Having The Wind at Your Back

Welcome. All right. Welcome back to another episode of CRE – The Unspoken Truth. I’m Charlie Coppola and I’m joined by my father, Craig. Today we’re talking about having the wind at your back. I’ve heard you say this a number of times: you were a great broker, but you had the wind at your back being in Phoenix, Arizona. Tell us what you meant when you say that.

So, I always start with this story. My dad was a high school baseball coach. And he got inducted into the Arizona Baseball Coaches Hall of Fame. And at his induction, there actually is an Arizona Baseball Coaches Hall of Fame, at his induction, I looked at him and I said, “Dad, congratulations. You’re a great coach.” And my dad looked at me and he goes, “Craig, I was a great coach. And then my pitcher graduated.” And I love that story, because I actually had a revelation, because I thought I was really good. And I think I’m really good.

I got, you know, I started saying, you know, “my pitcher graduated” to myself, because I thought, you know, here I am. I came from a little small town. I had no money. I’ve built a financial independence. I have net worth that’s way above what anybody would have ever assumed this kid from Sierra Vista would do. I’ve had success at Lee & Associates. I’m the top producer. Blah blah blah blah blah. And all of that I thought I did myself, till my dad told me that story. And so I changed it to wind at your back.

And what I mean by that is there’s really three things, and I’ll get right into this. The three things, and we can kind of break them down each, but the three things are… I made a great decision when I was in Chicago. I got released from baseball, and then my first job was in Chicago, and I didn’t want to be there. I didn’t want to be there for weather reasons. So I moved back to Phoenix, I moved to Phoenix, back to Arizona, but to Phoenix. So I lived in Phoenix for the first time and I started my career here.

So, and what was great about that, the Phoenix market is just booming for the last 40 years. I got into the market, there was 30 million square feet of office space. Today there’s 110 million square feet. So in my 40-year career we’ve built 80 million square feet, three times the… this almost 90, it’ll be three times the size. So I got into a growth market. And so if you’re in a local market and you’re looking for, pick somewhere, go somewhere that for the next 20 years looks like it’s going to grow. That’s number two. Number one.

Number two, you want to get into the product type. I already mentioned that office grew from 30 to 100 million, 108 million square feet. It, are they going to build an office? So we have about 10 young industrial brokers in Phoenix that have started in the last 10 years. The wind has been at their back, not because they’re good brokers, but because the Phoenix industrial market’s built a thousand buildings in the last 10 years. A thousand buildings. I’m like, it’s insane. They’re in a great, not only a great market, Southwest, the smile, if you will, but they’re also in the product type. Before that industrial run, there was a 15-year run for multifamily. The multifamily brokers thought they were really good, and they were really in a good marketplace. Office has never been, like, the hottest thing. It’s always just been steady.

And the third thing that you could do is, what do you do? Is it going to be, are you going to be taken out because, you know, AI and other automation is going to lose your business? Like, I think appraisers are on the way out, you know. So you want to pick not only the geographic market, not only the product type, but the third thing is what you actually do. We do both tenant rep and landlord. So, we play both sides. So, I think I’ve said this before, 10 years ago, 75% of our revenue was from listings, 25 from tenant rep. Today, 75 or 80% of our revenues are from tenant rep and 20 to 25% are from listings. And that switch, thank goodness we had it. We could do both. And that’s not really true, because we do five to 15% in sales. But we’re kind of tapping into another, and we have a bunch of brokers across the country that do multiple marketplaces. But understanding all three of those is critical if you’re a young broker, to kind of look at those three to go, hey, I want to move to a market that’s growing.

I want to be in a product that I think is going to do well in the next 15, 20 years, and then finally, I want to be on this side of the business.

Yeah. Yeah. So I think, I mean, I think about it for my own career, our own company even, is just, like, how much of the success do you, you know, credit how hard you’re working, and how, you know, how hard you’re running in that direction, versus how much the wind is helping you, or, you know, blowing against you. I think, I don’t know, like, for me, I think you and I both think we can outwork whatever, you know, wind is, and that’s great, but man, it’s a lot easier if you have the wind at your back. And I don’t know, I’ve started to think about that more for our company and our own, my own career too.

Well, it’s 100% true, Charlie, what you just said. And I’ll give you a perfect example. You know, I’ve been number one at the Phoenix office for 25 of our 33 years. Now, in 2000, in 2000, COVID hit, office, they shut off…

Twenty twenty.

