By Jeff Burd: firstname.lastname@example.org or 412.366.1857
First published on the Tall Timber Group, Developing Pittsburgh Spring 2023 Edition
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Like almost all closely held family businesses, the public – and even the industries it served – knew as much about The Buncher Company as founder Jack Buncher wanted known. During Buncher’s six decades leading the company and the nearly three decades that the Buncher Company was led by his successor, Tom Balestrieri, the culture hewed closely to the philosophy that “the spouting whale gets harpooned.” So, it has been a shock to the company’s culture and to the commercial real estate industry that the Buncher Company intentionally reversed its attitude about publicity when new CEO David Heaton was hired in 2020.
“We are a quiet company. There’s the ‘Buncher way,’ which was seen as rigid and stubborn. Buncher doesn’t borrow money. Historically those things have been correct, but the transition was an opportunity for the board to change that,” says Heaton.
The transition Heaton refers to was the change in leadership that was necessitated by Balestrieri’s retirement after 57 years with the company. Buncher’s board decided that the change in leadership should lead to a more significant transition, that of sharing the unique structure of the organization and its goals. The Buncher Company is owned by six non-profit organizations, one of which is the Jack Buncher Foundation. Jack Buncher created an estate that transferred his 100 percent ownership of the Buncher Company to his foundation, the Carnegie Library, The Pittsburgh Foundation, The Jewish Federation of Greater Pittsburgh, Carnegie Mellon University, and the American Jewish Joint Distribution Committee. The dividends from The Buncher Company’s operations go entirely to those non-profits, five of which are in Pittsburgh. Almost 20 years after Buncher’s death, the company’s board of directors felt it was time that its story was better known.
“The company had been so quiet because it was Jack’s personality. I have tremendous respect for the fact that he never wanted to boast,” Heaton says. “Now, we want to celebrate the vision Jack had to create this type of structure. I don’t think it will be replicated that there are six non-profit shareholders of a private company. It is so unique that it took the IRS eight years to sign off on it. Our purpose to develop real estate to provide dividends to our shareholders so they can do the work in the community.”
The Buncher Company evolved from the family scrap business founded by Jack Buncher’s father, Harry, in 1917. At age 24, Jack Buncher began managing the family business in 1935. The following year Buncher landed an opportunity to participate in the massive cleanup and salvage effort in the wake of Pittsburgh’s severe winter flood. That experience led to a similar contract at the Jones & Laughlin Aliquippa Works, which became the foundation of Buncher Company’s dismantling, salvage, and scrap business.
In 1950, Buncher purchased a riverfront industrial site in Leetsdale to salvage. When the structure of one of the buildings was discovered to have been bolted, Jack Buncher decided to dismantle and reassemble it as rental property. That was the beginning of Buncher’s development business. Buncher Commerce Park Leetsdale now has 27 buildings covering 1.7 million square feet. Over the next six decades The Buncher Company (which was formerly incorporated as a consolidated corporation in 1970) steadily grew its holdings and developments. Buncher Rail Car Service was founded in 1960. Buncher Commerce Park in Youngwood, PA was begun in 1966. Multi-Service Supply, Inc. was purchased in 1976 to support the rail car business.
In the 1980s, a vast swath of properties was assembled along the Allegheny River from the Convention Center through Lawrenceville. Tri-County Commerce Park in New Sewickley Township, Beaver County, was begun in 1994. In 2001, the development of Riverfront Landing began with what is now Waterfront Place. In 2007, Buncher began assembling the property for Jackson’s Pointe in Butler County. In 2008, construction started on Clinton Commerce Park in Findlay Township. In 2015, Buncher purchased land and built in Findlay Industrial Park and was named master developer for the innovative Neighborhood 91 adjacent to the Pittsburgh International Airport five years later.
The transition in leadership and approach involved more than new management, more publicity, and re-branding. The board tasked Heaton with developing a strategic plan that would guide the next development projects and internal reinvestment in the company. There was also another key leadership transition when Brian Goetz announced he would retire in mid-2023.
“We appreciate that Brian gave his intentions in advance after 40-plus years. Knowing his intentions, we were able to connect with Gregg Broujos, with whom I’ve been friends for many years, to take the reins from Brian and lease our portfolio. It’s given us a chance to give some recognition to Brian. He doesn’t like to talk about it, but he was a critical part of the successes of the team prior to my coming here.”
“After 35 years in the brokerage business, it was the right time to do something different. It was a combination of three things that attracted me,” Broujos says. “First was David’s leadership. I wanted to work with him to continue Brian’s legacy. And when you can help six non-profits do better and provide for their constituents, it’s a compelling opportunity.”
Goetz jokes that he is retiring to bring the average age of the employees to under 65. The claim is only partly in jest. Tom Balestrieri was in his 80s when he retired. Several former executives worked into their 80s or beyond in second careers after working in banking and construction. Longevity is also a legacy of Jack Buncher’s.
