By Midwest Real Estate News Staff
San Francisco’s trendy SOMA district and Warsaw, Poland, might seem worlds apart, but not for one of Chicago’s oldest family-run commercial real estate companies, Golub & Company.
“Deals have taken us to a variety of places across the U.S. and in Europe; it’s not about geography, it’s about opportunity,” says Michael Newman, chief executive officer and part of the second generation of family leadership at Golub.
2014 may be the most geographically diversified year for Golub & Company since Eugene (Gene) Golub founded the firm more than half a century ago. Decades of consistent management have built a strong relationship network of capital partners, architects, contractors and other partners that seek out the firm when a deal feels right—sometimes in those unlikely places, from Warsaw to Chicago to Aspen, San Francisco and anywhere else opportunities might arise.
Navigating family leadership
“The bottom line is that for 54 years this has been a family business that’s opportunistic and entrepreneurial, and it’s going to be around a long time,” Gene said.
Golub & Company has survived and thrived through a half-dozen market cycles that wiped out or transformed most development firms of its vintage. The firm has completed deals totaling in excess of $7 billion, and is rapidly adding to that total with a wave of new developments across the country.
The firm’s owners, all family members, have navigated the commercial real estate market through its ups and downs, following a basic formula that hasn’t changed much since Gene founded the firm more than 50 years ago:
- Act when the market’s right;
- Look for deals where you can add value;
- Work with the best partners and long-term employees; and
- Do what you say you’re going to do.
This philosophy has led to a long list of professional recognitions for Gene, who recently has been celebrated in Europe as well as in the United States for his contributions to the industry and the built environment. Most recently, he received a lifetime achievement award from EuroBuild, which noted that the firm was the first developer to commit to Eastern Europe after the fall of the Berlin Wall. Gene has also received lifetime achievement awards from the Central & Eastern European Real Estate Quality Awards and from the Chicago Chapter of the Urban Land Institute.
At 83, Gene remains engaged, yet the business has been run primarily by the next generation for two decades, a management team including son-in-law Michael Newman, son Lee Golub and daughter Paula Harris. All three have been with the company for a quarter-century or more.
Other non-family members who round out the leadership roster are long-term company and industry veterans including Michael Goldman, head of acquisitions and financing; John Ferguson, head of office and retail leasing; Bruce Armstrong, head of development; and Tom Gatti, who heads the firm’s financial and administrative functions.
Golub & Company has now become a third-generation family business, Harris notes, as her daughter Samantha Patinkin has joined the company. And there are other family members in the wings. Some of the third generation have already completed internships at the firm and are working elsewhere, gaining valuable experience in the business world outside the family business.
The consistency and longevity of its leadership team has helped Golub & Company achieve a high level of credibility with financial sources and operating partners. “We’ve done deals or worked with just about every major lender out there,” Gene observed. “If someone were to ask me for references, I’d say, ‘just talk to anybody in the business.’”
At least one family member is involved in every major deal, which on the one hand limits the firm’s size but on the other ensures quality control and sponsorship upon which partners can rely.
“We’ve always been able to do big deals, but it’s not about being big—it’s about doing the right deals,” Newman said. “We define the ‘right deal’ as one that is profitable for our investors, is high quality in its asset class, and where we can offer excellence in professional operations and management.”
Taking Chicago connections global
An example of the management team’s creativity in finding those ‘right deals’ is the firm’s presence in Central and Eastern Europe development during the last three decades. Golub & Company was the first Western developer to build in Poland after the fall of the Berlin Wall, and the success of that first building led to additional opportunities, the latest of which is PRIME Corporate Center in Warsaw at the center of Warsaw’s CBD.
Golub & Company’s Polish affiliate, Golub-Gethouse, recently pre-signed Raiffeisen Polbank to a lease for 90 percent of the building’s office space–19,500 square meters (approximately 195,000 square feet)—plus the entire first-floor retail space. The deal was dubbed “Transaction of the Year,” by Polish media and ranked among the largest deals year-to-date anywhere in Europe. The building was designed by Chicago firms Epstein and Solomon Cordwell Buenz (SCB), and is expected to be completed in early 2016.
