May 25, 2022
What is the most important asset every company has?
Answers may differ but to our guest, Cory Wright, it’s the people.
Cory, Founder of William Wright Commercial Real Estate Services in Canada, joins us to discuss the importance of retaining employees and incorporating them into the business model to create a unique corporate culture. Cory explains that this strategy helps to keep the retention level high and creates a positive environment for employees to thrive. He also talks about how they look at all asset classes to find opportunities and how they monitor trends to make educated decisions in the market.
[00:01 - 03:59] Investing In People
- Cory on enhancing the brokerage experience
- Creating a smaller team and really investing in them
- Hiring people with little to no experience and training them well
[04:00 - 09:54] Clients Come First
- Building the relationships with landlords through leasing
- Actively buying office space in markets where it is not currently active
- Instilling confidence in their client base
- What they’re doing to protect their clients’ interest when going to markets
- Getting into the markets early where there's not really a high demand
[09:55 - 15:06] Buying Triple Net Leases
- Hedging against inflation
- Why they are buying into markets where they’re at the bottom of the barrel lease rates
- Going with their best calculated guess
[15:07 - 18:31] Profiting as a Team
- How they are growing organically through their own members
- Incentivizing their employees
- Topline revenue sharing
[18:32 - 19:55] Closing Segment
- Reach out to Cory!
- Links Below
- Final Words
Tweetable Quotes
“Versus having hundreds of brokers, we wanted to have a smaller group throughout the province, focus really hard on training them really well and investing in them really, really well.”
- Cory Wright
“We're only as good as our people. And for us, one reason why we’re able to grow at the pace we have is we've been able to retain a lot of our people over the years.” - Cory Wright
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Connect with Cory! Head over to the William Wright Commercial Real Estate Services website and listen to the Vancouver CRE podcast.
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Cory Wright: One reason why I'm able to grow at the pace we have is we've been able to retain a lot of our people over the years. And a lot of times in the brokerage business, you see a lot of people like two steps forward, one step back where people are changing brokerages and administrations, staff are leaving.
[00:00:13] Cory Wright: So I've always been up to belief if we pay our team, right, and we treat them right, and we incorporate them into our overall business model and they can profit right along with the company. It keeps our retention level is very high and creates a very unique corporate environment to work with them.
[00:00:26] Intro: Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
[00:00:37] Sam Wilson: Cory Wright is the host of the Vancouver CRE podcast. He's also the founder of William Wright Commercial Real Estate Services. Cory, welcome to the show.
[00:00:46] Cory Wright: Thanks so much for having me here. I appreciate it.
[00:00:48] Sam Wilson: Hey, man. Pleasure is mine. Three questions I ask every guest who comes on the show, in 90 seconds or less, can you tell me, where did you start? Where are you now? And how did you get there?
[00:00:55] Cory Wright: Sure. So going back about probably what, 10 or 11 years ago now, I got my real estate license. Prior to that, I was in the hospitality industry where we bought and sold restaurants and pubs through that part of it, we became commercial landlords and felt there was a niche in the brokerage market that we could eventually roll ourselves into.
[00:01:13] Cory Wright: So we get that and then fast forward, nine years now we've got five commercial real estate offices in the province of BC. And soon to be two more, that will be opening later this year, which will give a seven and give us the most coverage and most offices than any of our competition in this marketplace.
[00:01:29] Sam Wilson: Wow. That's really cool. So you were in the hospitality business, you were buying or brokering restaurants.
[00:01:35] Cory Wright: We were buying and selling them. And through that, we worked with a lot of brokers and just felt that we could probably, you know what I mean, everyone feels there’s got to be a better way. We sort of thought there was a niche in the market there that we could exploit.
[00:01:46] Cory Wright: And when we exited that industry, we went into the brokerage business just as a broker, not a brokerage right away. Wanted to test the theory to see of how I think it could be done, it could work. 18 months later, we opened our first office and then nine years from there. Now we've got a team of about 45 to 50 across the province.
[00:02:04] Sam Wilson: What were some of the things that you said, man, I think this is something that we can do better than what the industry was already doing.
[00:02:11] Cory Wright: Well, I think I don't want it to sound bad from an industry standpoint, but a lot of things like common sense, I think that general business people will deal with. We didn't feel that was happening the same way as a client for the brokerage community, where we felt we were doing a lot of our own legwork, a lot of our own DD work, having to make her own phone calls, which to me, I always thought if I was hiring somebody, they would take care of a lot of that. We found out that wasn't the case. So coming into it from a tenant perspective, a landlord perspective and a business buyer and seller, I thought that we could sort of enhance the brokerage experience, focus on customer service, bringing a lot more to the table and we were of a quality versus quantity-type concept versus having, I mean, hundreds of brokers, we wanted to have a smaller group throughout the province, focus really hard on traing them really well and investing in them really, really well. And that's also been very reflective in the clients that we have. And I think a lot of companies forget that no matter what business you're in the most important asset you have is your people. And we focus solely on that.
