Interview

A child of the ’60s from a family of eccentrics and artists of one kind or another, Michael A. Zugsmith was headed for a career promoting rock and roll bands by the time he was in college. But an early marriage and a young daughter to support forced him to turn to a more stable, income-producing career path. As it turned out, real estate was a good choice. After a stint with Paul Ellis & Co., Zugsmith ventured out on his own in 1979, just as the Southern California real estate market was taking off. By last year, he had built Capital Commercial Real Estate Services into a 10-office operation in five Southern California counties. Capital Commercial is a full-service broker, dealing in sales, purchases and leasing of office, industrial, retail and income properties like apartment buildings. In 1993, the company also formed a property management division, offering its services to the properties it brokers. In 1997, the company handled $853 million in transactions, making it the largest commercial brokerage in the San Fernando Valley. Question: Was the real estate field a longtime interest? Answer: My goal had always been to do stuff in the music business, in rock and roll. As a teenager I put on concerts and dances and managed local garage bands. I (promoted) some concerts for some fairly big people like the Beach Boys and Fleetwood Mac and Iron Butterfly. But I became a single parent when I was in college. I was married at 19 and it lasted about a year. I couldn’t stay out all night at these clubs or travel around because I had a responsibility to my daughter. But I always thought that I would go back into the entertainment industry. Q: How did you drift into the real estate business? A: As a single parent I had to figure out how to support myself, so I went to Century 21 real estate school. I wasn’t their prototypical broker because I wouldn’t wear a golden jacket or drive a four-door sedan. But I sold houses. Over a period of time I started to sell small investments triplexes, fourplexes finally I decided I was more interested in commercial real estate because I saw the field as more analytical and playing to my strengths, if you will. It’s less emotional because you’re not as concerned about the color of the carpet as much as the economics of the acquisition. I went into commercial real estate in 1977, first for a company called Paul Ellis and Co. In those days I had a baby face, so I wore a beard to give me a certain maturity, and none of the firms would hire me. I said that if I shaved off my beard I would look about 12 years old. And Paul hired me beard and all. Q: You founded your first company, Zugsmith & Associates, in 1979. Why did you want to form your own firm with only a few years of experience? A: I observed Paul’s operation and, as many young, cocky people do, I said, “I can do this better.” I had an opportunity because one of my clients was a partner with Watt Industries, which had a division that was developing a lot of office buildings. He offered to bankroll a brokerage. I bought Paul Ellis & Co. in 1981, so obviously my observation that I could do it better was correct. We expanded into the West Los Angeles market in the mid-1980s. Q: Since 1993, you’ve gone from two offices to the current 10 offices. Why the fast growth? A: At that time, we saw no marketplace for a two-office brokerage in the greater Los Angeles marketplace; that eventually we’d be swallowed. You either had to shrink down and do one thing exceptionally well, or you had to have a full-service capacity and cover geographic territory. What we’re seeing is corporations limiting themselves to one or a few service providers, mainly because a lot of them have much smaller in-house real estate departments than they did a few years ago. So we expanded to the 10 covering the five-county Southern California area, and we’ll probably expand to 14 in the area. Q: A lot of real estate companies around here have these services. How do you set yourselves apart? A: We highlight the fact that our roots, management and philosophy are all regional. So when you have a company like Grubb & Ellis, they are headquartered out of Chicago and their focus is not on the five-county Greater Los Angeles market. We sell the fact that we live and die with what we do in this region if we fail here, we’re out of business. And if someone or a broker has a problem with a deal, they can talk to the top management of the company. Q: It seems there is heightened attention to real estate and development issues among members of homeowners associations and such. To what do you attribute that? A: I’ve lived in the San Fernando Valley since 1954, and I’ll be the first to tell you that the quality of life has deteriorated. Some homeowners groups are very militant in saying that commercial development has caused all these problems. The fact is, the weather and opportunities in Los Angeles make it a magnet, and it is a magnet for immigration. And if you didn’t have those, well, the birth rate would increase the population anyhow. I guarantee you, the people who lived in the San Fernando Valley before World War II and were here after were bemoaning how terrible the Valley had become when Lockheed had sprung up and all these houses were being built, compared to this idyllic rural area they had known in the 1930s and 1920s. The fact of the matter is, development is here. Q: How do you live peaceably with anti-development folks? A: There are always going to be a few anti-development extremists who think some buildings ought to be torn down and turned into parks. There are also extremists on the other end developers who want to build without any thought to how it affects residents. But most people are not extremists, and I work to show them that commercial development can be done in a way that its impact on residential areas is minimized. People have to understand that neighborhoods have changed and will continue to change. Q: Would you ever run for office? A: Never. If I can comfortably retire at a relatively young age, I would love to become active behind the scenes like the proverbial World War II “dollar-a-year” guy. They were businessmen who wanted to help the country during the war and who gave their business expertise for a dollar a year; they could afford not to have an income for a while. I think that I’m a logical thinker and don’t think I could be classified as a liberal or as a conservative. In my family I’ve had radical flaming liberals and wild Communists and conservative, law-and-order people. Q: As far as the flaming liberals, are you talking about your aunt, the writer Leane Zugsmith? A: Yes. I would not agree with her and my uncle Carl politically he was a Pulitzer Prize-winning journalist and she was a Bohemian in Paris of the 1920s, a book editor and author in the 1930s and a member of the Algonquin Roundtable with (F. Scott) Fitzgerald and (Ernest) Hemingway. But their absolute integrity to their beliefs was something to be admired. When they were called before the House Un-American Activities Committee to name names, they wouldn’t name names. And any friends who did, like Lillian Hellman, who was matron of honor at their wedding, they stopped seeing. Q: Your father Albert also made quite a name for himself in Hollywood. A: He also lived his life his own way. He would change careers when he wanted to, and he was successful in everything he touched. He drove out to Hollywood in about 1948 and within three years produced three movies for Howard Hughes. He made about 100 movies, including some good ones like “Touch of Evil” (with Orson Welles). Q: Do you ever wish you had gotten into show business? A: Again, my interest really was in the music business and I wasn’t able to get it together. I thought I would always love current music but now I basically despise it. I listen to music from the 1950s and 1960s and maybe a little bit from the 1970s, so I probably would be a dinosaur in that business by now. Snapshot Michael A. Zugsmith Position: Chairman of Capital Commercial Real Estate Services Inc. Born: 1951, Los Angeles Education: A.A. in journalism from Los Angeles Valley College, 1973, and B.A. in communication studies from UCLA, 1976 Most Admired Persons: His mother Ruth, his father Albert and his aunt Leane Zugsmith and her husband Carl Randau Personal: Married, one son, one daughter