Commercial Realtor Benjamin Pitts is walking through an empty office suite in the Loveman’s building in downtown Chattanooga. Although the space in the elegantly designed historical building is void of furniture, computers and people, Pitts sees it differently. In his mind, a small law firm is in operation around him. He can see the reception desk near the entrance, the table in the conference room, and the attorneys at their desks. When he pictures the firm’s logo on the carpet near the front door, he moves the reception desk to the side.
While Pitts has an uncanny ability to match a client with a space, his expertise goes deeper than placing a company within four walls. The breadth of his knowledge and experience also enables him to consult with a client about how a particular space can be a part of how his or her business works.
“I talk a lot with businesses about how they finance their operations, what their sales are like, how much rent they should be paying based on their revenues, the nature of their business model, their company culture, and how all of that would change if they moved into a particular space,” he says.
The son of a farmer and seed merchant, Pitts’ aptitude for evaluating the cost of occupancy for a client is partly derived from how his mind works. “My wife used to say that if I couldn’t put something in a spreadsheet, then I couldn’t think about it,” he says.
In addition to having an intensely analytical mind, Pitts brings extensive business experience to each deal. As the result of a seemingly unscratchable entrepreneurial itch, Pitts devoted years of his life to several technology start-ups and other business endeavors. From developing and selling computer networks for accounting and law firms, to programming databases, to streaming audio and video before YouTube became an Internet staple, Pitts immersed himself in the business and technology worlds for the better part of the ’90s.
Although nothing stuck, his exposure to various disciplines gave him the background he needed to eventually become CFO of Tricycle, a textile simulation company, and then executive vice-president in charge of finance at Smart Furniture.
Pitts is also an experienced attorney. Although one might wonder where the law could possibly fit into his long and winding career path, he was actually a lawyer before he was anything else.
“I originally thought I was going to study engineering, but I ended up studying accounting and management science because I had a strong interest in the financial world. I was also interested in the law, and as I was finishing up my degree and interviewing for jobs, someone said, ‘I thought you were going to go to law school.’ I realized I hadn’t thought about that for a while, so I picked up an LSAT application, took the exam, sent off some applications and went to law school,” he says. Pitts earned his undergraduate and law degrees at the University of Tennessee at Knoxville.
Pitts interviewed for jobs in several cities, but received the strongest interest from law firms in Chattanooga. He wound up at Chambliss & Bahner, where he did accounting malpractice defense work. Although Pitts enjoyed the work “on some level” and “loved working with smart people and engaging in thoughtful conversation,” the level of contentiousness in the practice of law and the concept of billable hours didn’t appeal to him, so when he was offered an opportunity to work for a local company developing and selling computer networks, he grabbed it.
Years later, Pitts’ arrangement with Smart Furniture had him hedging his earning capacity against future returns. His wife, Jean, was ready for him to start bringing home what he was worth, so he wondered out loud what he else he could do.
“She said, wisely, ‘You should go into real estate because you’re always thinking about it,’” Pitts says.
His wife was right. Pitts would spend his spare time on the Hamilton County Geographic Information System Web site looking at parcels. “It was fascinating to me. If I saw an article about a piece of land, I would wonder where it was, and pull up a GIS map and look at it,” Pitts says.
Pitts tapped into his extensive network of contacts, talked with every professional he knew who had a perspective on real estate, and eventually spoke with Rudy Walldorf. When he’d processed everything he’d learned, he decided to pursue commercial brokerage, and accepted an offer to work with Walldorf.
“I have a lot of respect for Rudy. He’s been exclusively commercial for most of his career, so he knows a lot about real estate deals and laws,” Pitts says.
Pitts says the uniqueness and challenge of each deal attracted him to commercial real estate.
“There are three components to commercial sales: One, convincing the owner to list the property with you; two, marketing the property; and three, closing the contract. The last phase is what separates residential and commercial real estate. There’s less routine in the commercial process. You have to work hard to figure out how to make every deal work, and that’s what appeals to me,” Pitts says.
His first year, he did better than others told him he’d do.
