What Type of Commercial Real Estate Do Wealthy People Prefer?
October 23rd, 2013 by Diane Moore
Investing in commercial real estate is a big business among America’s elite. For the rich and famous, opening numerous investment portfolios is like a child’s play, and for many influential businessmen, property investing simply becomes part of their M.O. so to speak.
“The rich get richer” isn’t just a saying. It came about due to the variety of commercial real estate deals that have gone down throughout history. Just look at the most influential and prominent of all American businessmen today, Donald Trump. He can attribute his multi-billion dollar empire primarily to commercial real estate. His investment in the hospitality industry and various retail and office building real estate deals have led to his rise in fame and fortune.
So, what other influential businessmen are there who have made their money in commercial property? Well, there are plenty of them, and thanks to the recent boost in the real estate market, these successful people are closing more deals than ever before. The buying and selling of real estate is a big business in the United States, and by employing the top investment advisors that money can buy, these businessmen will always manage to benefit from the market fluctuations. Let’s have a look at some of the top players in the commercial real estate game, both in the present day and the past:
Joseph P. Kennedy – The Go-Getter
With a famous American surname and political background that spanned decades, it is no wonder that Joseph P. Kennedy began investing in commercial real estate. After all, it is what rich people in America did during the pre Great Depression era. Mr Kennedy graduated from Harvard University and went into a finance career, working on Wall Street as a stock market investor, dabbling in commodities and real estate.
Joseph P. Kennedy is perhaps most famous for being the father of U.S President John F. Kennedy and was a political figure in his own right, as the 44th Ambassador to the UK. He was the inaugural Chairman of the SEC (U.S. Securities and Exchange Commission) and ultimately went on to help refinance various Hollywood film studios and organize mergers and acquisitions for companies who were hit hard during the Depression and Prohibition period.
He was known for having excellent timing in the stock market, and made a fortune off commercial real estate investing and commodities. He was a master at getting inside information and often used somewhat unscrupulous methods to his advantage. He was extremely ambitious and had a keen eye for good property investments, which is why he bought Old Colony Realty Associates Inc, where he turned a massive profit from the buying of distressed real estate, which were then flipped.
He set up his own investment firm in 1923 and became a multi-millionaire in a short space of time, before the stock market crash. After various investments in Hollywood to help refinance and reorganize the film industry after the Depression, he is said to have made $5 million, which is approximately $68 million today.
His main commercial real estate investments were that of Hialeah Park Race Track in Florida, La Pavilion Restaurant in New York, and the most important and strategic purchase, Merchandise Mart in Chicago.
John D. Rockefeller Junior – A Man with a Vision
Perhaps one of the most famous businessmen of all time, Mr John D. Rockefeller, became the face of the new America when the world crashed to a grinding halt, after the Great Depression. His forethought led to the development of the Rockefeller Center after New York City was forced to abandon its plans to build a new Opera House on the site that he owned. To this day, it is known as the finest entertainment and urban business complex in the world.
Falling under the name, the Metropolitan Square Corporation, the 14 buildings that made up the original Rockefeller Center was built between 1931 and 1940. It became one of the largest projects that any private enterprise had ever undertaken and cost $100 million.
The commercial real estate legacy that John D. Rockefeller left, led to the establishment of the Rockefeller Group and its various commercial real estate undertakings, mainly in the retail and office sector. They have been at the fore of many unique acquisitions and strategic ventures over the years and have led the way in numerous commercial developments projects and have designed investment management concepts for businesses.
Today the Rockefeller Group boasts 4 core areas of business, namely the:
- Rockefeller Group Development Corporation
- Rockefeller Group Investment Management
- Rockefeller Group Business Centers, Inc.
- Rockefeller Group Technology Solutions, Inc.
Since its humble beginnings and the visionary commercial real estate pursuits of just one man, this global enterprise has grown from strength to strength and remains a force to be reckoned with in the real estate world.
Warren Buffet – The Oracle of Omaha
This business magnate is considered by many to be the most successful investor of the 20th Century and held the title of the World’s Richest Person in 2008. Most of his success as an investor comes down to commercial real estate ventures and clever techniques, known for adhering to the philosophy of “value investing”.
In 2012, Warren Buffet was named one of the world’s most influential people by Time Magazine, and is largely considered to be a genius or wizard of the investing world. In his early years, Buffet worked as a stock broker and learnt a great deal about investments through various high powered individuals of the time. He attended lectures and seminars and his partnerships grew every year, until eventually he had 7 partnerships all running simultaneously by 1960.
He then merged all the partnerships into one and invested in the textile manufacturing company Berkshire Hathaway, which he is now the CEO and President of. His keen sense of business, finance and strong investment skills led to his financial rise to stardom. He also invested in a department store, Hochschild, Kohn and Co and in a bold move, liquidated and transferred assets.
