Finding Their Place
Demetrios Panteleakis has talked often about the interview he and his partners at the Macmillan Group had with the new owners of Tower Square when they were searching for a leasing agent.
He remembers it vividly, and he refers to it often because … five years later, he’s still shocked they ultimately won the contract.
That’s because they, and especially Panteleakis, were candid — as in candid — when it came to their assessment of the state of the building, its future, and what the new owners (and future BusinessWest Top Entrepreneurs) Vid Mitta and Dinesh Patel could and should do with it. Or not do with it, as the case may be.
Indeed, the brokers who came to the interview table were telling the owners they couldn’t lease the office and retail spaces that were vacant or soon to be vacant, Panteleakis recalled, adding that Mitta and Patel were looking seriously at turning the property into multi-family housing.
“I thought I was brutally honest with them, and I had a list of 10 things they must do if they wanted to make this viable again in downtown Springfield,” he said. “It encompassed the totality of the space, how they looked at it, and how they approached it. It was one of those calls where you get off the call and say, ‘this is never going to happen — we just went in there and punched these guys in the mouth; there’s no way they’re calling us back.’”
But they did, and Panteleakis believes that’s because he and his partners, Walter Kroll and Mark Healy, didn’t tell Mitta and Patel what they wanted to hear — even if they didn’t seem too happy to hear it at first.
“With most of the responses, they didn’t like it — they didn’t like what Demetrios was telling them,” said Kroll, managing director of the firm. “They were not appreciative of the plan, but they listened.”
That strategy, if it can be called a strategy, is how the firm operates, said Panteleakis, adding that this mindset applies to clients of all sizes and questions of all kinds, especially those heard most often in commercial real estate, including ‘can you buy/lease my building?’ and ‘how much can I sell my building for?’
Too many people asking those questions are drawn to people and firms who will tell them what they what to hear, Panteleakis said, adding quickly that what they should be looking for is a firm willing to partner with them on the matter on hand, be it selling a property or leasing out the vast spaces within Tower Square.
“I have lost opportunities because I am rigid on giving the correct number to someone, more than I am giving the number that the client wants to hear and has been given to them by another broker,” he told BusinessWest.
The Macmillan Group is the latest incarnation, if you will, of the brokerage and property management firm known as Macmillan & Son. When the third-generation president of that firm, Doug Macmillan, ultimately lost his battle with cancer in 2016, the firm was in limbo, Panteleakis said, adding that he was told by Macmillan’s mother, Pat, who passed away in 2002, that Doug’s wishes were for Panteleakis to take the helm and ultimately write new chapters to the Macmillan story.
At first, he was somewhat reluctant to take that course — he already had a job working for MassMutual in its real-estate arm, and was fond of it.
He was more fond, though, of the opportunity to essentially run his own firm. And his eventual partners — Kroll and Healy — were of that same mindset.
“I have lost opportunities because I am rigid on giving the correct number to someone, more than I am giving the number that the client wants to hear and has been given to them by another broker.”
“I knew right away that I couldn’t do it myself,” Panteleakis said. “So I approached Mark and Walter, two of my closest friends, and we came together on this; we pretty much run a co-op here.”
Today, this co-op boasts a growing portfolio of clients and properties — topped by Patel and Mitta, Tower Square and the neighboring 1550 Main St., also acquired by those two serial entrepreneurs — in Western Mass., but also well beyond, as we’ll see.
Looking toward the future and what’s in the business plan for the Macmillan Group, the partners said the simple and direct goal is to continue growing the firm and the portfolio by convincing more property owners (and potential property owners) to become partners with the firm, in the same vein as those who own Tower Square.
For this issue and its focus on commercial real estate, we talked with the partners about their firm, the real-estate market in the region, and what is likely to come next for both.
As they walked with BusinessWest from their offices on the mezzanine level at Tower Square to the ground floor and the ‘Dunk’ (Dunkin’ Donuts) for a coffee, the three partners pointed out many of the changes that have come to this important piece of real estate over the past five years.
These include the return of the Marriott flag to the hotel after it was lost for several years amid profound deterioration of the structure and the service provided in it, and the facility became known as Tower Square Hotel; the arrival of Big Y’s scaled-down supermarket next to the ‘Dunk’; White Lion Brewery; the Greater Springfield YMCA’s fitness center and daycare operation; and new tenants in the office tower, including Farm Credit Financial Partners, Wellfleet, and others.
Overall, Tower Square boasts a wide array of different types of tenants, which makes it ideal for the Macmillan Group and its partners, who bring different areas of expertise to the table. Panteleakis offers a diverse background, including work in succession planning, development, and construction management, but especially a strong focus on the office market through his work with MassMutual. Kroll, meanwhile, brings expertise in the retail market, while Healy has focused on the office market as well as industrial and medical.
And all three brought an understanding of this market and relationships with the brokerage community to the ‘new’ firm, as well as that mentality of partnering with clients rather than simply trying to sell or lease out their building.