So, 2020 has shut it down. And this is this decade. This decade has been a just a hellacious year, a hellacious decade for all office. There is one segment doing well, high class NA, but everything else has just been… there’s been a four or five year… So what’s interesting, I was number one in 2024. Now, the wind is not on my back in 2024, and I just looked at the numbers yesterday, and here we are in 2026, and I am number four today. Andrew is number six or seven. So two of the Coppola Cheney team are in the top 10, and that’s because we worked really hard in a marketplace that’s not easy. So you can outrun the wind a little bit…

But it’s way harder to do. Yeah.

And I would say that over your career…

It’s a lot easier. And I would say this, it’s just like a sailboat. If you have a big sail or a big motor, or you’re really good at brokerage, and the wind is stronger, then that boat’s going to go faster. And so I think I thought I was really good. I think I’m really… I still think I’m really good. But my sails were a lot more full because the wind was blowing on my back.

Yeah. How do you look at someone, let’s use your example of the industrial brokers over the last 10 years. How do you look at someone who’s, you know, five, ten years into the business, have had a great start to their career, and say you’re actually good, or you’re at the right place at the right time, and if this, you know, market shifts or the wind changes, you’re in trouble? How do you evaluate that?

Well, you know, you really don’t know until the tide goes out if anybody’s wearing clothes. And so everybody’s good until the tide goes out. And it’s starting to happen right now. The industrial market’s, obviously, it’s kind of, other than data centers, it’s kind of slowing down, and so those brokers are getting their… their numbers are dropping. And I got to tell you, I look back and I was super fortunate to get in the business in 1985, because in 1987, you’re too young to know this, but 1987 we had the great recession, real estate recession. And they called the RCT, RCD days, RCT days, a Resolution Trust Corporation, RTC. And that was the worst thing that could ever… the entire industry just went to… from 1987 to 1993 was just horrible.

Now, I had been in the business literally 24 months. I was a single guy. I didn’t… I’m like, if I…

Know any different. Yeah.

Nothing. I didn’t know it. And I was so fortunate. We started Lee in 199… Lee Arizona in 1991, and the recession was still going, and we never looked back. It got better in ’92, ’93, by ’95 we were rolling, and I was like, I’m now, like, ’91, I was 30 when we started the company, and by ’93 I was number one in the office, and I was rolling, and I’d been in the business five years, because I had learned to be hungry. I learned how to do these things.

So, I feel bad for these folks who have come in and had it easy for the first… because you got to look at this. They’re going to have to learn what I learned my first five years, when I had nothing. And they’re going to be… and it’s a really hard change to go and make X dollars, and then the next year go make X minus 20%, a year after, another 20% discount. So, they could go down 50 to 80% in revenue over the next two or three years. That’s a hard thing to get through.

What would, how would you advise someone who, you know, is overconfident given the market conditions, and, you know, they’re starting to see the, you know, the tide shift a bit? What would you say to them?

Yeah, it’s hard to talk to them.

Yeah.

They think they’re… they think like I did. I think they were the greatest thing since sliced bread. “No, I’m really good.”

Yeah. And the way you talk to them is two years after their income was at the peak, and they’ve been sliced 25%.

They get humbled, and now they’re open to listening.

Yeah. Yeah. It’s happening. It’s happening. Well, look, I had a couple conversations with a couple of our guys in the last two weeks about this, and I could just see it glaze their eyes. They’re just not… They’re not ready to listen to it.

Yep.

And they’re good. They’re good people. This isn’t a negative on them. They just came into a situation, they were, they were born on sec… they, you know, they got in the industry on second base and think they hit a double.

Yeah. So they haven’t experienced enough pain yet to have that conversation, right, understand how real it could be, you know.

My only comment, advice to them, is make sure you have a lot of cash saved up and you haven’t increased your lifestyle.

Yeah.

And most of these guys are pretty smart. They’re not out buying the Bentleys and all that. They’ve saved money. And number two, they haven’t gone out and bought the $10 million house, you know?

So, how about this? What would you say to someone who’s two years into the business, and they’re, you know, they’re an office, right? So, it’s obviously, the wind is a headwind, right? You’re running against the wind in a market like that. And I’m using that as an example, but someone who, you know… and you said it, it benefited you early in your career to have a bit of a headwind, because you, you know, you benefited from that. So, what would you say to someone who’s in that place today?

If you can make it for the next 36 months, then you’ll make it your entire career. You do not have to make it 10 years, you have to make it 36 months. And to do that, you just got to start getting… there is a lot of transactions happening. They just may not be 50,000 foot deals. So, you know, Andrew just closed the biggest deal that he’s done for our team. It’s a 100,000 foot deal, but he’s been in the business 23 years. So, it’s like, a 100,000 foot office deal just does not roll around that often. So, then you go, okay, now we’re just talking semantics. If it’s not 100, 50, it’s big. If… But, you know, when I got a 5,000 foot deal… like, I hear our young guy go, “Yeah, it’s a little 5,000 footer.” But I’m like, 5,000 foot, that’s a good size deal, man, ’cause, you know, on the tenant rep side, a 5,000 foot deal could make you 50,000 bucks in gross commission. It’s like, it’s real money. It’s not nothing to sneeze at.