Those Chicago-bred relationships travel well for Golub & Company. Another SCB-Golub collaboration is under construction in San Francisco. The City on the Bay may be a market with high prices and high taxes, but it’s also known for high rewards for those companies that get development right. When the San Francisco Redevelopment Agency selected a developer for the Transbay Block 6 development parcel in the city’s SOMA (South of Market Street) district, Golub & Company might not have seemed like the obvious choice. But given the complexity of the deal – a 32-story luxury apartment complex and a required adjacent affordable housing tower – it made sense.
“It was a relationship that brought us there,” said Michael Newman. “SCB called us and said, ‘we think Golub can make a difference there.’ It was appealing to us because it was zoned, so there was no entitlement risk, and urban high-rise multifamily is right in our wheelhouse. We gravitate toward development opportunities where our experience can add real value to the deal.”
Golub and SCB built a diversified team peppered with both San Francisco and Chicago connections with decades of experience working together. Bentall Kennedy joined the group as a capital partner to bring the complex deal to fruition. Ground was broken in December 2013 with much fanfare from the mayor of San Francisco. It was a classic Golub deal, leveraging the firm’s deep relationships, credibility and entrepreneurial flair to seize a moment of opportunity—regardless of geography.
Creativity: A family affair
The projects in Warsaw and San Francisco share a common denominator: creative, opportunistic plays that present strong investment potential for Golub’s many institutional capital partners.
“We are often brought in by capital partners who need operating partners with local knowledge, and are willing and able to have ‘skin in the game,’” Lee Golub observes. “One thing our partners appreciate is that we treat all deals like we’re the owners, even when we work on a fee basis. Because of this, many of our capital partner relationships go back decades, and typically lead to multiple collaborations.”
The firm’s projects typically have a good story behind them – sometimes literally. Gene Golub is a published author of spy novel Protokol, a story set in Poland during the cold war, with interlacing connections to the areas surrounding the firm’s Warsaw developments.
More often, the creativity is in the deal-making and identifying opportunities. One current project, a development of 14 ultra-luxury townhomes with price tags $9 million and above in Aspen, Colo., began with a land purchase at the height of the financial crisis—an opportunity now coming to fruition. In another deal outside traditional major markets, a mixed-use development in Scottsdale, Ariz., was launched when the site was identified during an unrelated business trip, and the management team was then able to garner zoning approval that no other developers had previously been able to achieve. The result: the tallest residential building in downtown Scottsdale.
Other deals still in predevelopment phases are expected to be ready for ground-breaking later this year or in 2015, including several Chicago developments and investments. While Chicago is currently the focus of the firm’s Midwest developments, the company has owned and managed properties throughout the region, including in St. Louis, Indianapolis, Minneapolis and other markets.
When the rubber hits the road
The expertise and relationships that the Golub management team brings to the table pay off particularly when deals get complex. With Goldman Sachs, the firm bought the John Hancock Building in Chicago at the peak of the market in 2007. The financial crisis quickly changed the economics of the deal, and the building itself brought its own complexities, including the operation of one of Chicago’s most popular Observatories.
Yet despite the challenges, over the next five years, Golub & Company, acting as property manager and leasing agent, substantially leased and repositioned the Hancock. Golub principals note that the partnership was successful.
“Since the Hancock deal, we have done two more deals with Goldman Sachs, including the acquisition of 311 W. Monroe in Chicago,” Lee Golub observed.
“Our relationship partners look for value creation, innovation and creativity, and those values come naturally to us because it’s how we’ve always done things – it’s what my father taught us,” Paula Harris said.
Although her father has turned over the reins, his presence looms large, Harris said.
“He’s still extremely creative, able to come up with solutions, and he challenges us to think through every angle, on every deal.”