The Closing: Stephen Kotler
Stephen Kotler is Douglas Elliman’s CEO for the Western Region. After growing up in Livingston, New Jersey, Kotler dropped out of Ithaca College to try his hand in the restaurant business before getting into real estate. He did a stint at real estate appraisal firm J.I. Sopher and Company, and then joined Douglas Elliman in 1991. First working as a rental agent, Kotler eventually began taking on management roles, ultimately serving as Elliman’s chief operating officer and chief revenue officer. He made the move to Los Angeles in early 2016 to oversee the firm’s West Coast expansion. In 2017 he helped orchestrate the acquisition of Teles Properties, which expanded Elliman’s West Coast footprint to over 700 agents and 21 offices stretching 450 miles from Coronado to Carmel. More recently, the firm signed a lease for an additional floor at its office on El Camino Drive. Elliman also signed a lease for a 3,600-square-foot office on Robertson Boulevard for Josh and Matthew Altman’s team; it is scheduled to open in early spring of 2019.
In this interview, which has been edited and condensed for clarity, Kotler chats about adapting to California culture and the challenges of making the Teles deal work.
Hometown: Livingston, N.J.
Lives in: Beverly Hills Post office
Family: Divorced with one daughter and one son
How did you get started in real estate? My dad was in the real estate business in New York. He worked for a large developer called Milford Management. In high school, I worked as a doorman during summers in New York City. I saw the management and construction side of the business. I didn’t realize I was a salesman until later, when I got into the rental business. The construction side was interesting, but I also liked the satisfaction you got from helping people find homes.
What led to the decision to come to L.A.? Howard [Lorber] and I had been talking about it. We felt that the only way to bring the DNA of Elliman here was to have somebody here that understood that. I had never been to California before, other than for business. The first thing I did was hang up all my suits. I bought about 10 pairs of sneakers, and jeans, and more comfortable shirts. And I tried to embed myself into the culture. I realized that people out here don’t really like outsiders. Elliman is respected because of the brand, but you can’t just go in and plant your flag and expect that you know what you are doing. It was really important for me to have friendships with the other owner-operators as well. I met with everyone on the Westside that owned a business.
What was the biggest contrast between the New York and Los Angeles markets? It’s much more about land out here. It is a lot more nuanced here than it is in New York. The Westside of L.A. in general is very different than it would be in Carmel, or in Orange County. Here there are such different markets, and people consider themselves very different depending on where they live. So being able to say that you understand local is something that requires some effort.
What was your toughest deal? Teles. It was the most challenging and the most rewarding. It was the little things. When Pac Union was acquiring the three companies [John Aaroe Group, Partners Trust and Gibson International] and we were acquiring Teles, it was all at about the same time. And there are like one or two sign manufacturers in California. So for everybody to be able to get their yard signs done in a timely way was a challenge.
You hear increasingly that brokerages are concerned about margins. Are you? Overall, margins are thinner here than they are going to be on the East Coast, so you have to be nimble. We behave like a startup every day here. The acquisition was great, but how do we grow the business? Every morning at 9:45 a.m., our entire management team is on the phone, talking about what they did the day before, what they are going to do today and what they are going to do tomorrow, from a recruiting perspective, a retention perspective, a training perspective.
Elliman’s Aspen office is part of your territory. What is your history with Aspen? I left college as a junior at Ithaca College for the opportunity to open a business in Aspen. My dad and a partner of his built a restaurant on Aspen Mountain called Ruthie’s; it was a lunch spot. We actually had [participants in] the World Cup in 1984 at our restaurant. Franz Klammer and Bill Johnson got dressed in their speed suits downstairs in the basement of our restaurant before they went up and raced. So I lived in Aspen for three years, and then in 1985 went back to New York to start working in the real estate business. We had been wanting to be in Aspen because Howard felt it was an extension of New York and Miami. Howard had been looking to do a deal there for about a year with Joshua & Company, the preeminent high-end broker in Aspen. So when I met Joshua in New York and we were talking about doing a deal, we connected on Aspen again. Aspen is a small and challenging market.
What is your reaction to this rash of high-end spec home listings? We are starting to see certain parts of the L.A. market where there is an oversupply as well as aspirational pricing, where there needs to be an adjustment. We started smelling this in March. There weren’t a lot of trades in the Bird Streets, in West Hollywood, there was a lot of inventory. If you look at the market between $2 million and $8 million, that market — if it is priced right — still seems to be selling pretty well. In the market that goes from $8 million to $20 million, there is a lot of speculative construction, and that market is under pressure for price adjustments. Once you go above $20 million it is kind of the same thing as in New York, which is that those buyers and sellers may not be affected as much by sentiment or by the economy, and the decision-making is very different. In New York, pricing could be 10 to 20 percent above fair value. Here you see some prices that are 50 percent above what people perceive to be fair value.
How has L.A. changed you? I have lost 24 pounds since I have been here. I live a much healthier lifestyle. I go to bed at 9 and wake up at 5. It is nice to be up early and exercise early and be in the office early.
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