[00:03:11] Sam Wilson: That's really cool. I mean, building out, I hear you say all this, and then I start thinking, gosh, that sounds like, you know, training. That sounds like employee manuals. That sounds like time, you know, grooming people, but you guys were still newer to the space in its own. Right. So it's kind of a build it as you fly, as you're flying it process. Is that right?
[00:03:30] Cory Wright: Yeah, for sure. And a lot of the people that we hired over the first five years came with little to no real estate or even commercial real estate experience. And that was done intentionally because we wanted to have the ability to train them on how we saw fit and sort of focus on the areas that we did.
[00:03:46] Cory Wright: And from that, they grew and they grew their business and then they brought their friends. And it's sort of been a big residual factor that way with a lot of people bringing on, I mean, close friends and family members and type of thing who also had the same passion for the businesses we did.
[00:04:00] Sam Wilson: Was there a, an asset class in particular that you said, man, this is what we're going to focus on as brokers?
[00:04:06] Cory Wright: Up here in the early two thousands to late 2010, 2012 development land sales. We're really, really hot. And that made up a lot of brokerage business was getting into that recently over the past, you know, three, four years in COVID it's put an additional emphasis on this. Obviously, industrial markets are very, very tight in BC.
[00:04:25] Cory Wright: We suffer from a lot of land constraints and a lot of our markets from waters and mountains. So they're just not making any more land and that's really pushed the pricing up from a brokerage standpoint, we have your office to retail, your industrial, but development land. Early days was a big focus of ours.
[00:04:40] Cory Wright: And then we also focused on the leasing aspect because a lot of brokerages and brokers didn't want to do leasing. So we thought that, Hey, if, if you want a building, you've got to fill it. So we focused really hard on the leasing aspect, built the relationships with landlords through leasing, and then eventually they wanted to buy themselves and we kind of became that first point call.
[00:04:58] Sam Wilson: Yeah. Right. I love that. That's really cool. Tell me when it comes to acquiring your own assets. I mean, this is something, you know, we talked a little bit about off air. Are you guys also active buyers?
[00:05:09] Cory Wright: Hundred percent. So from a company standpoint and we, I think when you look at the McDonald's of the world and you take kind of that, if it's not broken why fix it type of thing. From a brokerage standpoint, we try to acquire as many of the buildings or office spaces that we go into twofold. A, because it's a great model and we're putting our money where our mouth is. We're opening these offices in these markets. We're investing our own money there, which I think creates confidence both in our brokerage community, but also I think from the client base.
[00:05:37] Cory Wright: But then I think at the same point in time up here, we've seen a lot of hiking lease rate. Quite a bit over the past 10 years, an office space in downtown Vancouver, might've went for, you know, 15 to 20 bucks, 10 years ago, and now it can approach $55 if you go into the right class A building. So by us acquiring them, we're almost giving ourselves the ability to protect our business 10 years down the road, that we're not subject to seeing our rents double.
[00:06:00] Cory Wright: And then we get into the position that we're just working for landlords at that point. So we definitely try to acquire it and also when we go into communities where we're not currently active or we're looking to go into, we try to acquire real estate in those marketplaces as we're going in. Because again, we believe in those marketplaces, we echo that to our clients.
[00:06:16] Cory Wright: We encourage our clients to as well because we're seeing trends happen now that if we can fast forward five or six years, getting in today probably is a good investment for everybody. Right. You know, we encourage our clients to partake with us, meaning acquire assets in those markets.
[00:06:30] Sam Wilson: Now, are you at what I'm hearing you say is that you guys are requiring only the real estate you are physically occupying. Is that right? Are you guys acquiring other assets?
[00:06:38] Cory Wright: Other assets as well. So we try to acquire our own assets for our company, but then also we believe in these markets, there's a reason why we're opening the brokerage in these markets because we're seeing uptick in population and trends and jobs. So we kind of have a thing up here where, you know, commercial real estate kind of legs the population growth. Developers go in, they acquire the land, they put up the condos shortly after that commercial space becomes a higher demand because we offer a place where jobs are.
