First non-family head of century-oldreal estate services firm has company preparing for next 100 years
When Draper and Kramer Inc. decided to break from tradition and hire someone from outside the family to run the 105-year-old real estate services company, the company knew people would be watching.
Now, more than two years after naming former First Chicago executive William Bennett as its president and CEO, Draper and Kramer said the move has paid dividends. Under Bennett's leadership, Draper and Kramer attracted new clients, enhanced its service offerings and is close to announcing new projects.
Bennett's performance even got the seal of approval from a Kramer who's been with the company 31 years. Chief Administrative Officer Anthony Kramer says Bennett has done a great job running the company that his grandfather Adolph Kramer started in 1893 with Arthur Draper. "He has made a huge difference here in bringing in fresh ideas," Kramer says. "We've really reorganized the company, the way it's administered completely since he's arrived, and it's made a terrific positive effect on just the whole structure of the company.""
One major change Bennett instituted was placing all of Draper and Kramer's property management services under one group called Corporate Services. The group helps clients decided when and whether to lease, buy or develop space and evaluates the risks and benefits associated with potential real estate transactions. Some of Draper and Kramer's Corporate Services clients include First Chicago NBD Corp., University of Chicago Health Systems, Madison Dearborn Partners, Fluor Daniel Inc., Home Savings of America and Harris Bank & Trust Co.
Bennett says the Corporate Services group has proven successful since its inception. In fact, he says all three of Draper and Kramer's major disciplines - management (Corporate Services), financial services and development - have flourished since the company's reorganization. "We've done a lot of streamlining. We've been focusing on the financial services side, both in our mortgage companies - commercial and residential - and we've been expanding our pension-advisory business," Bennett says. "On the management side, we've actually increased the amount of third-party management that we do by a fairly significant amount."
Plus, "We have several new developments in various stages of getting ready to announce," he says. "We've done a lot in two-and-a-half years."
Bennett says the company's new structure is helping it compete in this era of huge real estate service firms such as Cushman & Wakefield and CB Richard Ellis, and Kramer agrees. "You know in this world of consolidation, companies like us who aren't major capitalized companies have to pick our niches and carefully analyze where our strengths are and what areas we can compete," he says.
While larger companies and real estate investment trusts (REITs) have expressed interest in buying or merging with Draper and Kramer, it has no plans to give up its independence. "Our plan right now is to build on our strengths," Bennett says, "and we think our market positions, particularly in Chicago and the Midwest, is such that we have not seriously considered it."
As an independent, private company, Draper and Kramer knows its strengths and its limitations, Bennett says. "The challenges are to make sure you focus on what you're trying to do, because one of the good things we know is that you can't be all things to all people," he says. "So, we have the philosophy that says that when we choose to do something, we choose to do it very well. So, we're not going to choose to do everything."
Statistics show that the new Draper and Kramer is doing well in its three major segments. In financial services Draper and Kramer will place "well north of $200 million" in commercial mortgages this year; on the residential side, it will place mortgages totaling more than $250 million. In management, Draper and Kramer manages about 10 million sq. ft. of commercial space and 30,000 residential units.
Though company founders Arthur Draper and Adolph Kramer might be overwhelmed by what Draper and Kramer is today - a company with 1,800 employees and operations centered in Chicago but reaching to, Florida and Washington, D.C. - the business philosophy is the same as when the company was started, Bennett says. "While there have been a lot of changes here, there's also a terrific sense of history," he says. "I think the one thing I believed when I came here that has proven to be true is that Draper and Kramer is a quintessential part of the Midwest business community, and that's a very important asset from a company."
In fact, Draper and Kramer's position as a key part of the Midwest's business community played a role in Bennett's decision to leave First Chicago and join Draper and Kramer. "One of the great strengths of Draper and Kramer is our incredible reputation. I think its reputation is not only for high-quality service, but I think it has a reputation for very high integrity and being a leader in the Chicagoland area in a whole variety of things," Bennett says. "First Chicago has been our primary bank probably since the company was founded, or close to it, and so we had a very high regard for Draper and Kramer. It was one of the oldest customers the bank had."
Close relationships with clients such as First Chicago have been a trademark of Draper and Kramer's service. The company has expanded into new areas such as California because clients have asked them to, Bennett says. As of yet, Draper and Kramer has not followed a client outside of the country, although it has been chosen to be the sole U.S. real estate investment adviser to a company that manages a significant amount of pension funds in Latin America.
Looking ahead to the next 100 years, Bennett says Draper and Kramer can continue to grow by discovering new opportunities such as the investment adviser contract and expanding relationships with existing clients. "You have to continue to penetrate the clients. We are in a very highly competitive business," he says. "The issue is running businesses in an efficient way but giving very, very high service levels to clients."
Also, the trend of major corporations outsourcing will provide opportunities, although Bennett doesn't believe it's occurring as quickly as the press says it is. "It's happening, but I don't think it's the groundswell that I suspect it may be in the future years."
Meanwhile, Kramer says the company will continue to evolve as the real estate industry continues to change. "Things are a lot different today. There are a lot more people investing in real estate, a lot more institutions," he says. "You know, the coming of the REITs has certainly changed the environment for real estate investments; banking has changed radically in those 30 years. I think everything has changed."