“The time has come when developers began to envy consultants
Since the previous interview that Nikolai Kazansky gave to the Arendator.ru portal, seven years have passed – a sufficient period to judge the evolution of the company, the real estate market, Moscow and views on the profession. Nikolai leads a new program conversation with Anastasia Kremenchuk already in the office on the 52nd floor of one of the Moscow City skyscrapers, from where you can see the magnificent panoramas of the giant city, which has balanced estimates and large-scale conclusions.
What are the three achievements over the past seven years that you define for yourself as major?
At that time, the task was to form the best team in the consulting and commercial real estate management market. And we have completed this task. To date, we have formed the most competent, vibrant and successful team in the market. This characteristic applies not only to top managers, but also to all our 500 employees. We have no barriers within the team. There are glass walls in my office; neither curtains nor blinds cover them. This is not only my personal backstage space, it is part of a single office. This is really great when the team is on the same wavelength. Many of our colleagues have been with Colliers for more than 10 years, and some even more than 20 years. I also note that over the years the staff has expanded three times. We were able to create a team with strong support, and this facilitates the work of consultants, brokers and appraisers. Add to this the most powerful marketing and PR on the market – we have become not just consultants, but market makers.
The second strategic objective was to build an effective business model. The position of our Western colleagues played a large role in this. They provided us with sufficient freedom in decision-making and provided significant support by eliminating many bureaucratic procedures from the interaction process that usually impede development. In particular, thanks to this constructive dialogue, we were able to achieve exceptionally high growth rates during this difficult time – our turnover has grown more than three times. Shopping centers managed by Colliers International are located in 12 cities of Russia from Murmansk to Ulan-Ude. The real breakthrough began two or three years ago, but it was preceded by a long preparatory work. I am proud that we created the most effective model in the most difficult period for the Russian real estate market. I was always of the opinion that a business can only be profitable. If a business is not profitable, it is not a business.
For what I consider to be the third achievement, it is difficult to find a brief wording. This is due to the very philosophy of the market. We strive to make it more transparent and professional in all areas – in real estate management, brokerage, consulting and valuation. It’s crucial for us to set new standards for the provision of services, and as a result we manage to close outstanding deals – we closed the largest transaction in the office real estate market in Russia selling the Tower Evolution skyscraper with an area of 148,900 sq. M. m. in MIBC “Moscow City”. Even in world practice, a broker very rarely succeeds in doing this. Or, for example, literally just we closed the largest deal since the beginning of 2019 in the segment of office real estate in Moscow. The uniqueness of this transaction is that we actually changed the functional purpose of the space and the former shopping center will be redeveloped into a class A business center.
How much has the market changed over this period, and what, in your opinion, is needed for further progress?
The market has been significantly reformatted. Previously, its main content was quantitative indicators: withdraw as many shopping centers as possible and earn as much money as possible. Today, the emphasis has shifted towards the development of qualified support for existing companies on the market, as well as external management tools. In addition, the strongest players in the market are interested in revising the remuneration system for rental transactions. Under the current conditions, it does not matter for how long the contract is signed – a year, ten or twenty years – the broker will receive a commission in the amount of one or two month rent. In the USA, he could count on a 5-6% remuneration for the first year and a 2-3% remuneration for all subsequent years. That is, in the case of a lease transaction for 10 years, the remuneration was two to three times higher. We believe that the amount of remuneration should depend on what benefit the broker or management company brings to its client. But so far, in our corporate culture, this approach has not yet become widespread.
What are the advantages of the Russian commercial real estate market over foreign?
Although the commercial real estate market in Russia is limited to 100 million square meters. m of space (offices, warehouses, retail premises in total), it has a huge advantage – novelty. We have built new infrastructure, new roads, new skyscrapers, new shopping centers. And all this is done in accordance with modern standards.