Front row, from left: Kenneth Franzese, Christopher Lydon, Ronan Remandaban, Justin Fierz, Brian Vanosky and Jeffrey Galante. Second row, from left: CJ Kuehl, Ellen Steinbrecher, David Pals, John Cassidy, Denise Dalicandro and James Planey. Third row, from left: Michael Androwich, Jeffrey Janda and John Sharpe. David Brackney was not available for the photo.

Ken Franzese, one of the six founding principals of Chicago-based Lee & Associates of Illinois, believes that the firm has some of the best brokers in the Chicago metropolitan area. Since its inception in August 2002, the firm has increased its staff from 11 members to 25 members. Among the additions are seven principals, three associate brokers and several new members to the support staff. “We have brokers at our firm that come from CB Richard Ellis, Trammell Crow, Colliers Bennett & Kahnweiler, Grubb & Ellis, Darwin Realty and Brackney & Associates,” Franzese says. “These principals were among the top producers at their respective firms.”

The founding principals, which also include John Cassidy, James Planey, Jeff Janda, Christopher Lydon and John Sharpe, evaluated creating a start-up company for about 8 months prior to forming Lee & Associates of Illinois. They debated whether it would be better to start a firm from scratch or to become part of a network of companies. “When we completed all of our due diligence, becoming part of the Lee Group of Companies made the most sense,” Franzese says.

The Lee Group of Companies currently consists of 20 offices in the United States, which service California, Nevada, Arizona and Illinois. Each office is independently owned and operated by the principals of that firm. “We really liked the Lee model because it enabled us to leave the rigors of a corporate mentality and employ an entrepreneurial spirit,” Franzese explains. “We have tremendous local expertise and our own vision but, at the same time, we get a national platform and name recognition. It is the best of all worlds.”

Although there is no headquarters in the group of companies, one representative from each office meets formally once per month (and at other times on an as-needed basis) to share information such as databases and proposals. This structure was attractive to the founding principals because they could avoid having the bureaucracy of a corporate office that would mandate an approval process.

When the firm started, it dealt solely with industrial brokerage. However, within its first year of operation, Lee & Associates of Illinois also added office and investment brokerage to its services. “If you look at most of our corporate and institutional clients, they really desire a full-service firm,” Franzese says. By providing these core competencies, the firm has the opportunity to work for many different types of clients without having to turn away business.

“Institutional clients, such as REITs, pension funds and life insurance companies need investment expertise on the acquisition and disposition side,” Franzese adds. “They also need the office and industrial brokers working the product to get it leased and adding as much value as possible.”

Among the firms’ corporate clients are Chicago Tribune, Turtle Wax, Toyota and Nicor. However, the largest sale transaction that Lee & Associates of Illinois completed within its first year was the sale of a 370,000-square-foot facility in Carol Stream for Michelin North America. The largest lease it completed was a 380,000-square-foot lease for Nexus Distribution Corporation. Institutional clients have included DP Partners, CenterPoint Properties and First Industrial Realty Trust.

In 1 year, the firm completed 97 transactions, which totaled about $171 million. According to Franzese, the firm completed nearly 3.2 million square feet of leases and about 2.7 million square feet of sales. In addition to doing local business in the Chicago market, the firm also does regional and national business for its clients.

Even though 2003 has proved to be a challenging time for its clients, Franzese says that it has been a great time to create value and provide key services. “When things are more challenging, you have to get more creative with negotiation strategies and structuring transactions. Providing value during the difficult markets enables us to create the long-term relationships, which are the cornerstone of Lee & Associates.”

Next year should also provide opportunity for Lee & Associates. “We are optimistic for a meaningful rebound,” Franzese says. “I think we have seen the worst and that things will trend positively.”

Despite his optimism toward the market, Franzese does believe there are challenges to overcome. Most importantly, he believes that as a brokerage firm, the company must maintain the integrity of its information. “Our success has proven that if you focus on the basics of providing good services and information, there is always room for more firms.”

For other brokers who are considering starting their own firm, Franzese offers some advice. “Carefully evaluate the desired market niche and the risks associated with a start-up,” he says. “Secondly, make sure you know your business model and your organizational structure well. Third, know your competitive edge or differentiation. Lastly, make sure there is a good personality mix and a complementary business plan so that everyone will support each other and work together productively.”

The company is following its own advice, and it seems to be working. The Lee Group of Companies has a focused expansion plan, which includes opening offices throughout the rest of the country. The Chicago firm also has major plans for expansion including adding four or five more industrial principals, eight to 10 more office principals and two to six more investment principals. The firm also plans to add a property management division. “Our goal would be to provide property management services to institutional and large corporate clients as part of a full-service package,” Franzese says. Furthermore, Lee & Associates of Illinois plans to open a downtown office in the future. However, the company is managing its growth and taking things slowly. Currently, the firm is located at 8755 West Higgins Road in O’Hare Plaza.

Although Lee & Associates is new to the Chicago market, it has enjoyed major success due to the firm’s principals who have worked in the market for many years. Franzese says, “We enjoyed instant credibility in the market from corporate and institutional clients because of our past relationships and because many of these clients have done business with Lee offices elsewhere around the country.”

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