Doug Schuster and Curt Allsop are executive managing directors and partners at Newmark Knight Frank, a firm that provides real estate advisory services to some of the largest companies in the world.
Do you have any recent news you’d like to share?
Schuster: The commercial real estate industry’s institutional news publication, Real Estate Alert, recently announced ARA, A Newmark Co., pushed ahead to grab the No. 2 spot for multifamily properties at the midyear point, as Newmark Knight Frank’s multifamily platform racked up a 12 percent gain in sales.
NKF provides a fully integrated platform of services to multinational corporations and investors worldwide, as well as to occupiers, owners and developers of real estate on a local, regional, national and global level.
I am proud to be a part of the largest multifamily brokerage team serving the Las Vegas community, complete with four knowledgeable brokers, two experienced marketing and operations professionals and one financial analyst.
What’s trending in the local CRE environment, and how do you expect those to evolve in the next year or two?
Schuster: Two major trends in Las Vegas commercial real estate stand out: the elevation of Las Vegas as a national and international market for investment capital, and the migration away from homeownership as more residents, particularly the younger generation, choose apartment living.
Las Vegas has always drawn interest from investment capital looking for a “home.” What has changed is the market’s perception among investors. Now, the Las Vegas market is considered an acceptable risk for both private and institutional capital, from the greater U.S. as well as international sources. While gateway cities will always receive the bulk of interest from national and international investors, Las Vegas is generating more and more attention for that capital. Additionally, the high growth of multifamily development has increased investors’ interest in Las Vegas, as apartments are generally considered a less risky investment than office and retail product.
Consumer tastes are changing for living areas, reflecting technology changes and the generational shift as more millennials enter the workforce. Many younger people are actively choosing to forgo homeownership. One reason is the relative high cost of home ownership, even for entry-level homes. Another factor is the premium lifestyle offered by many new developments, including high-level amenity packages and appealing environments. These factors, combined with experience-based opportunities available at many rental communities (gatherings, cooking classes, theatres, etc.), ensure high demand and competition among potential renters, and increase interest from national capital.
Allsop: Las Vegas growth expectations and return potential for real estate investments outperform virtually every other market in the country. Las Vegas was slower to recover than many of the coastal and primary markets, which were providing significant growth potential, but today, growth expectations for these markets have flattened, or in some cases declined, while Las Vegas growth is predicted to remain strong for years to come. Additionally, cap rates in Las Vegas continue to be attractive to investors, providing better yield than the majority of competing markets.
What is the best business advice you’ve received, and what advice would you share with a potential investor?
Schuster: My best business advice centers around two concepts: Location always matters, and pay attention. Generally, investors who watch their assets’ ongoing operations carefully do better in the long run.
These two concepts are particularly important in Las Vegas; this market is relatively new — it didn’t exist until the 1950s and began to flourish in the 1970s. Only about 10 percent of multifamily ownership in Las Vegas is local; the rest are owned by outside capital. New investors and owners in the market need to be strategic with location, as the market changes quickly. Owners need to walk properties, read financials and stay apprised of the transient Las Vegas market.
The multifamily market is highly demanding, with high turnover. Cleanliness, maintenance and curb appeal remain vitally important and owners need to be willing to invest the necessary capital to protect and/or leverage their investments.
Allsop: The best advice I’ve received is to be competent through education and experience, yet humble in approach.
What’s the biggest issue facing Southern Nevada’s real estate climate?
Schuster: The biggest issue is the impact of economic cycles outside the control of the investment community.
As a tourist destination fundamentally driven by the hospitality and gaming industry, Las Vegas does not have a big, self-sustaining economic base; we are not known for our industrial base, high-tech industry or medical facilities and, in terms of size, the market is the 26th-largest metropolitan district, with the sixth-busiest airport. As such, market drivers from outside the valley can have a big impact on Southern Nevada’s real estate climate.
Allsop: It’s still surprising to me that many investors come to Las Vegas without understanding the geographical and governmental protections that affect development here. Unlike many other metropolitan areas, Las Vegas does not have an abundance of private land. About 85 percent of Nevada’s land base is managed by the federal government. Investors may be unaware that virtually all land surrounding the Las Vegas Valley is federally owned and restricted, and unavailable for purchase. Future Bureau of Land Management auctions will be for smaller infill parcels only.
Nevada’s water rights are another complex issue many investors do not understand. The lack of private land in Southern Nevada contributes to the lack of water rights, and complicating the water shortage is the fact that Nevada receives very little water from Lake Mead compared with Arizona and California.
If you could change one thing about Southern Nevada, what would it be?
Schuster: I would like to see a stronger and more synergistic relationship with the hotel and gaming community, as they are our major corporations and employers. Many other markets have a corporate environment highly integrated into business and cultural communities, and this increases visibility and collaboration — we need more of this in Southern Nevada.
Compare Southern Nevada with Charlotte, N.C., for example. Charlotte’s significant banking industry influences and positively affects the community through endowments to universities and investment in local developments, such as youth sports arenas. I would like to see this type of corporate participation and “citizenship” here, with an emphasis on investing in and giving back to the community.
