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Michael and Harvey Kalles
Michael and Harvey Kalles

Report on Small Business magazine

The new king of the castles Add to ...

It's rush hour at Harvey Kalles Real Estate. On a humid early afternoon in August, the small reception room buzzes with voices and a cacophony of ringing phones. A stream of ladies of a certain age - big sunglasses, big makeup, big designers on their labels - teeter in on high heels to pick up listing brochures, issue home-showing instructions and swap gossip before sweeping out again in clouds of expensive scent. A beefy man in a suit enters and informs the receptionist that his car is blocked. When the offending parker hears a page and rushes in, the receptionist scolds him: "You're blocking Elise."

That would be Elise Kalles, the closest thing to a celebrity agent that Toronto - and perhaps all of Canada - has. (The imposing gent is the chauffeur who ferries her to appointments in her black Lexus LS.) If you have a multimillion-dollar spread to unload in the Greater Toronto Area, or long to acquire one, the odds are that your first call will be to Elise (via one of her two assistants). She's sold two of the most expensive condominiums in Ontario. And she's the embodiment - and the most valuable asset - of the elite, carriage-trade Harvey Kalles brand.

The eponymous Harvey is Elise's husband, who founded the firm in 1957 and built it into Ontario's top independent brokerage - one of the owner-operated fiefdoms amidst the franchise empires of Re/Max, Sutton Group and others. It's a true family affair: Harvey is CEO and chairman, son Michael is the president who manages the day-to-day operations, while Elise and eldest daughter Corinne work in sales (the middle daughter isn't in the business).

The scion has been gradually taking over since the late '90s, but the turbulent market in the past year put him through his first major management test. The firm came through strongly: Kalles was the No. 1 brokerage in Toronto from January through September, eclipsing all the franchise operators. Nevertheless, the sudden market plunge highlighted a fragility in a company so reliant on the roughly 2.5 per cent of the population that can afford a million-dollar-plus home. Michael Kalles says the company's niche has long been a boon. "There's an old expression that if people trust you to sell a home for four, five, 25 million [dollars] they'll trust you to handle a $300,000 condominium - but it doesn't work the other way around."

Still, those first-time home buyers aren't paying the company's steep overheads. It's commissions on deals like those Elise Kalles handles that have allowed the family to stay independent while its peers were swallowed up or disappeared. As the very brokerage model is being threatened by social media that puts information and power in consumers' hands, the Kalles also face a succession challenge, and not just about who runs the firm. Real estate is a business that runs on relationships, and nowhere is that truer than in the insular, affluent pockets of major cities. As in other service industries reliant on rainmakers, it's less important who sits in the corner office than who has the ties with lucrative clients. Elise, who is today buying and selling homes for the third generation of client families, is in her 70s. As her Lexus, now freed, rolls away, it's hard not to wonder who, if anyone, can succeed her.

Michael Kalles has a cold. That's not usually a charming condition, but in the 42-year-old executive it occasions a bravura display of gracious manners. He apologizes for not shaking hands, then makes sure to hold every door so his visitor need not touch the handles. Many people, colleagues and rivals alike, comment on his charisma - not the flashy kind but more a subtle gravitational pull. "He has a remarkable ability to hold court in conversation and put anyone at ease," observes Leslie Bender, the COO who's worked for the Kalles for 28 years. In short, he'd make a great real estate agent.

He's never been an agent, however, even though he's had a realtor's licence for 24 years. But Michael grew up in the business. As a child, his father would pick him up from Sunday school and they'd drive around looking at land and homes (as Harvey's father had done before with him). When Michael got his driver's licence, he began hanging signs for salespeople, dropping off ads and baking muffins for meetings. After getting a general degree, he wanted to join the company, but his parents were against it, urging him to study something else first. He nevertheless enrolled in a realtor training program, then did an MBA at York University in development, followed by a related post-MBA diploma.

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