SAN DIEGO- Timing, opportunity and relationships are what led to Seattle-based Kidder Mathews' purchase of San Diego-based property-management firm StepStone Real Estate Services, Kidder Mathews' chairman and CEO Jeff Lyon tells GlobeSt.com exclusively. As we reported earlier this week, StepStone has a portfolio of 600,000 square feet of retail, office, and mixed-use properties and has been providing asset, advisory, and property-management services in the San Diego Market for 20 years. We spoke with Lyon about the reasons behind the acquisition and how it will affect the growing company.
GlobeSt.com: Why was StepStone the right firm for you to acquire, and why now?
Lyon: The timing is all about what we've done down in San Diego. We made the decision in the fall to see if there was an opportunity to come down to San Diego. We knew we wouldn't leapfrog from where we are in San Jose and Northern California, but we already had a beachhead down there managing our Amylin portfolio, so I went down there and talked with our San Diego managing partner Mark Read and Chris Wood, who's now president of the west region for Ryan Cos.', about our company and what we're doing. They put me in touch with a number of people, and Mark was excited to be my managing partner. Jack Naliboff at StepStone had been looking to partner with somebody over the last year, so it fit with my plan for Southern California. It was the right timing and the right relationships.
From Jack's standpoint, Kidder Mathews was really the right cultural fit. We had the right tenor, and he felt very comfortable with who we were. We've been unbelievably successful in a short period of time as a firm-we now have 30 brokers-and if you combine that with Jack's relationships in the market, you realize it's a great place for us to join and we're a great fit for Jack. He doesn't have to worry about the day-to-day and can concentrate on doing business development with the infrastructure and resources we offer for anywhere on the West Coast.
GlobeSt.com: What has been Kidder Mathews approach to property management, and how will that change with this acquisition, if at all?
Lyon: It's not really going to change. It gives us greater capabilities, depth and resources in Southern California as we continue to grow. Now it's about human capital. Bringing on Kathy Giraldo-Carlson and Mark, we now have the capacity to take on additional projects with the infrastructure in place. We want to proactively approach the existing relationships we have up and down the coast, but also add face time, and we can take on additional assignments. Owners want to see who is going to take care of their property. We need to have people on the ground in the market and bring them to the meeting. The owners need to have trust in who you are.
GlobeSt.com: Why is your firm so bullish on San Diego right now?
Lyon: Our long-term strategy is to be a West Coast company. We're privately held and remain independent. There's been a lot of consolidation in our industry, but there's nobody like us. Logic would say we should continue to grow down the coast. The weather is great in San Diego, of course, but we were already there doing business. Mark asked his friends what they would think if we brought this kind of platform down to San Diego, and he got a lot of very positive reactions. There isn't a platform like us down in San Diego. There isn't anybody down there that has a progressive split for the brokers while still providing them with all the tools and resources to do our business. Some say you can't provide all the tools and resources if you're giving 90% away to the brokers, but we can, and we have a track record on executing this.
Also, nobody else is doing broad base of ownership. The senior people have a chance to be partners in the company. We've recruited a couple of people from Cushman & Wakefield, which used to be Burnham, so we knew the Burnham guys. It's similar to how we used to be, and it's an easy cultural sell from that perspective. We met with the individuals providing the resources, and they said that's where they want to be. There's a certain level of comfort with us. Kidder Mathews is not a startup in San Diego-it's our 10th office, and we know what we're doing. It was just a matter of getting the right people.
GlobeSt.com: What are your plans for the retail sector of your business?
Lyon: We want to have presence with all the business lines in the San Diego marketplace. We've filled our industrial capabilities with the brokers who have joined us in the last 60 days. We're having conversations with retail brokers, and we have the ability to have more in-depth conversations with retail brokers because we know we have the management. Having a management portfolio with StepStone has given us a foundation on which to grow the retail brokerage side of the business. We have a very strong retail presence in other markets in Northern California into the Pacific Northwest, and this will help us grow the retail side of things in San Diego. We're looking to go farther north to Orange County, particularly Newport Beach, in the next 90 days. Almost every one of the institutional owners on the West Coast that we're already working with is in that area.