“People told me to not plan on making money my first year. I thought I could survive, but that it wouldn’t be easy, so I set a sustenance goal, a moderate goal and a stretch goal, and at the end of my first year, I was one deal away from making my stretch goal. So I reset my goals for my second year, and the same thing happened again,” Pitts says.
Then, in 2008, the wheels came off the commercial real estate industry. While Pitts has struggled ever since, he’s adjusted his business strategy to line up with the changes in the industry. For example, instead of using sales histories to determine how a property should be marketed, he focuses on what other properties have to offer.
“It’s hard to look at comps historically unless they’re less than two years old, but we can’t use those transactions anymore because more of them were distressed sales. So, when someone looks at a property I’m listing, I have to consider what else is available. If someone is going to sell a warehouse at a foreclosure sale, and the warehouse I’m listing is not a foreclosure, then my client has to recognize that the foreclosure is out there, and that the people who want to buy his building might be able to pick up the foreclosure cheap.
“So, do we sell his property as a premium in the marketplace based on its amenities, or do we get in the middle of the pack and sell the amenities while not eliminating ourselves because people have a lot of options?”
Clearly, Pitts leverages his experience as he represents buyers and sellers, as well as landlords and tenants. But the harsh realities of the current market have not made his work easy.
“There have been sleepless nights. Some big deals have died, and some big deals have gone through at the last minute following a lot of scrambling, negotiating, and renegotiating. This has not been an easy existence the last few years,” Pitts says.
Still, Pitts feels the industry making a turn. He says 2009 had potential, and that he would have made a lot of money in 2010 if every deal that had come close to closing had actually gone through. Deals continue to be fragile, but Pitts is seeing them being a little sturdier from the beginning.
“I’m always saying, ‘Before the recession, things were this way. I’ve started to feel like my grandparents, who would talk about how things were before the depression, during the depression and since the depression. I hope we’re moving into an era in which I can start saying, ‘Since the recession,’” Pitts says.
Pitts says his wife’s support and understanding throughout his circuitous career has been invaluable.
“Before I got into real estate, my wife had reached a point where she was ready for me to be less entrepreneurial. But this is still a very entrepreneurial endeavor compared to what she knew growing up as a minister’s daughter. She knows I love what I do, though, and therein is the slack she cuts me as I pursue this through the recession,” Pitts says.
Pitts’ wife must be understanding in other ways as well, as the analytical side of his brain seems to never turn off. Even when he’s talking about his daughter, he sounds as though he’s putting her through a spreadsheet.
“When I was single, I didn’t care about my risk-reward dynamic. If I had a lot of money – great! I’d spend it and do fun things. Getting married caused a multiplicative change in my risk-reward analysis because suddenly I was dragging my wife through what I do. Having a daughter changed my risk-reward analysis exponentially because she didn’t choose to marry me and my entrepreneurial spirit,” he says.
Even during his leisure time, Pitts continues to exercise the logical side of this brain.
“A few years ago, I developed a spreadsheet that ranks every Division 1A football team based on how they perform against their opponent’s average yield. If you’re in a conference that has no good rushing defenses, and you’re leading the nation in rushing, what does that say? Not much. A good rushing statistic only matters when you’re doing well against teams with a good rushing defense,” Pitts says.
One could even be excused for wondering if Pitts’ subjected his Christianity to critical thinking. Although he grew up in the faith, his beliefs slipped away during a personally tumultuous period in the late ’90s, and then slowly came back over time.
“Things have happened in my life that, because of the timing and what took place, could only be rationally explained by the presence of a Creator,” Pitts says. He and his family attend North Shore Fellowship.
As Pitts prepares to pose for a picture, he looks for a spot in a room with a good view of Market Street. He knows the value of the space, and he wants to show off one of the perks of working there.
“There are a handful of good commercial Realtors in Chattanooga. I like to think I’m on the threshold of that group,” he says.
Perhaps someday he can develop a spreadsheet that lets him know precisely where he stands in comparison to his peers - in his leisure time, of course.