[00:07:05] Cory Wright: So we try to get in early enough in that cycle that as we're seeing developers start to buy a land, we are also trying to acquire assets, whether it's an office building or even a retail strip center in these marketplaces, knowing that if the trends continue five to 10 years down, we might have some prime real estate in these markets where we'd have a major jump in our rents, which obviously as demand goes up, capitalization rates come down and that just pushes prices up, gives us the ability to refinance and go onto the next market.
[00:07:33]Sam Wilson: How do you acquire assets in these markets and yet protect the interests of your clients?
[00:07:40] Cory Wright: So when we look at these markets before we go into and we're monitoring them usually two to three years prior to us actually going into them while we're gathering data on that, we share all that data with our clients and we're sitting there and we're promoting a small market, say like a Victoria and Vancouver Island up here.
[00:07:56] Cory Wright: We're telling them to buy there. These are the metrics why they should buy. And also the same time we're also acquiring real estate assets and our clients always come first and foremost. So if there's an asset class or a building that a client has an interest in 100%, we take it to them first. If we've taken it through the list of clients and no one has decided to buy it, we will definitely look at the asset.
[00:08:16] Cory Wright: And if we feel it's a good purchase, we will. A lot of times too, we're getting into the markets early. Where there's not really a high demand just yet for it, because there's, you know, there's not the buildings built yet or the employers haven't shown up just yet. So there is some bumpy roads that we do go down early on in the process.
[00:08:32] Cory Wright: But nine times out of 10, when you know, the things all sort of play themselves out, we're in a good position.
[00:08:38] Sam Wilson: How do you project the future growth in these markets where, like you said, maybe the employers haven't shown up yet, or, you know, the, the writing isn't on the wall for everybody to go, oh my gosh, this is the next place to be like, how are you like you're getting in front of that?
[00:08:53] Cory Wright: Well, we obviously have a front row seat to see what developers are buying and where and why they're buying there. We also monitor population trends quite a bit. And we also look at a lot of industries or sorry, a lot of communities that maybe only had one or two pillars to support the economy.
[00:09:07] Cory Wright: Now there could be four or five pillars that could support that economies. We look at that very early on when we're watching these developers acquire land, major developers, acquire land, knowing that these things are probably three, five or 10 years out, and we start seeing those trends happen. That's when we'll start looking at marketplaces quite seriously, not just from an acquisition standpoint, but also a brokerage standpoint.
[00:09:27] Cory Wright: And again, when we're going into these markets, we're telling clients come with us and we're sharing the data with them and we're telling them why we're buying. Some of them feel it's a little too early for them and they don't want to go down that rocky road just yet. Other clients they feel confident that if we're partaking in that, and it's a good investment for them.
[00:09:44] Cory Wright: And we've been very fortunate, a lot of clients that bought in some markets early days when we were first looking to acquire in those markets, three years later have done extremely well. Some of them have even doubled the value of the real estate because now the boom has happened and now people are coming in and we've been fortunate to get there early enough.
[00:09:59] Sam Wilson: I love that. Is there an asset class you guys are not actively investing in because you're just unsure of where it goes?
[00:10:07] Cory Wright: Well, we look at all asset classes in these marketplaces to find out like some markets we like industrial better because there's lack of supply, higher demand. Other markets we'll look at how much square footage of office does that market currently have versus the population.
[00:10:21] Cory Wright: Some of these smaller markets, especially in the office class and the retail asset classroom, you're more subject to a repositioning of tenants, that new businesses coming into the market to backfill it, like you'd find in a major city. So location, location, location becomes premium. When you, especially when you go into these smaller markets with that, we look at everything from a population to demand.
[00:10:41] Cory Wright: You mean how much square footage is available in that asset class? Mainly. So we don't run into a situation, say like Calgary, Alberta did. Oh, geez. I think they had like 18 million square feet of office space in the market just never, ever caught up. And then when the collapse happened. I mean, they've got acres unfortunately, of empty office space there.
[00:11:00] Cory Wright: So we really, really monitor it on a case by case basis. It's very unlikely. We ever looked into the multi-family marketplace just because of the triple net rents that don't exist. We're open to whatever makes the most amount of sense dependent on where we feel, where that market's at.
[00:11:13] Sam Wilson: When you say the triple net rents don't make sense because obviously they're not there. I mean, is that all you guys are investing in is triple net properties?
[00:11:22] Cory Wright: More or less. And mainly up here, we've run into some challenges. I mean, demand for the multifamily asset classes, huge cap rates you've seen in Vancouver area as low as two and a half percent about a year ago, three and a half percent is more common you see now, but we've had a huge increase in our insurance cost.
