David Marks

Coffee Break

Marks

David Marks
Managing director, Phoenix Investors LLC
1818 N. Farwell Ave., Milwaukee
www.phoenixinv.com
Industry: Commercial real estate
Employees: Approximately 85 (including Phoenix Investors and affiliates)
Family: Wife, Rachael; daughters, Teah and Eve; son, Solomon

Marks
Marks

What was the smartest thing your company did in the past year?

“As a company, our smartest initiative was the implementation of our wellness program, which has had a positive effect on current employee attitude and morale. Additionally, the program has been a key deciding factor in employee recruitment.

“On the investment front, our smartest move was the continuation of our portfolio re-balancing, in which we have continued to sell retail investment real estate, and reinvest those proceeds into large scale former single-tenant industrial real estate. The ‘Amazon effect’ has had a significant impact on the buying habits of American consumers and the declining need for brick and mortar storefronts, while space for manufacturing and distribution continues to be essential.”

What’s new at your company?

“There’s always something new at Phoenix! We continue to be on a rapid and exciting growth trajectory. Our footprint has expanded to encompass approximately 8 million square feet in 19 states.

“If you ask our employees, the greatest excitement centers around our new office building. Given our employee growth, we have outgrown our current space. Our new space is currently being built out at 401 E. Kilbourn Ave., in downtown Milwaukee. It will provide an improved layout, double the current office square footage, and enhanced employee and meeting amenities with on-site workout/spa-like amenities.”

Do you plan to hire any additional staff or make any significant capital investments in your company in the next year?

“We’ve dramatically increased our employee count in all areas of our investment, management, and construction teams over the last year. As our growth continues, we anticipate additional hiring, and have planned for that growth in our new office space.

“Making capital improvements is the key element in our investment strategy. Upon acquisition of a new industrial facility, unlike most of our competition, we immediately begin to make improvements to upgrade our properties, including: roof replacement and repair; utility upgrades; safety improvements; energy efficient lighting upgrades; HVAC efficiency and reliability upgrades; insulation of exterior walls; site work; and the upgrade of interior and exterior appearance.”

What will be your company’s main challenges in the next year?

“Our greatest challenge will not be finding new investment opportunities, but will be the allocation of resources. Finding the proper prioritization of allocating both capital and employee time will be the key element in maximizing the full potential of our opportunities.”

What’s the hottest trend in your industry?

“The two hottest trends I see in commercial real estate are both areas that we try to avoid. First, the ‘fee-driven’ model of real estate development, and second, the flight to ‘turn-key investments.’

“I guess we would be considered an old-school real estate developer/investor these days. We assess risk, invest primarily our own capital (in many cases, initially purchase a facility with all cash), and we develop or mostly redevelop property with a long-term view on ownership and returns. Many of the high profile developments seen today are promoted by developers who have little real equity in the deal and are simply completing the project for the initial developer fees built into the closing of the deal.

“Secondarily, many of the real estate firms (including the public REITS) are more investment managers than real estate developers. They have no appetite for property repositioning or renovation, and have a preference for a new or newer property with a longer term lease. We roll up our sleeves and position ourselves on the opposite end of the real estate spectrum, which has comparatively little demand and better pricing. Therefore, we believe our returns are significantly above market, while ironically, we are taking a lower level of risk.”

Do you have a business mantra?

“While I personally don’t have a business mantra, our corporate logo incorporates what we strive for as a company on a daily basis: ‘Opportunity, Execution, Value Creation.’ We incorporate those themes in what we do on a daily basis. Within Execution, we focus on one key word: Service. It’s not a word you hear often in industrial real estate, but that is what we sell to our tenants to be highly successful. Having a great space for your tenant is key; however, when you combine that with excellent service and being attentive to their needs, you build a strong relationship with your customer; in this case, our tenants. You want your tenant to think of you first when they need additional space.”

What was the best advice you ever received?

“In a business context, ‘you can’t manage what you can’t measure.’ I’ve run across too many businesses, where the management really couldn’t tell you the true cost of producing their product. They’ve all been doomed to eventually fail, especially when there is a downturn in the economy.

“In a personal context, ‘know what matters.’ It helps to know that a business call isn’t always really that important in the grand scheme of things when your child is sitting right next to you in need of some attention.”

What’s the funniest thing that ever happened to you in your career?

“Well, let’s just be glad that cell phone cameras weren’t around 25 years ago. I was shredding some papers and carrying on a conversation, and caught my tie in the shredder. While it was slightly harrowing to try to find the off button as your neck is rapidly being drawn into the shredder, I can certainly laugh about it now. I seem to get reminded of the incident every few years.”

What do you like to do in your free time?

“In my free time, I enjoy spending time with my wife and children, as well as being an avid fan of Wisconsin-based sports teams. I’ve also been known to say, ‘L’Chaim’ over a good scotch with friends and associates.”

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