Real Estate Titan Marcus Lets Loose In San Francisco

Icons with George Marcus_Michael Covarrubias The Registry real estate

By Sharon Simonson

As Bay Area real estate magnates go, George Marcus is probably the most famous. Hamid Moghadam of Prologis might give him a run. So might Carl Berg of Mission West and John A. Sobrato. But Marcus’ achievements are singular.

In 1971, he founded two companies that have exercised major influence on the U.S. real estate industry. Palo Alto-based Essex Property Trust Inc., now a publicly traded real estate investment trust, owns more than 33,000 apartments (both outright and in partnerships) in the Bay Area, Southern California and Seattle. Marcus remains the company’s chairman.

Essex has expanded aggressively in the current multifamily housing boom, buying 3,016 units for nearly $802 million last year alone, hundreds of them in San Francisco and Silicon Valley. It also is developing, including nearly 500 units at Folsom and 5th streets in San Francisco and a proposed high-rise tower in downtown San Jose.

Marcus also co-founded The Marcus & Millichap Cos., the parent company of multiple real estate firms. That includes the most prominent, Marcus & Millichap Real Estate Investment Services, the largest U.S. commercial real estate investment brokerage. “George started one of the greatest institutions in real estate in the country,” TMG Partners Chief Executive Michael Covarrubias said March 28 in introducing Marcus. “It is truly an amazing organization.”

Marcus & Millichap also is parent to Bay Area homebuilder SummerHill Homes, which is led by Robert Freed, a former KB Home honcho; multifamily investor Pacific Urban Residential led by Al Pace; SummerHill Apartment Communities and Meridian Property Co.

Marcus’ reputation is that of a serial entrepreneur and modern day Midas with an uncanny ability to start successful companies, to make money in whatever field he chooses and to select great leaders to run his creations. With partners, he also owns two Greek restaurants. The first, Evvia Estiatorio, is in downtown Palo Alto; Kokkari Estiatorio is in San Francisco’s Financial District. By all accounts both serve excellent fare in exceptional settings and are financially prosperous.

In a rare public interview, Marcus agreed to be questioned by Covarrubias as part of ULI San Francisco’s real estate Icons series. The two men have known one another for 37 years. Marcus also entertained a smattering of questions from attendees. The first ULI San Francisco Icon was William Wilson III, recognized in 2011.

Covarrubias: Tell me about a day in your life. You are a deal junky. What percent of the day is working on deals, what percent working with political folks and what is the fun?

Marcus: The notion that I do deals is really a misnomer. I organize companies that think about better ways to be involved in multiple deals. From the beginning, I was interested in improving the industry. I had two principles: I wanted companies that sustained themselves beyond me. My other guiding light is that when I realized I had talent in the door, I would give them all of the responsibility they could handle. [William A.] Bill Millichap came into my office in 1971. It was the luckiest day of my life. It took a long time to get the brokerage going. Bill was excellent at it. I realized that I could lose Bill if I remained CEO, so I moved out of the way and started Essex [Property Trust Inc.]. My career has not been about the deal. It’s been about process and strategy.

Covarrubias: Back in the 1970s and 1980s, the value of information gave value to brokers. Now information is instant and everywhere. So who needs a broker?

Marcus: There is a value to representation, which will find the optimum buyer who will pay the most and still do well. A platform like ours is a massive auctioning. We started a policy 40 years ago, if you pocketed a listing without telling other brokers that was a fire-able offense. We are working for the client from the top. It is of enormous value.

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