from Cushman in a major coup.
“Everybody in the market would’ve offered a body part for him,” said Catherine O’Toole, managing principal of Coldwell Banker Commercial Advisors’ New York City office.
Avison’s Liebersohn said Nelson — who was at Massey Knakal before it was bought by Cushman for $100 million in 2015 — is setting up his own operation at the firm and is actively recruiting brokers. His hire is also a show of the firm’s first true push into New York’s investment sales game.
Nelson, whose contract with Cushman expired at the end of 2017, received the remaining 25 percent of his share of the proceeds from the Massey Knakal sale before making the move. Sources said he will have more runway at Avison to build his business with less internal competition.
He told TRD he made the move to Avison in order to “work differently.”
“Almost all full-service firms work in silos when it comes to sales, leasing and financing,” said Nelson, who added that he’ll be doing away with the “team approach” in favor of a more collaborative platform.
For firms like Avison, those hires are high-stakes and could mean the difference between success and failure in New York. So firms are often willing to spend substantially to reel in big fish.
The company has brokered some sizable leasing deals, such as Comcast’s 100,000-square-foot deal last year at 1407 Broadway and the Hershey Company’s lease for a flagship retail store at 20 Times Square. Avison said it’s handled 6.1 million square feet of New York City transactions, valued at $6.4 billion, since 2011.
Yet it’s still never mentioned in the same breath as the city’s top players, and it suffered an embarrassing black eye last year when the Moinian Group replaced it with JLL as the leasing agent at 3 Hudson Boulevard.
Liebersohn conceded the company has a long way to go to catch up to New York’s top-tier brokerages, but he said it does compete with them on some deals.
“I know that we’re competing in that next tier, because I know we’re at the table for most of those deals,” he said. “I’d like to say we’re at the table for all of those deals. We’re not, but we are at the table for many of those deals.”
Body blows billionaires
For some fledging New York teams, losing even one top player can be a major body blow.
Houston-based Transwestern, for example, opened its New York office in 2011, hiring leasing veterans Patrick Robinson and Lindsay Ornstein to run the show. But Robinson decamped for landlord George Comfort Sons after launching the office, and the New York arm hasn’t achieved the same success as nearby offices like Boston, which leapfrogged New York and became a major player by buying one of the city’s top brokerages. (It’s now seeing brokers in that office jump ship to bigger firms, though.)
The Manhattan office had 23 agents as of February, up from 18 in mid-2016, according to a review of state licensing records.
Representatives for Trans-western declined to comment.
Firms with national reputations often face the challenge of making a local name for themselves.
Berkshire Hathaway HomeServices — a franchise of the megafirm headed by billionaire investor Warren Buffet — launched its New York office in January 2017. While it’s known as a residential firm, it’s building a New York investment sales team. The team — headed by Herb Hirsch, a former Engel Völkers broker who previously owned his own eponymous firm — has seven brokers so far.
Candace Adams — CEO and president of Berkshire Hathaway’s New York, New England and Westchester operation — said there’s a perception that the brand is focused solely on residential. But she noted that it has more than 2,000 commercial agents nationwide.
“Our goal is to be a full-service commercial brokerage as well as residential,” she said. “From our perspective, the commercial focus that we have was born, obviously, out of Warren Buffett’s desire to service all aspects of the real estate market, so we clearly have commitment to growth in that arena.”
On the residential side, the firm snapped up Westchester’s largest firm, Houlihan Lawrence, for an undisclosed amount about a week after opening in NYC. And Adams said the company will consider making acquisitions to grow on the commercial side, noting that it has the firepower to do so.
“Berkshire Hathaway probably has the most significant financial strength in the world,” she said.
Adams added that the New York investment sales team is in negotiations on deals worth more than $1 billion in New York and elsewhere, though she decline to provide details, citing nondisclosure agreements.
Yet not all firms have that kind of billionaire money to burn.
For example, Coldwell Banker — another national brand — has struggled to get the kind of market share it expected. The company has more than 40 brokers, but it’s seen its local franchise change ownership multiple times in the last eight years.
Last year, the brokerage did roughly 188,000 square feet in office leases, a little more than 15,000 square feet in retail leasing and two building sales.
In April, the franchise took a hit when co-founders Peter Sabesan and Richard Selig left the company. Six months later they joined Cresa, which opened its New York office in 1989.
O’Toole said the firm is beefing up its marketing efforts to win new agency assignments and actively recruiting brokers with “generous splits.”
“The brand is looking to grow its platform and be well-received and get more market share,” she said. “We were not achieving that.”
To merge or not to merge?
Complicating matters for New York firms trying to make a name for themselves is the elephant in the room: consolidation.
In the last decade, big and small firms have ramped up their market share by merging with — or buying out — competitors.
And that trend isn’t slowing.
The latest buyout that has real estate tongues wagging is Newmark’s planned purchase of retail brokerage powerhouse RKF. Sources say the move, which comes on the heels of Newmark’s lackluster IPO, will further tighten the grip on the retail leasing market and make it harder for new players and smaller shops, particularly in today’s struggling market.
“Many of the smaller firms are struggling, and some of their brokers are looking to move,” said David Firestein of SCG Retail, which represents Starbucks and other megaretailers, like Whole Foods. “The Newmark/RKF merger will probably happen, and will further impact brokers moving.”
Firestein predicted that larger, more national firms, like SCG — which was formed out of the merger of the White Plains-based Northwest Atlantic Real Estate Services and the Atlanta-based Shopping Center Group in 2011 — will “continue to grow and do well.”
His said his firm, which opened a New York office in 2012, is expanding into a bigger space this month.
The California-base Lee Associates followed a similar path in 2011, when it entered the New York market by merging with local brokerage Sierra Real Estate.
“We were the new guys in town,” said James Wacht, president of Lee’s New York operation. “Lee was primarily looked at as a West Coast-based company doing industrial deals. We had to really struggle to get our name out there and get brokers to talk to us.”
Since then, Lee has scored some sizable deals, such as representing investment firm Silver Lake in its 56,000-square-foot deal to relocate to 55 Hudson Yards.
Wacht said the firm’s business is about 40 percent office leasing, 40 percent retail leasing and 20 percent “miscellaneous,” such as investment sales and industrial deals.
In 2013, Wacht told TRD that he was “very happy hitting doubles,” going after deals in the 10,000-to-50,000-square-foot range instead of megadeals.
But he said the company has now set the bar higher. “Singles have become boring. We’re now interested in doubles and triples, and we’re striving for a couple of home runs,” he said.
Not surprisingly, success often takes time and money.
Texas-based mortgage broker HFF, for example, opened its NYC office in 1996 and went public in 2007 with a $257 million IPO.
But it took until last year for it to join a rarefied club, brokering its first 10-figure deal: the $1.04 billion sale of a 95 percent interest in Deutsche Bank’s 1.6-million-square-foot headquarters at 60 Wall Street from Paramount Group to GIC.
When asked if, in 20 years, he would like to be where HFF is now, HWE’s Silverman wasn’t shy about his vision.
“No,” he said. “I’d like to be further than they are 20 years from now.”
Correction: A previous version of this story incorrectly stated the month Peter Sabesan and Richard Selig left Coldwell Banker.
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