The Real Deal New York

Cutting to the Core

While other start-ups failed, Shaun Osher's five-year-old brokerage survived the downturn, earned TV notoriety, and is now expanding. But can it make the jump to a name brand?

November 01, 2010 07:00AM
By Candace Taylor

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Shaun Osher
Shaun Osher

It’s rare to see an unpleasant expression on Shaun Osher’s face. The fair-haired 43-year-old CEO of the brokerage Core has a megawatt smile that is now familiar to HGTV viewers, thanks to the reality show “Selling New York.”

But today, Osher is frowning. Specifically, he’s frowning at a bowl of oranges, poised artfully on the granite kitchen countertop of a $2.9 million apartment.

“I want to change the fruit in the bowls,” he says to Michael Graves, a Core agent who is marketing the Upper West Side condo. “It’s cheesy. Take it out of here.”

To the layperson, it’s hard to tell what’s so offensive about the oranges, but to Osher, “it feels staged,” he explained. “You can’t have a staged apartment that feels staged.”

This is the kind of exchange that the 1.3 million weekly viewers of “Selling New York” have come to relish. But Osher’s laser-like focus on aesthetics is more than mugging for the camera — it’s become his calling card in the industry, and one of the hallmarks of the brand he’s spent the last five years building.

In 2008, when Lehman Brothers collapsed, it dragged a number of brokerages down with it. JC DeNiro, Coldwell Banker Hunt Kennedy and Homestead New York closed, while Shvo has largely disappeared as a firm.

Core, by contrast, survived the downturn and is now expanding. Founded in 2005, the firm today has 45 agents and 14 additional employees. The company says it has done over $2 billion in sales since its founding, and also opened a high-profile new office in Chelsea last year — at the height of the downturn — and is close to inking a deal on a new headquarters, according to Osher’s business partner, Jack Cayre.

Core’s growth, observers say, is due partly to the firm’s deep-pocketed backers, the Cayre family, and to Osher’s vision for the company. Once a top-producing agent at Elliman, Osher left his lucrative niche behind and set about building a firm he hoped would be unique.

“This was a decision I made, to leave where I was to create a different kind of company,” he told The Real Deal. “I don’t think there’s been a lot of innovation in real estate. Our industry was lagging behind the rest of the nation, and that upset me.”

The business model was simple: Core would invest in top-notch resources for its agents, from professional photographers to iPads. In return, those agents would be expected to perform at an exceptionally high level.

“The focus and the goal have always been keeping the quality better than anything else that’s out there,” said Jack Cayre, the 37-year-old scion of the Cayre family, who works closely with Osher.

In working to make these goals a reality, Core has faced challenges. During the downturn, it lost a number of new condo projects and scrambled to recast its image as a full-service brokerage, rather than a new development marketing firm. It has grappled with lawsuits and commission disputes, and there have been a few misfires, such as the founding — and rapid dissolution — of a rental department.

Now five years old, Core is at a crucial juncture.

“We’re at the tipping point where we’re no longer a start-up, but we’re not an established brand yet,” Osher said.

To move to the next level, the firm is making some big changes. For starters, it began appearing in “Selling New York,” which debuted in March and is bringing the firm more visibility than ever before. (Tellingly, two of the other firms originally slated to appear on the show, JC DeNiro and CBHK, shuttered during the recession.) In August, Osher hired Brittley Jarrell, a former Capitol Hill staffer, to help prepare the company for expansion. Jarrell has since doubled the size of the management team in preparation for an aggressive recruiting effort, which they say will focus on hiring some of the city’s top agents.

In the next few months, the firm will also be unveiling a number of new technological initiatives, and announcing a number of new development projects.

“We have the team in place, so we’re ready for lift-off,” said Jarrell.

An espresso tornado

On a recent Monday, Osher is clad in an impeccable gray suit with lavender pinstripes. He has the lithe build and relaxed manner of a cyclist — he bikes around 120 miles a week on Long Island, where he lives with his two daughters and wife, Lauren DeFranco, a TV reporter for WABC. (Osher also rides his Vespa to the train station every morning.)