[00:11:39] Cory Wright: Property taxes, all of those costs that we can't recoup through it. So not that it's a bad investment model, it just doesn't fit what we look for. And we feel more protected with the triple net type asset classes we go after.
[00:11:50] Sam Wilson: How are you protecting against inflation in a triple net lease? Is there something you're writing in your leases that say, Hey, we're going to reprice based on this metric. And what does that look like?
[00:12:02] Cory Wright: Well, our triple that costs up here and a lot of leases, they will recalculate on an annual basis. Our base rent, obviously we're protected through that, but our triple net costs, it's a fluid cost for us as landlords. So every single year, unfortunately, if we're seeing a 6% increase on property taxes and insurance and strata fees and garbage and water, that all gets passed onto the tenants.
[00:12:23] Cory Wright: Part of our strategy when buying is buying into markets where we feel we're at the bottom of the barrel lease rates. We might be getting 20 or $25 a foot base and you know, 6, 7, 8 blocks down there getting 40 or 45. So we feel we're getting into that position and the bottom of the barrel. So, you know, if we can make our numbers work at those low lease rates and we ever have to support a tenants through a, maybe a major increases in property taxes the next year, we're in the position to do that versus coming into a marketplace where we feel our lease rates are kind of peaking and then we're really dependent on our tenants being successful at that point.
[00:12:56] Sam Wilson: Yeah. And you answered that to a degree on things such as property taxes, insurance, things like that, that you don't have control over, but on inflation as a whole, is there like, Hey, it's, you know, I don't know what the Canadian version of CPI is, but it's like…
[00:13:09] Cory Wright: Yeah; we use CPI.
[00:13:10] Sam Wilson: Okay. Yeah. So, I mean, do you tie it to that and say, Hey, your lease, if it was a hundred bucks last year, I'm just making up numbers here next year, 108, because we had an 8% consumer per whatever, you know, inflation rate here in the last 12 months. I mean, it's, is that the kind of way that works?
[00:13:23] Cory Wright: From time to time you'll see that. Normally when we're negotiating for the base rent rates now we always try to build in a step up throughout the five-year term, or maybe they're paying $60 today, 62 next year, 64, 66, and 68. We're hedging our bets by doing that, not knowing where the inflation rate comes from, but we do see sometimes that sometimes this will be tied to CPI or even the renewals will be capped based on CPI during that fixed term which can all help both sides of the equation, but I mean, we're in a very high demand market in BC that we're very fortunate that if a tenant leaves, because I can't afford the $45, then three more guys are willing to come in and pay $50 to get the space. We're a little jaded up here, how that works, right?
[00:14:06] Sam Wilson: Yeah. It's nice to be in that position there in BC, but you guys are buying, you know, outside of BC as well. I mean, you guys are buying across the country and so you kind of have some exposure in some of these smaller markets, maybe where that demand factor isn't as well priced in.
[00:14:20] Cory Wright: You're exactly right. And when we get into those smaller markets, it's just, we will do our best calculated guess of where we're going to see things go.
[00:14:27] Cory Wright: The tenant pool isn't as strong to draw from. And you mean usually the tendencies aren't as strong and the covenants aren't as strong. So we'll do our best to try to make the best educated guess. First got to tell you we're not always right.
[00:14:38] Sam Wilson: And who knows, let's talk about this. And there's a question I've asked multiple times on this show and I always get a varied response, especially people who are mostly in triple net leases.
[00:14:46] Sam Wilson: How are you guys protecting yourself? And, you know, I like the way you've explained that. So that makes a lot of sense to make your best guess. It is what it is for four or five years.
[00:14:55] Cory Wright: Yeah, exactly. I think if we all had the crystal ball of where we were going to look in five years, we'd all be billionaires and we probably wouldn't be doing this today. We'd all be having a beer in the Caymans. So we just got to go with where our best guess.
[00:15:06] Sam Wilson: I love the sound of that. Tell me about the complexity of opening, a new brokerage in a new market with a new team.
[00:15:14] Cory Wright: You know, there's challenges with it, for sure. You mean we've been fortunate enough that we've sort of grown organically through our own team members.
[00:15:21] Cory Wright: So when we're going to other markets say, you mean like we have our Vancouver office and we'll go open, say in a Kelowna marketplace, which is about four hours away from us. There's a good chance people in our Vancouver office, know brokers that already operate in the Kelowna market. And when we go in there, we have revenue-sharing programs for our staff.
[00:15:38] Cory Wright: We have profit-sharing programs for our team leaders and managing brokers. So I'm a big believer for that. You mean it's better to have 50% of a watermelon than a hundred percent of a grape. So when we go into these markets, making them a part of our success and getting them to focus on the same parts that we're focusing, we profit as a team.
