Discussing the possibilities and future of the intersection of healthcare and commercial real estate
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Trisha’s guest this week is Kevin Jones, Managing Director and Real Estate Practice Leader at ZRG Partners. He focuses on recruiting for the healthcare real estate sector. Our discussion centers around the role technology plays in decision-making within the healthcare real estate industry, and combining that with the traditional “boots on the ground” way of doing business in commercial real estate.
[2:12] The background of ZRG Partners
In two of the last four years, ZRG Partners was ranked as the fastest growing executive search firm in the world. They are a strategic healthcare solutions provider, and executive search is their core business. They have on demand and interim project work, in both individual and team development. The third component is consulting. Culture consulting is really where it starts, but it’s also about developing efficiencies and getting closer to aligning your stated culture with your day-to-day culture.
The firm employs 355+ people and they have done business in 35 countries. Kevin runs the global executive search practice. He had focused on North America for most of his career, and he came to ZRG to really try to understand and get a blueprint for how to build a global practice.
[4:00] Kevin’s professional background
Kevin started in search right out of school through a contingency recruitment shop. He learned through hard knocks and sharp elbows, and climbed the ladder to do more senior level searches. Now ZRG focuses on the C-suite, meaning positions that report to the CEO as well as the board. Kevin has always done commercial real estate, so his 25 years of experience help him to understand the sector really well. He has also had opportunities for, as he called them, “strategic introductions”. They aren’t investment bankers, but they have been able to manage companies and capital as well as match pipelines and developers. Their skill set goes beyond executive search, but that’s the core business. Other opportunities happen through those relationships.
[5:49] How technology is changing commercial real estate
Real estate has historically been laggard in terms of utilizing the technologies available. In the last 12 months, whether it’s driven by COVID or just more sophisticated business, technology has started to drive real estate more. Kevin shares his belief that it is going to be “the driver of 2022” and it touches so many aspects. There is AI investing that creates algorithms based on buy/sell points, markets, and asset types. It can be valuable, but there is so much involved there and real estate has been slow to adopt.
Kevin also shares some takeaways from the recent Real Comm Conference, which is a real estate technology conference. They were talking about 500-600 new prop techs developed, so there is potentially a lot of new technology coming at real estate – not just commercial, but residential as well. He sees the potential impact as tremendous, and he considers two schools of thought. One would say, let’s use technology as best we can. The other would be, let’s say we use technology and advertise that we use it but still do business the same way we have been doing.
Right now there is such a push for not only automation, but also for AI in how people approach the business. His company has started searches for a head of innovation and technology position for a $30 billion institutional real estate investor. They are working with a prop tech that is focused on automating the mortgage process and being able to do that online. It’s the old guard adopting a new mentality and thought process while also consuming technology and making sure they are competitive in their recruitment. If you’re looking at the next generation of recruitment, you need to be sophisticated and have a technology platform that is more than just for show. It needs to be integrated into your daily access.
This also plays to all the property companies with the hybrid work environments. There are so many changes happening, and technology is a huge part of the “back to work/work at home” balance. So many companies were exposed during COVID. They talked about technology and thought they had technology, but when it came down to it they were underserved and underutilized on the technology piece.
Even something as simple as documentation that you would have previously sent through fax is subject to technology changes. If you don’t have DocuSign, people start to get annoyed now. They don’t want to meet in person, and they want things to happen quickly. Kevin thinks this effect is going to be exponential in the next 12 months, because of the focus on and investment in real estate technology. It’s a global push in all markets, and it’s touching every aspect of the business – not just site selection or expediting signatures.
People are approaching the business differently now. There are some really strong multi-decade professionals that have been doing business a certain way. Kevin has been in real estate long enough to have seen people talking about deals on the back of a napkin, to the back of an envelope, to a white board, to a smart board. Now there are 3D holograms and spatial science that can come into play. These are positions that literally didn’t exist several years ago and now his clients have access to this advanced technology. That is where the industry is heading, and part of the industry is already there.
[11:43] Balancing technology with building relationships
Kevin sees the face-to-face relationship as the core component of this business. Technology won’t change the fundamentals of an asset. You might be able to see it, or get clarity on it, but it won’t change the fundamentals. If a property is over-leveraged, technology isn’t going to save you from that. Technology might make access to capital easier so that it becomes an issue in and of itself, but the relationship part is still crucial.
