Relating a Story About Real Estate Entrepreneurship

For many people, the word “entrepreneur” conjures images of one or two individuals transforming a brilliant idea into a profitable business with only their hard work, grit and a handful of trusted investors.

For Jeff Blau, WG’92, president of real estate firm Related Cos., entrepreneurship is about being nimble, quick and able to react, no matter if you’re working alone in your garage or at a corporation.

It was an entrepreneurial way of thinking that helped Blau and Related adapt, survive and ultimately succeed in the face of the financial crisis of 2007-2009, he explained during his Nov. 16 talk on campus, as part of the Eric and Beth Schlager Lecture Series on Real Estate Entrepreneurship.

Related had been one of the biggest U.S. real estate developers before the crisis. The company grew organically from eight to 2,000 employees. It had completed signature projects, like the mixed-use Time Warner Center in Manhattan. Private investors had bought a 25 percent stake in the company in Jan. 2008, based on a total company value of $5.5 billion.

Then Lehman Brothers crashed. Real estate, Blau recounted, went from boom to no new development.

“It was literally like hitting a wall,” he said.

Unlike many of its competitors—many of which stagnated without new projects, cut staff and costs, and tried to live off existing properties in 2009—Related pivoted. As Blau explained, the private company retained its staff and applied their talent toward new ventures: advisory work for banks left with defaulted properties and real estate fund management. This has led to successes like working with Deutsche Bank on Cosmopolitan of Las Vegas, and setting up funds for sovereign wealth funds and Fannie Mae properties. Related is only now “tip-toeing” back to new development, according to Blau.

Jeff Blau, WG’92

Two entrepreneurship lessons come out of Related’s experience. The first is that in the current macroeconomic environment of no or little growth, don’t bet on future recovery; rather, make money today through “micro-opportunities.”

The way to do this—and the second lesson—is through your people, whether you’re a team of eight or 2,000. Related, after all, leveraged its staff to deliver value to new clients and investors through project execution.

As Related founder, CEO and Chairman Stephen Ross told Blau when he hired him right out of his undergraduate alma mater, the University of Michigan: “If you’re any good, it’ll be our job to keep you.”

Blau turned out to be so successful he earned his Wharton MBA while commuting to work at Related, where he’s remained ever since.

Eric Schlager, C’86, and wife Beth Schlager, C’86, sponsored the lecture series at Wharton’s Samuel Zell and Robert Lurie Real Estate Center to further knowledge and interest in entrepreneurship in real estate.

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