[00:15:54] Cory Wright: And that's, we've been very fortunate where people that can partake in the revenue sharing programs from the company that don't really exist in our industry too much. That's a great feature for a lot of these people take part in. So that's, we've been very fortunate to get some great people to join us early on.
[00:16:07] Sam Wilson: Yeah. I haven't really heard of that in any brokerage arrangement, you either on the residential or the commercial side.
[00:16:14] Cory Wright: It's very unique to our industry. And I think we're only as good as our people. And for us, one reason why I'm able to grow at the pace we have is we've been able to retain a lot of our people over the years.
[00:16:24] Cory Wright: And a lot of times in the brokerage business, you see a lot of people like two steps forward, one step back where people are changing brokerages and administrations staff are leaving. So I've always been of the belief if we pay our team right. And we treat them right. And we incorporate them into our overall business model and they can profit right along with the company.
[00:16:41] Cory Wright: It keeps our retention level is very high and creates a very unique corporate environment to work with them. So when we are looking to open up another offices, a lot of our brokers are eager and excited to reach out to people they know in those markets to tell them about their success so far, gets them excited to come join us and meet with us.
[00:16:56] Cory Wright: We've been able to scale the models quite quickly, maybe more so than other brokerages in some of these smaller markets be transitioned.
[00:17:02] Sam Wilson: Yeah, I love that. I love finding unique ways to incentivize employees to share in the rewards of the work, not just to get an attack or not just even to get commission, but Hey, you know, retain part of the, maybe not ownership shares as directly, but at least participate as an owner normally would.
[00:17:19] Cory Wright: Exactly, they profit along with us.
[00:17:21] Sam Wilson: Were there any surprises or were there any kind of tweaking of that model as you built that over the years?
[00:17:28] Cory Wright: We typically from like a revenue sharing standpoint as well. We do it off the top line versus the bottom line. And the reason why we do that is because it encourages our team where their focus is selling and leasing product for clients.
[00:17:39] Cory Wright: They're tied right into that versus me making a really bad least deal or a really bad acquisition in the market. They're not penalized because of that. So we do it off the top line type of thing. Obviously, when you take that model and that approach, you've got to be very confident in your bottom line because there's no guarantee you're making money, but we've been very fortunate that we've had almost a hundred percent growth year over year from a top line sales revenue over the past five years, we've been able to sustain that.
[00:18:04] Cory Wright: And because we focus on a quality versus a quantity model, our offices might only have six to eight team members in a particular marketplace where there's not 50 or a hundred of them. So for us to have top-line revenue sharing, we don't have an enormous staff to have to share that with. So we, it gives us the ability to give back to them that way.
[00:18:23] Cory Wright: Versus if we had 400 brokers and everyone had 1%, while 400% is greater than 100%, we'd be in a lot of trouble. So it works well with our model.
[00:18:32] Sam Wilson: Right. I love it. Cory, thank you for taking the time to come on today and really just tell us about your business, you're kind of thinking as it pertains to incentivizing employees and you know, doing revenue sharing with them, talking about the market, you guys are investing in, how you vet and see opportunity coming down the line, and, you know, how you guys are protecting yourself there, and triple net leases, you guys are busy, man. You're absolutely busy. I love it, coming on the show today and sharing with us. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?
[00:18:59] Cory Wright: They can visit our website at williamwright.ca. On there, they can sign up for all the latest listings and transactions and information. We publish quarterly reports. We also have the Vancouver Commercial Real Estate podcast, which we bring on great guests on a weekly basis to help educate the general public. So I think there's a mystique out there that commercial real estate, especially in Vancouver is very hard to acquire or owned by big businessmen in New York.
[00:19:24] Cory Wright: And we've really tried to break down that barrier and explain to them that this is an opportunity for everyone, whether you're a small business owner, that's been in business for a while with great revenue, all the way to the mom and pop type owners that might have a little bit extra equity in a property or even cash in the bank.
[00:19:37] Cory Wright: How we can hopefully open up those doors, by bringing on great guests to educate them on how that works and show the people that commercial real estate is for everyone.
[00:19:44] Sam Wilson: I love it. Cory, thanks so much for your time today. I appreciate it. Have a great rest of your day.
[00:19:47] Cory Wright: My pleasure, Sam. Thanks for having me take care.
[00:19:49] Sam Wilson: Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on apple podcast, Spotify, Google podcast, whatever platform it is you use to listen. If you can do that. That would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.