Allsop: I would like to see Lake Mead at full capacity. Perhaps from a selfish point of view, more water in Lake Mead would not only be fun for recreation, but it would help address the overall water shortage.
What has been your most exciting professional project to date?
Schuster: Our recent apartment portfolio sale to Blackstone Capital was my most exciting professional project thus far. The $170 million Nevada West Development portfolio was the largest Class A apartment portfolio sale in Nevada. Most importantly, it represented a real institutional commitment to the multifamily platform in Las Vegas.
It was also an important transaction for my team, as we were integral to the success of the project. Our commitment began by approaching local developer Nevada West and tasking them to build an institutional quality Class A multifamily product encompassing 972 units. Nevada West delivered an institutional-grade asset — which allowed us to pitch Las Vegas multihousing product to the institutional market, providing an opportunity to entertain the “big dogs” in capital and promote the Las Vegas market. Our team was instrumental in bringing Blackstone Capital to the market and helped put Southern Nevada on the map for national and international investors.
Allsop: Two recent deals come to mind: the marketing effort and closing of a Nevada West three-property multifamily portfolio totaling almost 1,000 units; and the marketing and closing of a 33-hotel portfolio located across 10 states. Both opportunities required tremendous personal focus and a well-coordinated team effort from all involved, including the sellers, buyers and escrow/title companies.
Describe your company culture.
Schuster: NKF’s culture is focused on individual merit and entrepreneurial leadership. We have a results-driven focus and we embrace creative thinking. Our office is energetic and fun, and sometimes noisy.
Allsop: NKF is a client-focused real estate advisory firm; where clients are our partners and our No. 1 priority. NKF values exemplary corporate citizenship in business and in our community relationships. I find our company culture supportive, hardworking and fun.
What’s your favorite place to have fun in Las Vegas?
Schuster: My wife and I are big dog lovers, so a great day for us is with our pets chasing rabbits, ducks and geese at Sunset Park Lake in the winter, and the same wildlife at Lake Big Bear in the summer. I do love to travel and have visited some beautiful places, but it can be exhausting. Our second home in Big Bear is my favorite place to relax and hang out.
Allsop: My favorite thing to do is go boating on Lake Mead. I spent all my childhood years with my siblings, parents and friends boating in Northern California. It allowed me to get the full attention of my dad, who was otherwise very busy. Boating, to me, is synonymous with family and fun.
Where do you see yourself in 10 years?
Schuster: I still love what I do, but who knows what the future will bring in 10 years.
Allsop: I would like to say on a boat, but realistically, I see myself working with clients and friends to chase the thrill of closing the next real estate deal. The beauty of commercial real estate is that it is relationship driven, and that makes it fun.
What is your dream job outside of your current field?
Schuster: My fantasy job would be to work as a play-by play announcer for the Los Angeles Dodgers. I grew up in LA and will always love the Dodgers.
Allsop: If I could be anything I wanted to be, I would be a professional barefoot water skier.
If you could live anywhere else in the world, where would it be?
Schuster: It is hard to imagine living anywhere else, but Paris comes to mind. I took a trip there and cycled around the city sightseeing. I got lost in the Latin Quarter on the left bank and found Lafayette Park, where I sat and rested, watching life, the vibrancy of the people, and thought then that it would be an enjoyable place to live.
Allsop: I would want to live in Capri, Italy. It is the only place I have been where a 150-foot yacht seemed small compared with the many other yachts that were three times as big.
Whom do you admire?
Schuster: I am drawn to anyone who embodies character — someone comfortable in their own skin, who conveys an unconscious confidence and an open, honest nature. I enjoy being around people who demonstrate these characteristics, as they tend to put others at ease and be active problem solvers. I strive to be a person of character myself.
Allsop: I most admire my parents, my spouse and my children. I am blessed to be surrounded by wonderful people.
What is something that people might not know about you?
Schuster: I was fortunate to meet the love of my life, my wife of 27 years, Ali, in a chance encounter. I was in Portland on business and realized I did not have my belt. I walked down the street and went into a boutique looking for help. A tall, stunningly beautiful, blue-eyed girl greeted me, and that was it. One day I was happily single, the next, an incredibly lucky married guy.
Allsop: People might not know that I barefoot waterski almost every weekend at Lake Mead. It is an individual as well as a family sport. It is in my blood — my mother learned to waterski when she was expecting me. I’ve known how to ski since before I was born.
Anything else you want to tell us?
Schuster: Have you heard of the Four Stages of learning/competence? We all start out unconsciously incompetent; we don’t know what we don’t know. In the next stage, we become consciously incompetent; we become aware that there are things we don’t know. Next, we become consciously competent — we know how to do something, however, demonstrating the skill requires concentration. In the fourth stage, we become unconsciously competent — we have so much practice at a skill that we no longer have to think about it. I’m glad to say I am unconsciously competent.
Allsop: Life is what you make it.