Over lunch at Chelsea’s Da Umberto, where Osher is a regular, he describes a childhood in Johannesburg, South Africa, in a “less-than-privileged” single-parent household. His father was out of the picture by the time Osher was 10; his mother was a television producer who did her best to support Osher and his two sisters.

Osher displayed a certain star quality from an early age, appearing in his first South African TV commercial — an ad for Melrose Cheese — at six. It was followed by ads for the soft drink Fanta and Colgate toothpaste, a slot in a TV drama series, and stage performances in “Oliver,” “Gypsy” and “The Sound of Music.”

Acting earned him spending money, but music was his primary interest. He started out playing the guitar, but soon switched to the saxophone. As he grew older, he got into jazz and started getting gigs and recording, eventually saving enough money to buy a plane ticket to the United States.

Landing in New York in 1998 with “$300, maybe” to his name, Osher enrolled at the New School for Jazz and Contemporary Music. He put himself through school working six nights a week as a waiter and bartender at La Margarita, a Mexican restaurant on Bleecker Street, where he met DeFranco.

After graduation, Osher needed a job that would pay the rent and allow him to attend evening gigs, so he answered an ad in the Village Voice for the small Soho rental agency Elias/Burnstein.

Osher — whom Jarrell calls “a tornado on espresso” — started pounding the pavement immediately. He did his first deal, he recalled, after spotting a moving truck outside an Irving Place co-op, and convincing the doorman to give him the name and number of the owner of the soon-to-be-vacant apartment.

Despite his outsize ambition and drive, Osher displayed a low-key demeanor that clients liked.

“He has a very soft sell, which I prefer over the ‘closer’ [type],” said Greg Manocherian, a developer who hired Osher to market his high-end condo conversion 420 West Broadway. “He makes his presentation, but doesn’t push and push, which can scare people away.”

After two years at Elias/Burnstein, Osher jumped to Douglas Elliman, where he became one of the firm’s top-producing brokers. At the time, the new development market had picked up steam, and many top brokers were tempted to go out on their own. Corcoran’s Elan Padeh founded Brooklyn-based the Developers Group in 2003, while top Elliman broker Michael Shvo started his own company in 2004.

“New developments were king,” recalled longtime Elliman broker Lisa Wong, who said she, too, received offers to start her own firm but never wanted to risk leaving a large company.

Brokers who had good relationships with developers, in particular, “felt like, ‘Oh gosh, I don’t need to split this with anybody, let me make my own company,’” she recalled.

Osher said starting his own firm wasn’t about money. He had become increasingly dissatisfied with Elliman since it had been purchased by Prudential, and morphed from a white-shoe firm into a huge corporation. “It didn’t resonate with me anymore as a sales agent, because it became bureaucratic and political, and was run in a very different way,” he said.

He’d already started thinking about opening his own brokerage when he met Jack Cayre, who with his father, Joseph, is a principal of Midtown Equities, a real estate investment firm that owns some 100 properties.

The Cayres had taken over an Upper East Side residential project that Osher was marketing. They planned to clean house by firing everyone associated with it, Cayre recalled. But when he picked up the phone to fire Osher, the broker responded, “‘You can’t fire me, you’ve never met me,’” Osher recalled.

Osher wrangled an in-person meeting with Cayre and managed to avoid getting fired. “My gut feeling was, ‘This is a guy who is as straight as they come,’” Cayre said, adding that Osher is “genuine, sincere and brutally honest, to a fault.”

The Cayres, who tended to shy away from large brokerages at their developments, liked the idea of starting their own firm, but hadn’t found the right partner. As they continued working with Osher, they grew more impressed. “We said, ‘We need to align ourselves with someone like this,’” Cayre said. “This is a very unique find in the sea of brokers who are out there.”

It took them only a few weeks to form Core — which stands for Cayre Osher Real Estate.

A leg up

Osher is nothing if not zealous about his vision for Core.

“The business of selling real state really hasn’t evolved much since Barbara Corcoran opened her firm 30 years ago,” Osher said. “She was innovative, she was pioneering. But that was 1980. This is 2010.”

