Minneapolis-based NAI Legacy didn’t get its start until 2019, when four boutique commercial brokerages joined to form the new company. The young age of this new CRE firm, though, didn’t stop NAI Legacy from winning one of the most prestigious awards during September’s 2020 NAI Global Virtual Convention, being named NAI Global Office of the Year.
What’s behind the quick success of this firm? NAI Legacy has succeeded largely by finding its own niche to serve: The firm has established itself as a leader in tax-advantaged real estate investments, and it has remained focused on this niche since its founding.
NAI Legacy demonstrated its expertise in the tax-advantaged niche when the firm executed the first Qualified Opportunity Zone Fund in Minnesota. NAI Legacy brokers then fought through uncertainty caused by the COVID-19 pandemic to close a key Delaware Statutory Trust 1031-Exchange syndication.
The leaders of NAI Global have noticed this success. It’s why the local firm took home the global conference’s top office honor.
“NAI Legacy continues to demonstrate great commitment to NAI Global, and we are very proud of their achievements and contributions to the organization,” said Jay Olshonsky, president and chief executive officer of NAI Global. “The firm exemplifies how our local market leadership is driving the NAI Global brand.”
Duane Lund, chief executive officer of NAI Legacy, said that the Office of the Year honor offers proof that taking the risk to form the company last year was the right move.
“This is a big deal for our little company,” Lund said in an interview with Minnesota Real Estate Journal. “Last year was just our first full operating year.”
Why was last year the right time to start a new commercial real estate company? Lund said that he took a long look at his where he was in his own personal career. Lund is no commercial real estate newcomer, having worked in the industry for more than 30 years.
In 2018, Lund began thinking about where he wanted his career to go next. As he contemplated this, Lund looked around the commercial real estate industry in the Minneapolis market. He saw that of the big players in the industry, about 80 percent will retire during the next 10 years. This includes CRE pros who are owners and landlords.
Lund came to a revelation: He wanted to help craft tax-efficient retirement solutions for these real estate professionals, helping them close 1031 Exchange transactions.
“I’m a Baby Boomer. I’m at the back end of my career. I wanted to focus on not only how I can cement my own legacy, but maybe help others cement theirs,” Lund said. “All the deals we’ve been closing have something to do with the tax code, how one can retire from the industry without being hit with a whole lot of taxes. That is what 1031s are all about.”
As Lund says, it’s not always easy to retire from real estate without suffering significant tax consequences. The way real estate pros own their assets often triggers a big tax hit when they sell them.
“If you look at the name we chose, we could have gone with something like ‘NAI Minnesota,'” Lund said. “But we wanted to position ourselves as a legacy play. This industry is turning over now. All the Baby Boomers are going to retire. Legacy, then, is about how we can help people cement their own legacies when they’re ready to retire.”
The NAI Legacy team has a background in structuring Tax Deferred Exchanges, including 1031 Exchanges, Property Contributions, Delaware Statutory Trusts and Net Leased Investments. Beyond traditional brokerage services, the team at NAI Legacy helps manage its clients’ tax-deferred real estate investments.
The leaders at NAI Legacy — which includes Michael Houge, managing director of NAI Legacy; Garrett Farmer, senior director; and Spencer Lund, investment director — have been in the commercial real estate business for more than 80 years combined. This experience has helped NAI Legacy maintain their deal flow, even as Minneapolis and the entire country fight through the COVID-19 pandemic.
Lund said that NAI Legacy hit the first quarter of the year at “warp speed.” Like all CRE firms, though, NAI Legacy’s business slowed down in mid-March, when the COVID-19 pandemic began dominating news headlines.
Succeeding today, then, is no easy task. But NAI Legacy, relying on the experience of its leaders and continuing to focus on tax-advantaged transactions, has continued to close a steady stream of real estate deals even as the pandemic drags on the economy.
“We made a decision after early July that it was time to crank up the machine again,” Lund said. “Our deal volume is definitely down because of COVID, but we are still closing deals. I do think COVID and what has happened in the past eight months has accelerated the retirement steps people are taking. I have a lot of friends in this business. COVID has changed a lot of philosophies. I’ve been getting calls from my friends who are saying, ‘Duane. It’s time.’ COVID has caused a lot of people to think about their real estate retirements.”
While 2020 has been challenging, Lund says that he expects an especially strong year in 2021. Part of the reason is that NAI Legacy has made a significant investment in its technology and online presence, an area of the company that Spencer Lund, Duane Lund’s son, is responsible for.
“Technology matters,” Duane Lund said. “We have made a substantial investment in our Web presence and in our investor portal. When people work with us, they have access to all of the information they need to make their own real estate decisions. We view our technology as a key tool to capturing a ton of investors.”
Spencer Lund said that the Office of the Year award shows how important this investment was.
“This award is a recognition of the investment we’ve made in our clients’ experience” Spencer Lund said. “Our firm made several investments in technology the past year, highlighted by our launch of the all-inclusive NAI Legacy investor portal powered by Juniper Square. We’re committed to providing our clients with the best tools and experience available in the industry. I’m appreciative of NAI Global for recognizing our success and am honored to work with the best of the best at NAI Legacy”
Houge, managing director of NAI Legacy, said that he views the award as evidence that he made the right decision to join with Lund and Farmer to form the new CRE firm.
“I’ve worked with Duane and Garrett in previous roles in my career and when Duane asked me to join the NAI Legacy team I was eager to ‘get the band back together’,” Houge managing director of NAI Legacy, said. “Our internal chemistry is unmatched, and we look forward to reestablishing old relationships and building new ones. It’s an honor to receive the recognition of office of the year. I couldn’t be more excited about the future of our firm.”
Duane Lund, too, said that he is looking forward to 2021 and beyond.
“I love the people in this industry,” he said. “It’s such a fun industry. It is so heavily entrepreneurial. That appeals to me. To be able to solve and deliver solutions to our customers? I love it.”