Q&A: Cresa's new president on what companies get wrong about the post-pandemic office, what's next
A tenant representative industry veteran this week began his new role at commercial real estate firm Cresa.
Monday was Greg Schementi's first day as president of Cresa, which exclusively advises tenants, primarily in the office and industrial sectors. Schementi spent 17 years at Cushman & Wakefield PLC (NYSE: CWK), with his tenure during that time crossing several real estate firms that eventually folded into Cushman, starting with Equis Corp.
At Cushman, Schementi was most recently president of Americas tenant representation, so transitioning to Cresa felt familiar, he told The Business Journals in a recent interview.
"It was the right time for me to make a change," he said. "It is not a coincidence that it happened throughout the pandemic. The pandemic just created such an emphasis and focus on what occupiers need to do with their space, both industrial and office."
Schementi joins Cresa as the commercial real estate firm is amid a headquarters relocation — from Washington, D.C., to Chicago's Fulton Market neighborhood, joining fellow commercial real estate firms like Cushman and Jones Lang Lasalle Inc. (NYSE: JLL) also based in the Windy City. The new office is about a month or two away from completion.
"It's a unique time," he continued. "It’s a career-defining time for people in our industry and people on the occupier sides … We’ve never been more needed."
Schementi spoke with The Business Journals in a wide-ranging interview about the headquarters relocation and the state of office tenant decision-making through a pandemic and mounting economic uncertainty. The following excerpts have been edited for brevity and clarity.
What are some of your top priorities as president at Cresa?
We’re a nearly 30-year-old firm and there are people who have spent their entire careers here, who decided to stay at Cresa; others who have 10 years of tenure and people who have joined us recently. Cresa is at the scope and the scale that it needs someone fully dedicated to bringing the best ... to every broker here. That is a full-time job.
I need to understand where we sit in the market in terms of size, scale and expertise, and bring existing company resources to that individual adviser and their clients and, for whatever reason, if we need to invest and build additional capabilities, I can identify that because I’m on the front lines.
How (companies) decide to return the office, how they decide to use hybrid or in-person work, will impact the quality of their service and work. It simply will. That decision will have an impact on product development, service and people they attract and retain. We can help them not just with the space but, also, what are some of the strategies they can use to occupy the office?
On the industrial side, it’s about, how do I deal with supply constraints that are extraordinary as well as pricing challenges? It’s particularly acute (now).
What do you see office occupiers getting wrong about the post-pandemic office?
Technology Company A decides they have to go back to work 100% five days a week. That's a headline. There are quotes and discussion of that, and that becomes a thing people talk about. Similarly, Financial Services Firm Z goes all-remote. That (also) somehow has influence on the dialogue and discourse. It really shouldn’t. It's like the weather in another city. It’s not relevant.
The biggest mistake I see is, (companies asking) what are other people doing? I like being definitive and clear, but we’ve already had two or three false starts in the return to work and office. Some of that has been driven by known decisions by very big companies. That’s not the vast majority of companies we interact with. I think it has to be … thoughtful, and you have to care less about what others are doing and you build your own path. They’re your people. You have to have responsibility for them. Nobody knows your business better than you.
Do you think some companies are having a knee-jerk reaction, that they feel they have to respond to this moment quickly?
I do think it’s such a part of everyone’s discourse now, that real estate decisions are being influenced by things that aren’t about that core business. For us, our entire organization is designed to take just their needs into account. We're not cheerleading office space. The right thing might be to downsize significantly.
What's different now about how you advise office tenants now than pre-pandemic?
Now, everything is in the search. We want to expose the entire market to the clients — different parts of town, buildings, types of space. People will need to be brought to the office for different reasons they they were in the past. A flight to quality, additional amenities, a different part of town that has a community type of feel — I think it’s changed in that regard.
We have to understand what’s going on with their existing employee base. We have to survey how they worked in the past, how they work now, how they want to in the future, and understand those particular roles they play in the organization by function. There’s a fair number of interviews that may not have happened in the past with executives, midlevel managers and those doing the baseline functions. That helps us size the requirement. It also helps us figure out the type of space and what’s important to them. That was done before but it’s so much more intense (now). The stakes are so much higher.
The third is, the demographics have changed, There is going to be turnover — who is the employee we want to attract in the near, mid- and long term? My current employee base has this profile. They’re long-tenured in the firm, of a certain age and generation. We know where they live. That would drive how often, frequent and what type of space they would need currently. But we know there’s future growth and turnover, the employees we want to attract have a different profile and live in a different place. They have a different appetite and need for a real estate footprint.
You’re actually profiling the people who currently, and will, work in the future — that defines the type of space and where you occupy space in a metro area. Some version of this was done pre-Covid but we were not talking about the stakes that we’re talking about now. Everything is in the air for a single location or a portfolio, It's very robust and thoughtful.
As tenant reps, what kind of demand are you seeing to represent clients in sublease space as more companies put some or all of their office real estate on the market?
After the initial waves of Covid, the amount of sublease space that went on the market was extraordinary, unprecedented. For awhile, nobody was making any decisions. It's easy to say, I want to sublease, but with so much sublease space available, it was like selling something nobody was buying.
It’s very interesting now. Depending on the city and metro area you’re in, the sublease inventory is still there, but companies that are thoughtful, that maybe want to (make) a short-term decision, are looking at that type of space. Subleases are probably more in the natural flow of looking at the market than they had been in the past. It’s already built out and the price is right — it’s an interesting mix of subleases feeling bad but it gives occupiers options.
How are decisions about Cresa's new headquarters office being influenced by the pandemic and new work trends?
A lot of our best work happens when we’re in the office. It happens to also be our product, and we need to be close to not only our clients but the products, the space, we have to understand in detail. We’re largely going to be in the office. It wasn’t even a hard decision for us. It's how we perform better. (We have) a little more flexibility but it will feel very much like it did pre-Covid. We have folks that are always out in the field but there is a home base and office when they come back to their teams.
(The Fulton Market) part of Chicago is experiencing explosive growth. It has the amenities, it has the energy, it has the employees and clients we want to attract and retain. That space, that part of the city, is emerging to be a creative and a professional services and advisory hub.
Can you speak to some of the decision-making that went into relocating Cresa's headquarters from Washington, D.C., to Chicago?
I wasn’t involved in any of that. (But) we’re a national firm, and all of the typical advantages you see in Chicago contributed to that decision. We do have a critical mass of advisers here, and there are some folks that are in the headquarters function that are here. But it’s also about the city: it’s centrally located, easy to get in and out of, and there’s other firms headquartered here in our same industry. As we continue to grow and add service lines and advisers, it made sense to make that move. The timing of it in the last year, to fill some headquarters positions, was obviously a driver as well.