In forming Core, “we didn’t really follow a format of how things have been done before,” Osher said. Core is one of the only ones in the city where agents don’t pay the company fees, and it has invested heavily in technology and support services — spending more per agent than any other company, Osher said. (For example, Core is in the process of purchasing iPads for all its agents.) In turn, the agents are held to higher standards. For example, they have access to directories of names and addresses of city residents. But when they do mailings, they’re strongly encouraged to send handwritten notes to at least 10 percent of the recipients, Jarrell explained.

Unlike another new brokerage, Charles Rutenberg Realty, Osher said he doesn’t want Core to have the goal of being the biggest firm in the city. “We won’t just hire anyone,” he said, noting that the company also does not have a training program for newbie agents. “I’d rather have an office half-empty than have agents who are not experts in what they’re doing.”

What he does want is to be city’s the most successful firm, and to become a dominant force in the industry. “We’re going to be here for the next 100 years,” Osher said.

So far, his attempts to do things differently appear to be paying off.

Osher “is definitely not your typical sales guy,” said Courtney Campbell, the series producer for “Selling New York,” adding that Core was selected for the show in part because of its “cool Downtown vibe.”

“What differentiates Core is their attention to detail,” Campbell said. “There’s this amazing view on how to market a property properly. I think that’s where a lot of people go wrong in this industry — they don’t know who they’re trying to target and how they should be reaching them.”

Core recently took over the marketing of 650 Sixth Avenue, a condo conversion that first came on the market with Shvo in 2007. With sales stalled in the downturn, Corcoran and Elliman both tried their hand at marketing the building. When Core was hired in March, Osher decided to rebrand the building by emphasizing its history. He renamed it the Cammeyer, after A. J. Cammeyer, who operated a shoe store on the spot in the 1890s. The building’s historic columns were painted a darker shade to highlight them, floors were stained a more traditional color, and the bathroom fixtures were altered. When Shvo left the project in 2008, around 35 percent of the building’s 67 apartments were in contract. Now, the project is nearly 60 percent sold.

Core also had some advantages that other start-up brokerages didn’t, thanks to its backers. Cayre wouldn’t say how much he invested in the venture, but said, “it was certainly well-capitalized.”

He added: “There’s really no limit, I think, to the capital that we would put into the right opportunity. That’s been a real asset and something we’ve been fortunate enough to be able to bring to a platform like Core.”

Core’s corporate headquarters are in Midtown Equities’ office at 417 Fifth Avenue, and the brokerage has access to Midtown’s legal and accounting departments. (Jarrell emphasized, however, that Core pays rent to Midtown Equities and has its own director of finance.)

While Cayre leaves the day-to-day operations to Osher, the two speak on the phone “seven or eight times a day,” Cayre said.

Core’s storefront office at 127 Seventh Avenue — with furnishings handpicked by Osher — opened in April 2009 and “is probably one of the most profitable brokerage offices in the country,” Cayre said. He added that his family is extremely pleased with its investment in Core.

“We’re probably most proud of Core out of the many companies my family is involved with,” he said.

Facing challenges

Of course, Core has faced its share of challenges. Formed in the midst of the boom, it was initially known primarily for marketing new developments.

But when Lehman Brothers collapsed, apartment sales — and condo sales in particular — ground to a halt, putting some firms out of business. The Shvo Group largely disappeared from the public eye, and the Developers Group merged with the Manhattan resale and rental company TREGNY.

When the downturn hit, Core — like others brokerages — lost a number of new condo projects as flummoxed developers cast around for solutions.

For example, Core was hired, along with the brokerage Prodigy International, to market two high-profile projects that ran into trouble: William Beaver House in the Financial District and the condo-hotel Trump Soho. Core parted ways with the sponsor at both projects, though Prodigy is still marketing them. Core eventually filed suit at William Beaver, which is now in foreclosure, claiming it was owed more than $220,000 in unpaid commissions.

Core was also terminated in 2008 at a condo planned for 158 Madison Avenue. Construction on the site never began, and Core sued the property owner, an affiliate of Capstone Business Credit, for termination fees, ultimately winning a $113,800 judgment.

