By JODI SUMMERS
Out of the world’s 691 billionaires, 46 of them made their fortunes in the real estate industry.
According to Forbes magazine’s annual list of “The World’s Richest People,” this elite group have quite a bit in common through their habits, lifestyles and business styles. Here are some unifying qualities shared by America’s richest real estate moguls. 1. Go commercial. Billionaires who make their fortunes in real estate don’t do it in residential. They are moguls with an empire of owned and operated office buildings, shopping centers, apartment complexes and luxury hotels. That strategy works particularly well for “America’s richest landlord,” 73-year-old Newport Beach resident Donald Bren, the wealthiest man in American real estate. The self-made millionaire, with a net worth of $4.3 billion, made much of his money as chairman of The Irvine Company, a privately held real estate investment company known for creating balanced, sustainable, quality communities like the 93,000-acre Irvine Ranch in Orange County. Finished plots sell for more than $1 million an acre. The ranch also has 400 office buildings, 35 shopping centers, 80 apartment complexes and two luxury hotels. Bren is the sixth wealthiest real estate billionaire and the 122nd richest man in the world. He also is one of real estate’s great philanthropists. 2. Do more than invest. Making big money in real estate goes beyond buying property and waiting for it to appreciate in value. It’s all about improvements. John Sobrato of Sobrato Development Companies (SDC) calls Atherton home but he made his fortune in Silicon Valley. For more than 40 years, Sobrato’s SDC has developed real estate in Silicon Valley, specializing in facilities for high-tech and research and development companies. Another self-made man, he began in 1953 with one of the first “tilt-up” buildings in Santa Clara County. Sobrato, who owns and manages the buildings he constructs, maintains single tenant occupancy. He boasts a portfolio of $1.5 billion. His assets include land throughout Silicon Valley, San Jose, Fremont, Newark and Santa Clara. He has developed in excess of 7,000 rental units. 3. Be able to see the property for what it could be. Just because you buy a shopping complex doesn’t mean that’s the highest and best use of the property. 4. Know the local zoning codes and be open to the possibilities. Los Angelino Ed Roski did just that. Roski is the founder of Majestic Realty, the largest commercial builder in Los Angeles, boasting an office, retail and industrial portfolio totaling more than 55 million square feet. The USC graduate with a net worth of $1.1 billion, saw the highest and best use of the formerly blighted area near the convention center and built the Staples Center with Philip Anschutz. Roski also is a minority owner of the Lakers and the Kings. Headquartered in City of Industry, Majestic Realty also has offices in Atlanta, Dallas, Denver and Las Vegas — where they have a 400-acre business park and 3 million square feet of casinos. 5. George Argyros is the grandson of Greek immigrants. Argyros began by running a Palm Springs grocery. He graduated to buying and selling corner lots at busy intersections for gas stations. He turned to apartments in 1968. Today, as part of Arnel & Affiliates, Argyros manages apartments and commercial properties in southern California. He has a net worth of $1.2 billion. 6. Have a thick skin. People can be resentful and jealous of successful people. Don’t let criticism of your work deter you from your goals. Consider Red Emmerson, the second wealthiest real estate titan in California. Emmerson is the largest private forestland holder in North America — assets include 1.52 million acres in Northern California, timberland stretching more than 350 miles from Mount Shasta to Yosemite National Park. For the last 20 years, while other logging companies retrenched or relocated, Emmerson and his company — Sierra Pacific Industries — quietly grew into the second-largest private landowner in the United States. Needless to say, Sierra Pacific is a darling of environmental groups. 7. Have superior information. If you do more research than your competitors, you’ll have an advantage in any transaction. Self-made billionaire Carl Berg was a loan processor before investing in Silicon Valley commercial real estate with John Sobrato in the 1960s. He struck out on his own, forming Mission West Properties, a real estate investment trust (REIT) in Silicon Valley. Berg owns a controlling stake in the REIT, which focuses on single-tenant research and development and office properties in Silicon Valley. Mission West now owns and manages more than 100 properties. Major tenants include Microsoft and Apple Computer. Currently, the Atherton-based businessman boasts a portfolio of $1.2 billion. 8. Don’t accept the cards you’re dealt. Forbes notes that while one-third of the world’s 46 billionaires who make their money in real estate inherited and then grew their fortunes, two-thirds are self-made. Stockton-based A.G. Spanos Companies are known for building, managing and selling multi-family housing units; constructing master-planned communities, and developing land. Although California based, it has expanded to build more than 100,000 apartments in 18 states since 1960. A.G. Spanos Companies also has developed top-class office space in San Joaquin County. Alex Spanos, owner of the NFL’s San Diego Chargers, operates the company with his sons Dean (president and CEO) and Michael Spanos (EVP). Spanos, whose net worth is $1.1 billion has pledged $200 million to San Diego for a new stadium for its football team. 9. Live in California. Of the 21 U.S. billionaires who made their fortune in real estate, more than one-third live in Atherton, Los Angeles, Newport Beach, Palo Alto or Stockton. 10. Get, and stay, married. Of the 43 real estate billionaires whose marital status is known, according to Forbes, 37 are married, while only three are divorced and three are widowed. 11. Go back to school. Of the 26 real estate billionaires whose educational attainments are known, 20 have a college degree or higher. Five made it on high school diplomas, and one is a high-school dropout. John Arrillaga is a big donor to alma mater Stanford University. Arrillaga and Richard Peery are two of Silicon Valley’s biggest commercial landlords. In the 1960s, they converted farmland into pricey office space. Peery and Arrillaga are lifelong business partners who avoid debt and the media. Each has net worth of $1 billion.
For more on Southern California commercial properties, there is a great information blog at www.socalindustrialrealestate-blog.com. (Jodi Summers is director of the investment division at Boardwalk Realty Santa Monica. For your real estate needs, , call 310-309-4219 or visit her Web site at www.santamonicalandmarks.com.)
Originally published in the Santa Monica Daily Press print edition on May 24, 2006. Read the original PDF.