His other commercial real estate investments all paid great dividends, as Buffet knew precisely when and how to purchase, sell, and handle these investments. His skills placed him on the Forbes 400 for the first time in 1979, and he successfully acquired stocks in numerous other companies including Washington Post Company, ABC, Salomon, and the Coca Cola Company.
By the year 1990, Buffet had become a billionaire, as Berkshire Hathaway began selling shares. In more recent years, Buffet has solidified his place as one of the most influential investors of all time as he continues to purchase stocks and buy shares in various currencies, and real estate, as well as acquiring shares in some of the largest companies in the world including General Electric, Johnson & Johnson, Proctor & Gamble Co., IBM, and others.
Donald Bren – A Master of Commercial Real Estate
In the world of commercial real estate, one of the leaders and most influential in America has to be Donald Bren. He wholly owns US based real estate investment company, The Irvine Company, of which is also the Chairman. His early years consisted of graduating from the University of Washington with a Bachelor of Economics and Business Administration. He quickly put his education and talents to work and built a house in 1958 which he then sold at a profit, and this quickly led to more being built in the Orange County area.
This was the start of his career and he formed the Bren Company. He soon joined with 2 others and purchased land on which they built and developed the city of Mission Viejo in California. Eventually in 1977, he purchased The Irvine Company along with a group of other real estate investors. By the end of 1996 he had purchased all the shares, making him the sole owner of the company.
Talking about his property inventing in a magazine interview, it was said that Bren wielded more power than Howard Hughes ever did and was responsible for the shaping of Orange County, determining where people shop and how they live.
Bren himself, said in a 2011 interview that his commercial real estate investment strategy was based on long term goals. He said, “What I learned is that when you own property in the long term, you are able to create much better values, and you then have something tangible to show for it.”
Donald Bren was listed as the wealthiest real estate developer n the United States as of 2013 with a net worth of over $14 billion.
Arnold Schwarzenegger – The Man on a Mission
Better known for his body building and acting career, rather than his commercial real estate investing, Arnold Schwarzenegger, has been on a mission to get his millions into every possible area of the market that he can. From politics to business, this heavy hitter has done it all and doesn’t show signs of slowing down anytime soon.
One wonders how this American action star became so investment savvy, and the answer lies within his barrage of teachers and tutors over the years. He has attributed his success to the guidance and expertise of Milton Friedman, Les Wexner, Warren Buffet, and Donald Trump himself.
Arnie’s main real estate investing has taken him to the more retail side of commercial property with the investment in a shopping mall complex in Ohio being the icing on the cake. His initial investment however, was that of an apartment building which he purchased for $10,000 from the winnings of his body building competitions. He has since invested in a variety of real estate holding companies. Although not educated in the finance or investing field per say, Arnold Schwarzenegger remains an influential American and shows that real estate investing is a popular lucrative business for anyone to get involved in, as long as you have the right people to show you the ropes and provide expert advice along the way.
Looking at these most influential commercial real estate investors, we cannot possibly end up without talking about the most famous of rich people in the property world today – Donald Trump.
Donald Trump – The Fierce Investment Tycoon
Donald Trump is well known in both the property development world, as well as the entertainment world. He has dipped his toes into every possible venture that one can imagine, but it all started working hard at his father’s New York real estate development firm back in 1968. He attended Wharton School at the University of Pennsylvania and graduated with a Bachelor of Science in economics.
He quickly became adept at real estate developing and his first project of revitalizing a foreclosed apartment complex led to a million dollar profit being turned. Future endeavors led to the expansion of the Trump Organization and with it the notion of going into the hotel arena. He developed the Grand Hyatt and soon began investing in entertainment centers, casinos, and other resorts.
He currently owns residential complexes in Trump World Tower, multi use building, Trump Place, commercial property in Trump International Hotel and Tower, sever million square feet of real estate in Manhattan and more.
As of 2011, Donald Trump’s net worth has reached over $7 billion, and continues to increase steadily midst a plethora of new developments.
The Types of Real Estate Rich People Invest in
Well, as you can see from the list of influential businessmen and investors above, each has their own unique area of expertise and preference as far as what types of commercial property investing they prefer.
Donald Trump gravitates predominantly towards hospitality and entertainment types of commercial real estate, with Arnold Schwarzenegger following along similar lines due to Mr Trump being a mentor. For the more old school investors like Kennedy and Buffet who have a finance background, commercial investing leant more towards the retail and business side of things, with the main types of real estate being office buildings, apartment complexes and industrial property.
Another investor who preferred investing in the entertainment side of things was Rockefeller, although he also invested in business real estate. Then, last but not least, you have Bren, whose main form of investing was in the business and retail side of things.
As you can see, the rich people of America – the wealthy business entrepreneurs and commercial real estate investors, choose to invest in a variety of different types of real estate. However, the favorite seems to be hospitality and entertainment property, then retail and shopping, and then finally in the business and industrial commercial real estate sector.
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