Executive search is a perfect example of this in business. Decades ago, monster.com was going to get rid of Search and LinkedIn. It was just an electronic classified ad, and it didn’t end up staying around. So while the technology piece is important, the relationship piece isn’t going anywhere. People still want to do business with the people that have been doing business with them, that they’re comfortable with, and that they trust. Some companies are so calculus-driven versus culture-driven, and it’s not bad, but you really need to make sure you have both culture and calculus right now.
Kevin advises focusing on not just your existing relationships, but also on how to build relationships. There is a skill set involved. Some people have been in business for a long time, and they may have 20 close business associates but they have never developed the skill set of how to take that 20 and leverage it to 40, 60, or 80. That skill set is just as important as technology. Leveraging relationships and being able to create and build a network versus working with the same people all the time is a great skill set and it tends to get a bit lost with the focus on technology.
People think real estate is all about fundamentals and cap rates, and it either works or it doesn’t. Real estate, however, is a very collegial business sector. Even though it is a young sector, there is an old-school healthcare real estate. People have been in the space for 10-20 years, and they are leery of the new players coming in and of all the capital coming in overseas. Technology doesn’t solve all the problems, and relationships still matter.
[15:33] Recruiting for the healthcare real estate industry
Part of Kevin’s job is to find talent that can be successful within this changing industry. ZRG Partners is data-driven and technology-enabled, and they leverage both of those pieces to do their jobs better. There is, however, still a human assessment involved. They are in the ultimate people business, so they are still assessing talent. It’s not all done with algorithms. There is a nuance in every position and you really need the skill set to listen to people talk about a new position and look for where they are consistent, where they are inconsistent, and differentiate between the finalists. It is so important to have an understanding of the culture, cultivate human connections, and determine who will be the best fit for the position.
[19:05] Kevin’s first job
Kevin started in the field right out of school, so his first “real job” was in recruiting. As a kid he worked for a caterer. It was hard work, but it was also customer facing so he learned a lot about white glove service. It was also project-oriented, and he worked long hours. It was a great sense of accomplishment to run such a fancy affair.
[21:09] What Kevin would be doing for a living if he was not working in healthcare real estate
In search, Kevin finds there is something easier to solve someone else’s problems. You have clarity, you have solutions, and you get excited about it. When you aren’t overly emotionally attached to that problem, you are better able to solve it. So, Kevin thinks he would be doing something where he would be solving someone else’s problems but he isn’t sure what it would be.
[22:12] Where Kevin gets news and information
Kevin tends to get his news from Michael Che and Colin Jost from SNL. He enjoys reading Joseph Campbell and Michael Neil, and he also likes to listen to podcasts. Lately he is getting into learning things that he should have learned in high school – he wants to know more about things he feels he should know about but doesn’t, for whatever reason. For example, he saw a documentary on World War II and he was amazed at just how little he knew about it.
[23:38] What Kevin does for self-care
Kevin walks his dog for self care. He also recently got an Oculus and he uses it for everything from exercise to meditation.
[24:43] Whether leaders are born or trained
It would be easy to say it’s one or the other, but Kevin doesn’t believe that it is. He thinks leadership and achievement starts with the appetite to lead and to achieve and to become a great producer. It boils down to ambition and appetite more so than genetic qualities or even intellect. All those things are great tools that are needed, but if you don’t have the appetite to do something great with what you’ve got, then it doesn’t matter whether you are born with it or learning about it.
Leadership is a really unique thing because there is a menu of skill sets that are needed. It’s not just somebody being born lucky, intelligent, or compassionate. These are all elements that we may be born with in some way, but that’s not all.
Kevin compares intellect to height. He is 5’11” and he can get on his tiptoes or slouch, but he is still 5’11”. Intellect is like that, in that you have what you have. It’s what you do with it that matters. Do you build on it, or do you just slouch? That is how he approaches nature versus nurture elements, because everybody has great gifts but it comes down to what you do with them.
We have to have a balance between being smart and being compassionate, so there is a need for IQ and EQ. The piece that Kevin and his company are looking for and talking about with clients as it relates to their company culture is DQ, or decency quotient. There needs to be a focus on decency in both the professional and the personal realm. It’s in every aspect of our lives, and Kevin thinks people are becoming more aware of that and recognizing who fits into their quotient of decency and who doesn’t. Kevin shares that when we are building teams and business, DQ is potentially a more important element than IQ. That is what companies are craving when they look at their leaders. You need competency, depth, and sincerity. Those are learnable, teachable, and coachable. If you don’t have the decency piece, however, you probably aren’t aware that you don’t have it – and therein lies the problem.
Links to resources:
Kevin Jones, Managing Director and Real Estate Practice Leader
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