Reigning over the hub of Philadelphia, a statue of William Penn sits atop the historic City Hall. By a long-standing gentlemen’s agreement, this statue has been the tallest structure in the city, defining its skyline and representing aspects of its character: understated, steady, conservative. The Rubenstein Co., headquartered here, embodies these characteristics as well. The firm is not only a fully integrated real estate organization; it is a quiet success story.
A Modest Beginning
Chairman Mark Rubenstein founded the company in 1969 after managing apartment buildings and developing retail facilities for Builders Development and Service Co. in Philadelphia. Beginning with just three employees, the company grew slowly over the next 30 years. “Our way is reasonable debt and level growth,” he says. In the 1980s, the company concentrated on paying down its debt and managing its current portfolio. Because of these practices, it emerged from the turbulent 1980s with the ability to borrow money instead of being burdened with a huge debt.
Currently, the firm handles the property management of several substantial real estate projects, as well as leasing, construction, development, and acquisition. Although headquartered in Philadelphia, the company maintains regional offices in Atlanta (the Southeast Region), Pittsburgh (the Midwest Region), and McLean, VA (the Mid-Atlantic Region).
Holding an undergraduate and master’s degree in mechanical engineering, Mark Rubenstein is an engineer by training who once taught theoretical mechanics in the graduate school at John Hopkins University. Stepping away from academics, Mark brought his engineering expertise and background in property management and building systems to his new enterprise. He embraced real estate development, bringing both his straightforward personality and a meticulous approach to the industry.
A Disciplined Focus
The Rubenstein Co. has grown to more than 150 employees, owning approximately 9 million square feet of Class A office properties – all in the Mid-Atlantic region. Up until 1983, the organization developed multi-family housing, retail, and office facilities. At that time, Mark Rubenstein sold the apartment buildings and shopping centers and decided to focus on the office market.
The company is one of the largest private owners and operators of office properties in the region, spanning across south New Jersey, Pennsylvania, Delaware, Maryland, and north Virginia. A private real estate investment trust (REIT), the organization does not have a lot of properties; however, each is very large and top-of-the-line. The Rubenstein Co. has grown by adopting a long-term strategy toward its portfolio and building strong business relationships. The firm considers each one of its properties a long-term investment.
“Our philosophy is that we work to provide good service. We prize it,” says Mark. The company handles the management and leasing of each property, always paying close attention to details. Over the years, the firm developed a solid reputation for its high-quality property management. In 1991, Mark Rubenstein’s son, David, joined the organization.
With a background in real estate business, this Wharton Business School graduate saw the Rubenstein organization as a great opportunity in a difficult economic climate. “Asset values were decimated at the time and I viewed it as the best opportunity to come in and make something work myself as opposed to working for someone else,” says David Rubenstein, president and chief executive officer, The Rubenstein Co. Paired with his father’s property management experience, David Rubenstein’s financial fundamentals are an excellent complement. He credits the company’s strong health to applying an attention to detail and to focusing closely on a few assets.
David Rubenstein believes the economy rewards the specialist vs. the generalist. “Our goal is to make our business more focused, more specialized. We view ourselves as a real estate boutique investment management shop,” he explains.
Though the organization outsources standard business services, such as security and janitorial, it closely manages those contracting processes. The organization also maintains a list of preferred suppliers in all trades. “To be competitive, you have to continually assess the short list to make sure the best possible people for us are on that,” says David.
A Commitment to Quality
The company relies heavily on its staff’s extensive knowledge. For example, the executive management staff has an average of 16 years of real estate experience; many of the staff have entrepreneurial backgrounds. Adds David Rubenstein, “Our company has full development and acquisition capabilities and we get that training by hiring people to supervise these projects. We use their years of experience.”
One of the company’s most noteworthy recent projects is in the Main Line office market in Radnor, PA, which is considered one of the most desirable locations in the Philadelphia area. The Rubenstein Co. acquired the 1.5 million-square-foot Wyeth Ayerst portfolio for an estimated $204 million. The recent sale attracted widespread attention because it had been several decades since such a sizable chunk of premier Main Line property came on the market. This office market continually features low single-digit vacancy rates and some of the highest rents in the region. The firm already owns the 733,000-square-foot Radnor Corporate Center.
The company is investing to bring all of the Wyeth Ayerst properties up to Class A status. Some of the facilities are over 20 years old and the buildings will need to be converted for multi-tenant use. Cost-saving initiatives, modernization, and capital improvements are a hallmark of The Rubenstein Co. Investing behind the scenes in the mechanical systems allows tenants to focus on their business concerns instead of hot and cold complaints. “All of our properties are very large, Class A, top-of-the-market. If we acquire something that was not, we would reposition it to be that,” explains Mark.
“Each property is selected because it has something special about it,” adds Peter Talman, senior vice president and director of leasing. The company’s solid affiliated brokerage unit provides landlord representation for all of Rubenstein’s properties related to leasing transactions. While the company does have a reputation for tough negotiating during leasing, its tough stance is tempered by its high quality of property management. Talman heads the staff for landlord representation, and also oversees the marketing of the current portfolio to prospective tenants. The brokerage unit is involved in assisting in identifying acquisitions, sales, and development. Presently, the third-party tenant representation makes up 20 percent of the business. Yet, Talman plans to increase that portion of the business up to 40 to 50 percent in the next few years.
Before coming to the Rubenstein Co., Talman served with The Equitable Life Assurance Society of the United States in Houston. Later, he formed his own company, specializing in representing tenants in major markets across the country. While searching for a site for a client in the Philadelphia area, Talman received his first exposure with the company. After relocating from Houston to Philadelphia for business reasons, Talman joined the organization in 1997. “I grew up here, so it was like coming home. Rubenstein offered a tremendous opportunity because of its excellent portfolio,” says Talman.