Meanwhile, Core had been hired to market a condo conversion known as the Jasper, which is now in foreclosure after scuttling plans to become a hotel.

While all brokerages lost projects during the downturn, Core “lost more than their share because a lot of their developers were small developers who didn’t have the wherewithal to withstand the downturn,” said one industry veteran. “I’m sure they had to dig into the [Cayres'] pocket for a while.”

But Cayre insisted that Core remained profitable throughout the downturn.

In terms of getting fired from new developments, “obviously, there are some people who don’t see eye-to-eye with us,” Cayre said. In particular, he noted that taking on new development projects alongside other firms “just didn’t work.”

“It was very difficult to have two captains of the ship, so I know that’s something we would have to think really hard about before we got involved with it again,” he said.

Osher emphasized that Core has always done resales, but since the downturn hit the firm, it has worked to strengthen its resale activity and retool its image. For example, the company recently hired Ogden Starr, an Elliman veteran who specializes in prewar co-ops.

In the beginning, “we got known as a new development marketing company,” Osher said. “It was a challenge to make people understand that we did resales and sold townhouses.”

Now, however, “people have come around and understand,” he said. It helps that “Selling New York,” now in its second season, frequently showcases Core agents marketing resale exclusives.

Another difficulty, Osher said, is hiring the right people. “Finding the right team has been a constant challenge,” he said.

That isn’t just a platitude. In one unsettling 2008 incident, a former Core agent named Joseph Bongiovanni filed suit against the firm, asking for more than $51 million in commissions he claimed he was owed. Core countersued, claiming that the suit was frivolous and that Bongiovanni defamed the brokerage by making false statements about Osher in letters and in anonymous comments on The Real Deal’s website. Core said Bongiovanni’s suit was dismissed by a judge.

A new chapter
In February, Osher hired Jarrell for some part-time project management work.

Jarrell had started her career on Capitol Hill working for a congressman, and then did crisis PR at Robinson, Lerer & Montgomery before leaving to spend time with her kids. Osher began asking her for advice on business strategy, and quickly discovered that the two clicked.

In August, he brought her on full-time to help whip the company into shape, managing its growing pains and preparing for the next phase.

One of the major challenges, Jarrell said, is figuring out how to grow the company without jeopardizing Osher’s vision. For example, in 2009 Osher decided to start a rental division, hiring Century 21 NY Metro alum Regis Roumila to lead it. But Osher didn’t like the hierarchy that formed between rental and sales agents.

“It was beginning to be a divisive situation,” Jarrell said. So when she came on board, Roumila –now working at Bond New York — was let go and the rental department was eliminated. Core agents still do rentals, but they are no longer a separate division.

Industry sources noted that Core’s emphasis on aesthetics isn’t ideal for rentals.

“They’re very image-conscious,” said one real estate insider. “Every photo is taken by a professional photographer. Their offices are beautiful. In some ways it’s great.” But when it comes to the fast-paced rental market, “you don’t have the time to get a professional photographer to take photos of every rental. By the time you get them taken, the apartments are gone.”

That gets to the heart of the company’s current challenge: Core doesn’t want to water down its brand, even if that means doing fewer rentals.

“There’s a certain level of execution that we expect for all of our properties, and rentals don’t get less attention paid to [them],” Osher said.

Others in the industry noted that Core has a couple of very high-profile agents — including Emily Beare, Kirk Rundhaug, and Fredrik Eklund (whose background as an adult film star has made him a colorful figure in the industry) — who appear to do the vast majority of deals, while less-established agents struggle.

Jarrell said the firm partners new agents with more experienced agents. But, she said, “we don’t have a training program, necessarily, because we’re not planning on being a 3,000-person company.”

However, Core will soon look to hire a number of top brokers, she said. In preparation for that, she’s hired eight new managers since she started, including a director of communications and a head of digital marketing.

The company is somewhat secretive about its specific goals for the next few years. They wouldn’t say exactly how many agents they’re hiring, though Jarrell said the company will never have more than 200. In addition, they say, they’re about to unveil a number of new technological initiatives and announce several new development projects, one of which Osher called “the most exciting project” in the city’s history.

The industry will have to wait and see.

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