential.

“We will be challenged to build this out,” Van Buskirk said.

Lee & Associates also is designing an entry-level program to target recent college graduates and other young nonresidential agents who are looking for that next career move, he added. “We think we have a powerful story.”

'Long runway'

Part of that story is the Lee & Associates model, which is broker-led. Senior revenue producers companywide are shareholders and help raise funds to propel further brand expansion. This allows entities such as the Cumberland County office to open without debt and with abundant capital to quickly scale up operations, said Jeffrey Rinkov, CEO of Lee & Associates.

“Our model dictates that one of the key tenets is ownership,” he said. “John, Brian and Jack have equity and ownership in their office.”

As a result, the partners are already looking for opportunities to open a second office in the suburban Philadelphia area. That should occur within the next six months, Van Buskirk said: “At the end of the day, it will be client- and experience-driven.”

Rinkov expects this new East Coast office, which has been in the works since January, will have “quite a long runway” for growth, given the historically stable market conditions in Central Pennsylvania.

There also is abundant capital available from investors who are looking to take further advantage of the region's major highway system, which includes heavily traveled interstates and the Pennsylvania Turnpike.

“There is at least a two- to four-year runway from a construction and absorption standpoint,” Rinkov said of the industrial impact. “We think (this market) is as strong as almost any market in the country. That's part of the reason we felt the need to open an office here.”

Goodman

The midstate market has experienced steady growth in the size of industrial projects, including build-to-suit opportunities for large consumer products companies. And speculative properties have topped around 1 million square feet.

“What you're seeing emerge is buildings around the 500,000 to 1 million square feet paradigm,” Van Buskirk said. “But we've seen some significantly smaller as well. There is a broad spectrum. That is reflective of a maturing market, both here and in the Lehigh Valley.”

The proposed Goodman facilities off Exit 44 of Interstate 81 — one just over 1 million square feet, the other slightly under — is a good indication of the stability in this area, Knowles said.

It's generally those distribution facilities that drive project opportunities in supporting asset classes.

“It does lift all boats,” Knowles said, as greater demand for electronic commerce and fulfillment centers speaks to the employment base of an area. “These users that come in have confidence in our labor pool. They need skilled people to do fulfillment inside these operations.”

Target Corp. earlier this year announced an e-commerce fulfillment center in York County, creating more than 250 new jobs initially. Online retailer Amazon has continued to add fulfillment center jobs in the midstate, while others such as Nordstrom and Urban Outfitters have recently made their way to Lancaster County.

A few big deals

In recent months, Lee & Associates has worked on many sizable real estate deals.

Company brokers have handled a $481.2 million multifamily portfolio sale, a two-shopping center deal in Denver, Colo., totaling more than $100 million, and a two-office deal in Irvine, Calif., totaling $80 million.

An Ontario, Calif., office picked up exclusive leasing rights for Goodman Birtcher’s Inland Empire Logistic Centers in California, totaling about 5 million square feet.

Its New York City office was named exclusive agency for a multilevel, 100,000-square-foot commercial development in Queens.

NAI CIR president weighs in

“This industry is always highly competitive and many firms are reaching into new markets and agents in attempts to gain overall market share,” NAI CIR President Robin Zellers said of Lee & Associates’ entry into the midstate commercial real estate market. “It’s an ongoing dynamic in our business.”

Zellers said his firm, the region’s top producer by sales and lease volume, has stayed on track with local recruiting efforts, having picked up four agents in the last two years.

“The majority of the largest industrial transactions we’ve completed over our 45 years have come through assignments sent to us by our NAI Global partner firms,” he added.

NAI Global is the world’s largest network of independent commercial and industrial real estate brokers.

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