“The other important thing about how Jack operated was his belief in his people. Jack’s philosophy was that if you were contributing to the company and it was benefiting you, you could be an employee for life,” says Goetz.
The result of that philosophy is that 60 percent of Buncher’s roughly 100 employees are older than 50 and 35 percent are over 60 years old. Heaton sees that as a strength and an opportunity for recruiting.
“When I came on board the board gave me a variety of areas to address. At the top of the list is the goal to become an employer of choice,” he says. “There is tremendous knowledge that we need to pass along but also start replacing. That means there’s a great opportunity for young people to join this company and advance, probably more quickly than with other companies. We have this wave of very experienced knowledgeable employees that are going to start moving on to the next phases of their lives.
“There are no family members in the business, no heirs who have been predetermined to be leaders. We are being very intentional about mentoring redundancy and succession planning. We are identifying the people that will be the future vice presidents of our various operations. That will lead to the plan for who will replace me. I’m not going anywhere for a while, but the time will come when someone has to transition from running a department to running the company.”
One important component of the change in culture has been internal communication. Goetz explained that the company did lots of surveying of the employees during the transition in leadership and learned a lot about what they thought about the company. He admitted that many were unaware of the company’s non-profit shareholders. The internal communications gave Buncher’s leadership an opportunity to respond to the concerns and questions of its workforce. That set the stage for a significant change in culture.
The company’s new offices at Waterfront Place are symbolic of the new culture. Buncher’s former Penn Liberty Plaza offices were something of a throwback. There were massive hallways and large private offices for most employees.
Co-workers could go weeks without encountering each other. Designed by Perkins Eastman, the new offices are colorful, denser, and designed to create collaborative opportunities. Fewer than one-third of the employees, including many managers, have private offices, and those have glass walls that allow for light and visibility.
“I’m very proud of the office. It’s a comfortable space. It’s very collaborative. At lunch time there are 10 to 15 people in the break room, eating and talking,” Heaton says. “There’s also no place to hide. I can close my door, but everyone can see if I’m in there, so if they have a question, I have to be available. This environment improves the efficiency of sharing of that knowledge.”
Part of the move to new offices was an upgrade in technology. New equipment and information systems allow widespread sharing of information between departments, which was more difficult to do previously.
“It is amazing how quickly people are adapting and utilizing the new technology and the collaboration rooms. Don’t get me wrong. There are those of us who have been around a long time for whom the transition has been slower,” Goetz laughs. “There has also been a response to people’s concerns, whatever they are. People are making the cultural transition.”
The Buncher Company is not relying solely on changing the workplace culture to drive growth. Heaton says that there is more willingness to change the way Buncher does business – such as selling properties or borrowing – if there is a strategic purpose that rewards the shareholders. Buncher is adding third party property management services to its offerings and plans to use Broujos’s considerable experience and relationships to expand its leasing services.
“We are starting Buncher Realty Services, which will be third-party brokerage services. Gregg is not just going to manage leasing our own properties but offer those services to others,” continues Heaton. “Again, we have these people that are knowledgeable of the market, experienced at leasing, and have relationships. Why not help tenants in the market?”
“We’re a little nimbler. We’re definitely more confidential,” says Broujos. “We’re not looking to become a big shop but we’re working with long-time clients and some institutional investors who like the idea that we are a boutique brokerage operation.”
The Buncher Company is also looking at its portfolio to match its strategic goals. Roughly 80 percent of its more than eight million square feet of properties are industrial. Most of the remaining properties are Class B offices. Heaton says they are studying the feasibility of converting some of that to residential and are looking at developing other property types.
“Part of our mission, driven by our shareholders, is to provide sustained moderate growth. We are not going to swing for the fences and take large speculative risks,” he says. “We want to diversify the portfolio some so that we are less exposed to swings in the market.”
While there is no specific next development announced, The Buncher Company is looking at more core industrial development in Findlay. There are also early discussions about potential multi-family, and a mixed-use project that would honor Jack Buncher’s Mulberry Street roots. Heaton is grateful that the financial foundation of The Buncher Company gives his team the ability to make decisions that will stand up over time.
“We are fortunate for the efforts of Jack and Tom to get us to the point where we are that we have this financial strength. When we decided to move to new offices and make all these changes, the investment was very significant, but we didn’t have any trouble doing it,” says Heaton. “We were fortunate to be able to ask what the right thing was to do, not what we could afford to do.”
“I like to say we’re a 75-year-old startup,” says Broujos. “The new office is emblematic of where our company is going. Everything is more collaborative. We’re committed to new technology. The new space is bringing in new people with new ideas and new skill sets.”
“A lot of work went into building that 8.5 million square foot portfolio when Jack was the sole shareholder, so that it could benefit our current shareholders,” says Goetz. “The board is 110 percent behind Dave’s strategic plan, and it will be successful in all facets. It will make the shareholders happy, and it would make Jack Buncher proud.”