Commercial Development News - Appraisal Development International

Strategic Moves: Brokerage Realignments Continue to Alter CRE Landscape
Shifting Affiliations Quicken Pace of Musical Chairs Among Brokers at U.S. CRE Firms

By Randy Drummer
CoStar Group
Published: Apr 21, 2010

Commercial real estate firms continue to reposition and reinvent their operations and business models, with local and regional offices switching affiliations and high-profile broker teams breaking away to join other firms or launch forth on their own into a market that's finally showing signs of life following a nearly three-year downturn.

The first week of 2010 set the tone for the latest round of changes, with Colliers International and FirstService Real Estate Advisors announcing they would combine operations under the Colliers banner, followed swiftly by the launch of Cassidy Turley, formed by eight breakaway affiliates from Colliers, Grubb & Ellis and NAI Global.

Brokerages and other service firms have been expanding and consolidating into a handful of full-service players for well over a decade. But companies further repositioned during the recession to adapt to sharply declining income streams from the slowdown in deal activity.

With the economy now turning around, firms are realigning in part to gear up for an expected boom in transactions as lenders and owners step up the workout of distressed loans and properties from the financial system.

As with accounting firms and virtually all other service providers, the middle market will eventually yield to either large global companies or small boutique firms, Dylan Taylor, chief executive officer of Colliers International in the U.S., tells CoStar.

"We're in the third quarter of a four-quarter game in terms of industry consolidation," Dylan Taylor, chief executive officer of Colliers International in the U.S., tells CoStar. "In this type of market, you're also seeing a separation between people and firms that have capital and those that don't."

Through the entire market cycle, Colliers has been "very contrarian," investing heavily in companies, people and service lines, Taylor said.

"That comes at a time when a lot of competitors have had to retrench," he noted. "You need fully integrated services on both the corporate and investor sides. Firms that are one-trick ponies -- that do one service in one market -- are having a hard time competing."

The Colliers/FirstService combination, which has now been unfolding for at least 18 months, was officially completed Wednesday. Over the last few days, the merged company has wrapped up the acquisition of its latest ownership stake, a major investment in Chicago-area firm Colliers Bennett & Kahnweiler. Colliers also announced a partnership with Adena Commercial in central Ohio, which will leave Grubb & Ellis effective May 1.

Grubb & Ellis last week announced it would expand its presence in Ohio with the opening of company-owned offices in Columbus and Cincinnati, similar to plans for owned offices in Phoenix and San Diego, where Cassidy Turley took over Grubb affiliates.

Colliers previously had a presence in each of the markets through Colliers Turley Martin Tucker (CTMT), which formally ended its agreement with Colliers last month. Over the next few days, Taylor said Colliers will announce a series of moves across the country, including markets where the company is back-filling offices following the launch of Cassidy Turley. Nashville local media this week reported that Colliers, which lost its Nashville presence when the CTMT firms formed Cassidy Turley, has struck a deal with NAI Nashville.

But Colliers isn't the only shop hiring talent away from rivals. In the East Bay of the San Francisco Bay Area, Grubb & Ellis has recruited several Colliers International brokers over the last month, starting with veteran Walnut Creek executive Edward Del Beccaro, who will head Grubb's office there. Del Beccaro, who opened Grubb & Ellis's Walnut Creek office in 1982, rejoins the firm as executive vice president/managing director after 11 year with Colliers, most recently as managing partner.

This week, Grubb & Ellis announced that brokers Scott Ellis, Trigger Reital and Brent Johnson will also move from Colliers to Grubb's Walnut Creek office.

There's much more. Significant moves in which firms have either combined or expanded, switched affiliations or brokers have branched off to found new companies include the following:

In Milwaukee, Colliers Barry officially joined Cassidy Turley April 15 and will be known as Cassidy Turley Barry while transitioning to Cassidy Turley. The firm has sold and leased over 1 billion square feet of real estate, including many of the largest industrial, office and commercial properties in Wisconsin and has sold tens of thousands of acres of land.
In Los Angeles, six of the Westside's most successful brokers, along with their 12-person brokerage and administrative team, split from Madison Partners and renamed their realigned firm LA Realty Partners. The firm is headed by brokers Hunt Barnett, Peter Best, Rick Buckley, Chris Houge, Lisa St. John and Gary Weiss, all formerly associated with Madison Partners. The group will continue to be a Century City-based specialty firm focused on Los Angeles' highest quality and most sought-after Class A office market, with an emphasis in West Los Angeles. The principals and brokers of LA Realty Partners currently represent many of the top properties and prestigious clients that make up the Westside Class A office market.
Salt Lake City-based Commerce Real Estate Solutions, formerly Commerce CRG, last month expanded its alliance with Cushman & Wakefield into Washington, acquiring brokerage and property management offices in Seattle and Bellevue, WA. Commerce, one of 27 Cushman & Wakefield local and regional affiliates in more than 55 U.S. markets, said it plans to add more industrial, office and retail brokers and expand services in Washington to state and local government agencies, financial institutions and existing national and global clients.
In San Diego, the six principals of Commercial Realty Advisers and the majority of its brokerage professionals have joined forces with Grubb & Ellis (NYSE: GBE) to form the new Grubb & Ellis-owned San Diego office. The principals, Gregory Albertini, Brent Bohlken, Jeffrey Chasan, Steve Dok, Brandon Keith and Robert Vallera, all joined the firm as senior vice presidents.
In Dallas, Elk River Real Estate and Y Street Ventures formed Verus Real Estate Advisors, a new brokerage company that offers advisory services and asset and property management services based out of Flower Mound, TX. Y Street contributed the growth capital and Elk River will assume the Verus name.
In mid-March, Jones Lang LaSalle hired Thomas J. Melody, Thomas O. Fish and Michael J. Melody, three leading CB Richard Ellis mortgage bankers, who joined JLL as executive managing directors heading its Real Estate Investment Banking (REIB) business in the Americas based in Houston. Two weeks, JLL again aggressively beefed up its capital markets practice tapping veteran investment brokers Al Cissel and Scott Melnick to head its Mid-Atlantic multifamily sales force and help grow the firm's apartment investment business nationally. The brokerage team, both of whom previously served as managing directors for Transwestern's institutional multifamily group, will be based in Maryland. In the last five years, the Cissel/Melnick team has sold more than $5 billion of multifamily property, according to Jones Lang.
In Washington D.C., veteran brokers Joe Michel and Scott Russi joined the office leasing team of Transwestern in Washington, DC, as senior vice presidents. The duo will represent tenants and lease downtown office space for institutional and private owners. Michel and Russi recently worked in CB Richard Ellis' Brokerage Services division. Michel was a senior vice president and has 20 years of experience. Russi is a former first vice president with nearly eight years in the industry. They've worked with clients like American Express Ameriprise Financial, Apollo Real Estate Advisors, Behringer Harvard Funds, Brookfield Properties and GE Investment on their space needs.
In Chicago, Stan Johnson Co. opened a new regional branch as part of its plan to establish locations in the Southeast, West Coast and Northeast, and appointed Brandon Duff as lead broker and associate director. Stan Johnson specializes in the net lease industry. The Tulsa, OK-based company launched an office in Houston toward the end of 2008 and has a capital markets office in Oklahoma City, OK.