This was especially true with Patel and Mitta, who were taking on a huge risk with Tower Square. Indeed, in addition to losing the Marriott flag from the hotel, MassMutual — the original owner of the building, and the primary tenant — was preparing to move out of several floors of the office tower. Panteleakis recalls that most of the talk, and speculation, was about converting the hotel, and perhaps parts of the complex, into multi-family housing.
It was with this backdrop that those two partners commenced their search for a brokerage firm.
“They interviewed every brokerage firm in Western Mass., and then it was our turn; we were the last ones,” Panteleakis recalled, adding that Kroll and Healy were face-to-face with the entrepreneurs, while he joined on a conference call. And they, and especially Panteleakis, were brutally honest.
“They didn’t like what they were hearing, but they listened,” Healy said. “And that’s why I give these guys a ton of credit.”
Kroll agreed. “With a lot of people, you talk to them and say, ‘you have to do this,’ or ‘what about this?’ and they’re insulted by it. These guys, they listened, and I think it’s because we were the first people not to tell them what they wanted to hear.”
Among other things, Panteleakis advised them to be creative when it came to leasing out the retail and office spaces, and also to be patient, and not chase tenants with attractive offers on rates, even with MassMutual set to vacate large amounts of space.
“I thought it was the most valuable building in Springfield, and I still think that,” he said. “Where others came in and told them to lower their prices, I did the opposite; I told them they needed to appropriately value the building against the competition and not chase tenants with rental rate. I advised them to establish their rate and strengthen it.”
This mindset of being honest and getting clients to listen has helped the firm grow its portfolio of clients and properties with Macmillan signs. These include Hadley Park Plaza, Palmer Plaza, the office complex at 877 South St. in Pittsfield, the Laurin Publishing Building at 100 West St. in Pittsfield, 20 Maple St. in Springfield, industrial land in Agawam, and many others.
It’s a diverse portfolio, Panteleakis said, adding that the obvious goal moving forward is to broaden and deepen it by being honest with clients and potential clients, and partnering with them to achieve whatever goals they’ve set.
Which brings Panteleakis back to those comments about numbers and projections that he and his partners give to clients, and not telling them what they think they want to hear.
“Some brokers will take the attitude, ‘don’t worry about what it actually sells for — just get the listing first, and then Mother Nature will take care of itself,” he said. “Here, we have a philosophy that this is not the kind of business we want to do. We rate success on how close we came with our assessment and analysis. Did we give that client the right information?”
As they survey the commercial real-estate landscape, and especially the local office market, the three partners at the Macmillan Group take what would be considered the optimistic view about the present and foreseeable future.
“We are past this concept of working from home — it’s losing traction,” Panteleakis said with a strong dose of conviction in his voice. “People are understanding that the productivity of their workforce is just not the same; whether it’s J.P. Morgan, Google, Apple … the trend now is ‘you have to be in the office,’ which is certainly a positive for the office market.”
Elaborating, he said corporations large and small are veering toward bringing their workers back the office, if they haven’t already, on the premise that teams of workers don’t work as effectively when some or all their players are working from home.
Persistently lower occupancy rates for office space in cities ranging from Boston to San Francisco notwithstanding, Panteleakis and his partners believe the office market locally, and especially in downtown Springfield, will withstand this post-pandemic environment and the trend toward remote work.
“What I see right now is the 3,000- to 5,000-square-foot users just starting to emerge,” Healy said. “This year has been incredibly slow, but I’m beginning to see people look to next year, for what space is available. And I think it’s going to be that way for the next 24 months.”
Meanwhile, Panteleakis noted that Regus, a leading provider of office space, co-working environments, shared space, and other products will be creating such opportunities on one floor in Tower Square, roughly 16,000 square feet, bringing more options to business owners in the wake of the pandemic and other shifts within the workplace.
Still, COVID and other factors have brought some changes to the landscape, Panteleakis said, citing law firms, a huge force within the local office market, especially in downtown Springfield, as one example. He noted there are fewer large firms, and the larger firms are getting smaller as Baby Boomers retire. Meanwhile, fewer clients are actually coming to the firms’ offices to meet with lawyers, some of whom are, in fact, working remotely. All this adds up to this segment absorbing less office space in the years to come.
Meanwhile, an even bigger challenge moving forward might be the growing number of businesses, across all sectors, that are not surviving the current generation of ownership.
Indeed, Panteleakis notes with concern that the pandemic convinced a number of Baby Boomer business owners to call it quits. Meanwhile, an alarming number of those still slugging it out have no real succession plan in place.
“They’ve put 40 years into a business, and COVID taught them that life’s too short and they really can find something else to do with their free time,” he said. “Their children don’t want their business, or they’re doing their own thing. And if they go to put the business up for sale, first you have to have entrepreneurs who are willing to take the risk and have access to capital … and when you add that kind of formula to what has happened with bank lending and interest rates, we’re seeing a lack of continuity with businesses.
“Initially, you say, ‘great, there’s so much for us to sell,” he went on. “The question is … who’s going to buy it?”