Yeah. Yeah. So where do you see… you’ve added some market commentary throughout this episode. If you could summarize your view on brokerage as a whole, where do you see the wind blowing, you know, today and in the next decade, and who’s going to benefit the most from it?

First, the relationship. First and last is always the relationship. Who can build the strongest relationship’s going to win. Second, who’s got the competency? You know, the idea, our business, I believe, is going to change dramatically along with AI and other technological advances. I believe it’s going to change dramatically. But the person who has the relationship, and who has a technical competency to be able to negotiate transactions that are effectively really good for their client, and understand the marketplace…

So, what average brokers have been able to get away with, building mediocre relationships and understand the market. Okay, they could find a tenant and go into St. Louis and go negotiate a deal and feel like they were doing well. If they don’t have a strong relationship, that’s going to go away. And so I think those two things are really going to play out. And everybody talks the relationship game. We’ve said this a hundred times on this podcast. Building real relationships matters. And having technical competency, which will be interesting, because technology can’t really figure out… on the sales side it can, because you can understand the comps, but the nuances of how to close a transaction, and what this tenant’s looking for versus that, is something I think, especially on leasing, is going to take another decade to figure out on the technology side.

Yeah. Yeah. And I think you mentioned this, the smile, or the Sun Belt, like, the cities and states where people are moving. It sounds like industrial’s been hot. Multifamily, I know, was hot. What’s your view on office? I know it’s been a hard last six, seven years. Beyond that, what, you know, the next six, five, ten years, what’s your view there?

I’m actually really bullish on office over the next 10 years. I mean, we’ve done the hard work. We’re doing the hard work. Still a couple more years to go. But the hard work of kind of getting the crappy product off the market, the hard work of conversions of stuff that didn’t… the demolition of product that just wasn’t ready to last…

Consolidation, right? Instead of 50,000 feet, companies want 20,000 feet. I feel like that’s happened a lot lately.

Yes. The consolidation’s happening for the last five to seven years. It’s going to continue. So I’m actually pretty bullish that, you know, our numbers came out in Phoenix, and, you know, we’re pretty much at a 20-year average vacancy right now, other than still, still high on sublease.

But I think we get back to this kind of idea, and this is the point that I would make to a young or midterm broker, or even a long-term broker: the perspective has to always be, I’m going to be in the business another 10 or 15 years. Even today, at my age, I still look at this for my team, like, I’m building the relationships for them to… hard to… to cultivate over the next 20 years. That’s what I would be telling any broker, is don’t just make a deal, move on. Make the deal, build the relationship, continue the relationship, and that’s what’s going to help you as the market evolves.

Yeah. So, last question is really for a lot of, you know, a lot of our customers will hire summer interns or year-round interns, you know, young broker, analyst, research person at a company, whose first year in the business. And I’ll talk to them, and oftentimes I’ll send them episodes, or parts of, you know, these that we’ll do that really speak to young people, and I’ll send them that after I talk to them. So this last question is for them. They’re starting their career, they’re an intern in college, or they’re first year out of school, they don’t really know what they want to do. How would you evaluate? What would you be looking for to try to see where the wind is blowing, to try to align yourself with the wind?

Well, I think you can, you know, brokers… you sent me that quote today, brokers like to talk.

Yeah.

So, anybody coming out of college can get in, can go meet with brokers at any time. They’ll call and say, “I’m just getting… graduating from college. I’d like to have a conversation. Want to get in your business. Do you mind, can you give me 15 minutes?” I think having 15 or 20 of those, not one or two…

You know, get 15. And if you have a meeting with somebody, and then say, “Can you introduce me to one other person? That may be… you’re industrial, and I want to talk to somebody in office.”

Brokers will introduce you and they’ll have the conversation. So, I think getting a feel for the business yourself. We have a lot of people who are just literally lost coming out of college. They show up, you know, they want to be a runner for our team, and they show up in a golf shirt, unshaved, you know, like, you clearly don’t know who our team is, and it would be so…

You literally go on our website, we’re all in suit and tie. It’s like, show up in a suit and tie. And so, but people don’t. And so I think there’s a disconnect between people going through college and kind of the real world right now. And I think the way to kind of start feeling about the real world is get out there and meet a bunch of people that are in it.

Yeah. Yeah. Real conversations. I love it. The wind at your back. Thanks again. Great episode. Thank