Washington Real Estate Journal
Volume I January 2009 The Pulse of Washington, DC Real Estate
Twelve years ago while affiliated with another highly respected tenant brokerage firm, Craig Lussi’s “Client First” way of conducting his consulting practice came under attack. The threat was from the tenant brokerage firm that had and was continuing to profit from Craig’s work. There was an unsuccessful attempt to put the fees of the brokerage firm ahead of the best solution for Craig’s client. Since then, Craig has successfully guided his clients through thousands of real estate decisions representing millions of square feet of creative real estate solutions while putting his clients first, ahead of attacks from landlords and competing tenants.
Six years ago, Craig established Tenant Consulting, LLC to ensure his clients would not be subject to the potential conflicts of interest that are a daily reality in the real estate brokerage business. The long standing client concern over hiring a real estate brokerage firm that represents multiple landlords and multiple tenants of the same size and with potentially competing interests does not exist at Tenant Consulting.
Taking a lesson from the legal profession, Craig and his team run a conflict check prior to agreeing to accept a new client. Because Tenant Consulting does not represent landlords actively seeking tenants, the potential conflicts to check are narrowed to similar size tenants in the same office market competing for space options and concessions in similar timeframes. Tenant Consulting graciously declines requests for competing tenant assignments.
Sixteen (16) years after becoming Studley’s National Rookie of the Year, Craig Lussi is leaving Studley to expand the company he founded in 2002. Lussi created Tenant Consulting, LLC as a solution to one of his tenant’s conerns that a tenant brokerage firm with different teams representing tenants of the same size in the same market or in the same building could represnt a conflict of interest. Tenant Consulting, LLC’s “Client First” philosophy prevents them from the tradition of renting office space from landlords. Instead, Tenant Consulting, LLC subleases from their tenant clients. When asked about this new philosophy, Tenant Consulting’s President and CEO, Craig Lussi, said; “Why should we as tenant brokers pay one landlord millions of dollars for 10 years rather than paying those same millions to 20 or 30 of our clients as sublease rent. The money still goes to the landlords eventually, but it benefits the clients first.” Lussi went on to explain, “We spend the majority of our business day in in our client’s offices helping reduce their office space costs yet conventional wisdom has us pay our rent to landlords. Tenants rarely have the exact amount of office space they require. Normally they have too little or too much. Their spaces in most cases could be more efficient. For those that have too much, there is no statement that says we’re working harder to sublease your space than putting our rent dollars and broker bodies temporarily in the space to be subleased.” When asked how tenant brokerage firms were expected to manage moving from client to client as their clients’ spaces were successfully sublet, Lussi responded. “We are not architects who have technology issues transmitting CAD designs over wireless. We are completely mobile. Have laptop, Blackberry, wireless printer, offiste accounting, etc., will travel for our client’s best interests.”
Eighteen months ago an eight-year partnership seemed to be winding down when Michael Hammond left Studley and Craig Lussi’s team for Cassidy and Pinkard. “There was as much weekly negotiating with Studley Corporate as there was on our own transactions,” Hammond quipped when asked why he left such a successful team. Hammond went on to say, “Craig thrives on negotiations and he is not particular on the subject. On the other hand, I enjoy matching the analytical underpinning to the strategy plans of our negotiations and I do not have much patience with negotiating for the sake of negotiating.” Craig Lussi gave some further insight into Hammond’s short-term separation: “Michael never left working on the deals because we had so many in progress. He just removed himself from the corporate clatter.”
When asked what was the most complicated they’ve worked on together, they both agreed that it was the cash merger of H Street Corporation into a Vornado entity which netted Vornado over 7.1 million sf of developed mixed-use projects with another 4.6 million sf of potential development in Washington and Pentagon City. Lussi said, “Hammond is a Civil War scholar and really enjoyed the first few months of the H Street Transaction because we never slept. We were planning and re-planning and adjusting assumptions on information that was almost impossible to obtain for clients that were used to doing things a certain way for 49 years.”
Beyond his extensive workload of ongoing transactions, Hammond’s responsibilities will include recruiting and growing the firm with the right type of consultants. When asked what it is really like working with Craig Lussi given all the folklore, Hammond replied with a long pause and a chuckle. “I learned very quickly 10 years ago that when Craig calls at 2AM with an impossible idea that he is not going to stop until we figure out how to make his idea work. Our relationship works because I keep giving him analytical reasons why his ideas will not work and he keeps modifying his ideas. When I run out of ways to shoot his ideas down we have our solution.”
Michael's new e-mail address is firstname.lastname@example.org.
Joanna Lohman, now a Vice President with Tenant Consulting, joined Craig Lussi's team at Studley 35 months ago armed with a business and mathematics degree and as one of the top women professional soccer players on the Washington Freedom. “I had played soccer internationally most of my life and I captained the U21 National Team for two consecutive years, but I had not yet achieved my ultimate goal of making the full National Team. Craig’s business philosophy was completely opposite of what I expected.” “Joanna was ready to put her soccer career on the shelf and focus all her energy on real estate,” Lussi said. He went on to say, “I reminded her that she had maintained a 3.97 GPA at Penn State while playing college and international soccer.” Lussi insisted that Joanna keep playing for the Washington Freedom and questioned her daily about how she could become a better player. Lohman made the full National Team and helped the United States women win the Peace Cup in China. Lussi was correct about Lohman's ability to juggle more than just a soccer ball. Her list of accomplishments during her 35 month real estate career is as impressive as the multiple Women's National Soccer Team fitness records she holds. We asked Joanna which of her real estate accomplishments she is most proud of. She responded, “Rent expense is such a large part of an organization’s overall budget, that when we are able to reduce the rent and make a client more efficient, monies become available to do remarkable things. We helped Counterpart International which regulates food safety and provides books to children in third world countries become more efficient. During their transaction we helped raise over $600,000 in charitable contributions for their humanitarian efforts. We renegotiated the Wilderness Society’s leases from Alaska to New Mexico, San Fransisco to Idaho to Denver to Washington, D.C. allowing them to become carbon-neutral for all their office space and purchase power from renewable resources. Our efforts in that transaction convinced Boston Properties to become carbon-neutral for the office space that their executives occupy around the country and implement cutting edge carbon reduction initiatives throughout their D.C. portfolio.” Lohman also mentioned that she was honored to be invited to meet Al Gore because of the carbon neutral calculator and program that she and Craig Lussi created with American Forests, which enables law firms, non-profits and corporation to reduce or eliminate their carbon footprint from their desktop computers.