By Tim J. Randall
Great partnerships have their compelling and rich stories. Much like the namesake for which they work, Marcus & Millichap’s Steve Gebing and Cliff David have followed the vision of the company’s founders: “a commitment to specialization, a willingness to foster a culture of information sharing and the foresight to pioneer real estate technology… coupled with an unfailing drive to measure success by client satisfaction.”
The narrative of this multi-family commercial broker team goes back to childhood.
“My business partner, Cliff David, is literally my childhood friend, a brother who at this point I am closer to than my two real brothers,” Gebing says.
This bond has driven the partnership forward along with a belief in the ability of the other and a discerning eye toward their respective distinctiveness.
“Cliff and I often joked that we would work together when we grew up” says Gebing.
Though the team is climbing the ladder of success they envisioned as kids playing basketball, their path to being prominent multifamily brokers was far from smooth. They roomed together at the University of Arizona, but upon graduation followed their own roads; Cliff to Marcus & Millichap in multifamily, and Steve to IBM. While their paths diverged, they always found time to connect often by daily phone calls through the years and summer trips to the East Coast to converse, explicate and still wonder about a David-Gebing what if?
For Gebing, the road to an eventual partnership with David in multifamily was tumultuous. His time with IBM placed him on the fast track for stellar status on its executive team. Yet, the relentless work cycle left him feeling he had shifted from the traditional work-life balance that had defined himself and David.
“Growing up in the same household environments we learned in order: faith, family and work,” he says.
It was in conversations with David that he realigned his priorities, deciding that IBM’s juggernaut program was not right for him or his family. In February 2006, the friends reunited around their passion for working together and building a multifamily brokerage team in Arizona.
With the partnership agreed upon, the cohorts developed their business strategy to tackle multifamily. David had already been established in the sector, but now the focus needed to be more succinct. Their goal was to be the preeminent resource for multifamily disposition services throughout Arizona for apartment communities with 100 units or more.
Gebing carried an important lesson with him after seven years at IBM; strategy is absolutely paramount in positioning to compete. He and David’s blueprint was certainly unique.
“For the first 18 months, we did the opposite of what every other broker would have done; there was no business development,” Gebing says. “We stepped away from the business and became absolute students of the game.”
The pragmatism of their strategy proved most ingenious, with the team literally walking every square foot of the multifamily 100 unit and above space. This arduous task, while daunting, did provide the pair with their elevator pitch when they began to target the owners in the multifamily arena, including Equity Residential, J.P. Morgan Asset Management, Archstone, Legacy Partners Residential, and Property Reserve, Inc.
The duo’s contrarian approach worked, and the phone started ringing. These upstarts were the knowledge brokers of multifamily.
If specialization drove the inchoate start of the David-Gebing team; the Great Recession and the recovery were about the group adapting to a commodity-based sales environment. That model saw the movement of distressed properties and owners who had to sell. The tandem view the next three to five years as a transition back to a knowledge-based and conventional sales environment.
“We see an amazing five-year window ahead…all the economic drivers are in place: job growth, population growth, immigration, and shifting demographics,” Gebing says.
While the transactional volume will inevitably slow from its pace of the last three years “to a more sustainable 7 to 8 percent sales velocity, the supply of available assets for sale versus demand is incredibly favorable to owners,” Gebing says.
Gebing and David estimate seven to 10 times as many buyers than sellers in the current marketplace, along with an existing multifamily pipeline that has a five-year horizon of approximately 25,000 to 30,000 units.
“In reality, this number is not concerning at all because it assumes 100 percent fruition, which will certainly not be the case,” Gebing says. “In historical context, the numbers are in line and absorption will be balanced.”
Now in their eighth year of business together, Gebing and David can look back on their accomplishments for perspective on what is to come. If the multifamily market is returning to specialization, as predicted, then “the environment provides another opportunity for us to differentiate ourselves as value added students of the game” indicates Gebing. Not that challenges are absent. The duo sees Freddie Mac and Fannie Mae decreasing the volume of their debt originations in the fourth quarter as well as interest rate decompression as a means to normalize the local transaction market. However, in the broad analysis, the fundamentals of the Phoenix Metro multifamily market are solid; from the Chandler Price Corridor to Tempe to Scottsdale.
While Gebing and David no longer have to head to Martha’s Vineyard to discuss their business future and strategies, they continue to build a record of achievement that speaks to client commitment. On a short list of Arizona’s finest multifamily brokers, the David-Gebing team upholds the commitment of their firm; a high standard driven by another pair of friends: George Marcus and William Millichap.