Talman sees his No. 1 goal as successful leasing of every building in the company’s portfolio at the best possible economic rate with the cleanest lease documents. The Rubenstein portfolio has attracted many prominent clients who have national or regional headquarters, including several large law firms, TV Guide, Texas Instruments, and Dean Witter. “Our property management teams provide a nice business life for our tenants,” says Talman. The company has a reputation for flawless property management service, and is also known for selecting properties that stand out because of their great location and attractive design.
A Reputation for Excellent Customer Service
In addition to improving building systems and technology, the company analyzes its buildings’ floorplates for space planning that suits a variety of tenants. Adds Talman, “We look at the quality of the current tenant mixture and the tenants that the property has historically attracted.” The company’s properties are large and complex. One of Rubenstein’s strengths is its ability to put a lot of talent on any one aspect of the real estate business, from leasing to engineering to property management.
Talman sees the answer to achieving tenant satisfaction as providing the basics in the high quality that tenants expect: janitorial service, property management, landscaping, and overall cleanliness. The firm provides all of the management and leasing for each of its properties. “Most times, tenants are happy getting back what they deserve – flexibility and responsiveness,” he notes. In the future, the firm is considering concierge service for its tenants to provide additional amenities, such as obtaining sporting event tickets or ordering flowers. Although sustainable design is not currently a strong focus, the company is investigating aspects of green design.
According to Talman, part of ensuring tenant satisfaction is creating a well-written lease, where every detail is carefully spelled out. “Our lease agreements are tough, our leases are accurate, and we make sure that everything that needs to be done is in the lease,” says Mark Rubenstein. “What is in it is what you are going to get.” The firm greatly values teaching and holds training sessions on a regular basis. More experienced staff members engage in role-playing with new staff members to improve the team’s negotiation skills. “We teach our people everything about a lease from every word of the document to the nature and nuances of every individual business point,” says Talman.
Another of the company’s strong attributes is its responsiveness. When a challenge presents itself, the company can get a lot of people on the issue. “One thing about our organization is that we can truly turn on a dime,” says Talman. With a collection of large properties, Rubenstein runs lean and mean. The company plans to continue to grow and acquire new product in the mid-Atlantic region. More than 95 percent of its space is leased.
A Community Driver, A Community Leader
When it comes to tenant attraction, the organization relies on its abilities, reputation, and branding. Rubenstein works to ensure its brand and reputation are known to prospective tenants and the real estate brokerage community. The executive team highly values building and maintaining the right business relationships as the best way to grow their business. Talman believes that tenant retention stems from choosing good tenants. “We choose our tenants wisely by choosing tenants with good business reputations and strong financial credentials. That philosophy has served us well,” says Talman. The organization boasts very high tenant retention rates.
“Our philosophy is waiting,” says David Rubenstein. Like its home base of Philadelphia, the company is known for its patience – for taking a conservative, long-term strategy to every project. He adds, “We plan to do more of what we are doing; our focused approach will continue.” The organization has captured a great deal of the Philadelphia downtown and suburban market.
The company has purchased interests in One and Two Logan Square, 594,000 square feet and 694,000 square feet, respectively – two premier office facilities in the heart of Philly’s Center City. In addition, the Rubenstein Co. owns several major upscale buildings in 10 Penn Center and 2000 Market Street; owns 49 percent of 2005 Market Street; and manages the Bell Atlantic Tower, all in Philadelphia’s downtown.
The organization is deeply rooted in the city itself; it is a major supporter of the Philadelphia Museum of Art, the Children’s Hospital of Philadelphia, MCP/Hahnemann University Hospital, local universities, and civic boards and organizations. In the 1990s, The Rubenstein Co. was one of the most aggressive investors in downtown Philadelphia when the area was struggling to attract investment dollars. Currently, the company continues to support the economic growth of the city’s local businesses.
The real estate industry has come to recognize The Rubenstein Co.’s understated business approach. Although the executive team does not consider itself to be a family-run company, the leadership does nurture and appreciate personal relationships. When Mark Rubenstein began his company more than 30 years ago, he started buying lunch for his employees. “It was a way to keep people in the office, instead of disappearing for an hour in the middle of the day,” he jokes.
The practice of bringing the entire staff together and sharing a meal started when the firm had three employees and has continued to this very day. Adds Mark, “The lunches have stayed and become a tradition.” Employees gather around tables in large lunchrooms, collaborate on ideas, hear discussions about all aspects of the corporation, and learn more about each other’s personal lives. He believes the lunches encourage teamwork and improve the company’s ability to handle complex deals. “The lunches encourage a lot of discussion; ideas are spread and the staff feels it is a part of it all,” he explains.
According to Robert Fahey, senior director at Cushman & Wakefield Inc., The Rubenstein Co. “combines the best attributes of a traditional family-run business with attributes of a good-sized international real estate investment company. They are very focused on their people and values, very aggressive, and deep in talent and, very importantly, they keep their word.” His comments describe what makes The Rubenstein Co. unique: The free lunches; the camaraderie; the patient, quiet business approach are all building blocks that lead to this unique organization’s success story.
Lined with windows, the company headquarters at 2005 Market Street overlooks the bustling streets of Philadelphia – a recovering city the company has supported and will continue to invest in. David Rubenstein is confident of his firm’s continued steady growth within Philadelphia and the Mid-Atlantic economic market. About his company’s future, he says, simply, “Our plan is to do more of the same.”
Regina Raiford Babcock (firstname.lastname@example.org) is senior editor at Buildings magazine.