After 34 years of private ownership, Manhattan residential brokerage the Bellmarc Group this summer announced that it would become a franchise of the massive Coldwell Banker. While the brand has locations across the U.S. and in 51 countries, Manhattan had been without a Coldwell Banker franchise since 2009, when Coldwell Banker Hunt Kennedy shuttered in the midst of the real estate downturn.
Now Bellmarc is betting on Coldwell Banker’s broad reach to help it shed its mid-market identity and grab more of the lucrative high-end Manhattan market from formidable competitors like the Corcoran Group, Douglas Elliman and Brown Harris Stevens. To make that happen, it’s banking on Coldwell Banker’s international network to lure high-end clients searching for Manhattan homes.
Bellmarc co-founder Neil Binder said his goal is to “make the very best company that exists in New York and to do it as quickly as we can.”
To that end, newly rebranded Coldwell Banker the Bellmarc Group is already aggressively expanding. After acquiring the rental firm AC Lawrence, the company now has some 650 agents and new offices in Midtown and Morningside Heights. The firm is also looking to acquire other Manhattan brokerages, and will soon launch a Coldwell Banker Previews luxury division.
But some industry insiders are skeptical of Bellmarc’s ambitious plans. As the closure of CBHK illustrated, national brands have historically met with mixed results in Manhattan. That’s something Eric Barron knows well; he’s the CEO of Keller Williams NYC, a national franchise which also recently launched in Manhattan. But while Keller Williams has a unique profit-sharing business model that sets it apart from other brokerages, Barron said Bellmarc may struggle to compete.
“Coldwell Banker is a great brand; a great company,” he said. “I just think that it is going to be near impossible for a franchise to bring a traditional business model — which I feel is already broken to begin with — and then expect to compete with people who already have a head start.”
Other industry insiders say anything short of a radical reimagining of the brand won’t be enough for Bellmarc, which they say has been in a rut for several years.
“Bellmarc and Coldwell Banker … really have to do something different,” said Paul Purcell, the co-founder of Rutenberg Realty and former president of Douglas Elliman. “The same Bellmarc with a Coldwell Banker attached to it will not change their business.”
Bellmarc has weathered many ups and downs since its founding in 1979.
Binder, the Queens-born son of a dentist, started the brokerage with a partner, Marc Broxmeyer. At the time, Binder was an accountant for a group of real estate syndicators in Manhattan, while Broxmeyer had worked at his family’s property management firm, which oversaw some 2,000 apartment buildings before getting put out of business in the 1970s recession. After the company went under, Broxmeyer finished up college and then went into business with Binder.
The pair initially wanted to invest in bricks-and-mortar real estate, so they teamed up to buy an apartment building in Bell Harbor, Queens (which later inspired Bellmarc’s name). Because the economy in 1979 was so bad, though, Broxmeyer came up with the idea of starting a brokerage — out of “desperation and fear” that they would fail in real estate investment, Binder said. The brokerage would offer training programs to make the firm stand out from others — a unique idea at the time, he noted. The two opened a tiny office in Manhattan at 80 East 11th Street.
“We both saw the other as having a good foundation for the real estate business,” Binder said. “We acquired our first building together, but the timing was not [right]. Everything was very much against New York City. As an act of desperation, we went into brokerage.”
That act of desperation ended up becoming the business model that stuck. By the early 1990s, Bellmarc had some 500 agents and 12 offices in Manhattan, Brooklyn and Queens. Bellmarc’s holdings at the time also included a company called Studio Specialists, which focused on selling studios and other small apartments. Along the way, Binder wrote several books about real estate. His newest one, “The Ultimate Guide to Buying and Selling Co-ops and Condos in New York City,” will be released this month.
Bellmarc focused on residential sales, and from the beginning steered more toward middle-market rather than luxury properties, Binder said. That focus continues to this day: In March, The Real Deal’s ranking of Manhattan’s biggest residential brokerages showed that Bellmarc had a median listing price of $474,000. By contrast, Elliman had an average listing price of $1.1 million and Corcoran was at $1.3 million. (Bellmarc does have some high-end listings: For example, Bellmarc agents Alan Nickman and Stephen O’Neal are listing a three-bedroom co-op at 221 West 82nd Street for $2.38 million and a seven-bedroom home at 5000 Goodridge Avenue in Riverdale for $2.9 million, while broker Liz Apgar is marketing a unit at 165 East 72nd Street for just under $3 million.)
When another recession came along in the 1990s, Binder and Broxmeyer tweaked their business model once again, closing six offices and consolidated the company while returning to their original idea of investing in properties. They began buying residential buildings around the city.
“We were afraid that if we had all our eggs in brokerage, we would be at risk,” Binder explained. “So we decided to bring in our operation, and focus on buying real estate and maintaining what we had.”
That kept the company afloat until 2008’s financial crisis, when yet another recession hit the city. In early 2009, Bellmarc closed its corporate headquarters at 352 Park Avenue South to save overhead costs, leaving the firm with five offices and fewer than 300 agents.
During the late-2000s recession, “we got creamed, just like everybody else,” Binder said. “Things became much more daunting, and we had to weather the storm.”
This time, though, Binder didn’t have a business partner to help navigate the difficult times: At around the same time, Broxmeyer retired due to illness.
“I was very lonely,” Binder said. “I didn’t have my business brother. We were in the middle of the recession, and there were all kinds of things going on that were challenging to every real estate firm, and I was … very unhappy.”
Binder started looking into options for another partner, either by acquiring a rental firm or by having Broxmeyer sell his stake to a larger company. At one point, Connecticut-based William Raveis Real Estate was in talks to buy Broxmeyer’s stake in Bellmarc Realty, but the deal collapsed in 2011. Raveis did not respond to requests for comment, and Binder declined to comment specifically on why the Raveis deal fizzled, other than to say he initially went about searching for a partner the wrong way.
Also in 2011, Binder put his townhouse at 250 East 68th Street on the market for $9.5 million, selling it a year later for $6.5 million.
Eventually, though, Binder found the new business partner he was looking for. In November, Bellmarc acquired the six-year-old rental firm AC Lawrence, which has also focused on lower- and mid-priced apartments. The firm, which had just under 100 agents, was led by Citi Habitats alums Anthony DeGrotta and Larry Friedman.
At that point, Binder said, he was also in talks with Coldwell Banker, which he noted had been looking for “some kind of relationship” with him for over 20 years. Until recently, however, he said, the arrangement “never felt like it was right.”
Once the acquisition of AC Lawrence was sealed, though, the stars seemed to align.
After CBHK collapsed in 2009, Coldwell Banker took a step back from actively pursuing partnerships in the New York market, Budge Huskey, the president and CEO of Coldwell Banker told TRD. The firm began thinking about reentering the Manhattan market just over a year ago. Meanwhile, Bellmarc’s acquisition of AC Lawrence made Coldwell Banker even more interested in a franchise opportunity, Binder said, because “it broadened my position in the market.”
Elayne Reimer, a former CBHK broker who is now at Halstead Property, said that’s consistent with Coldwell Banker’s pattern of taking on “viable companies that obviously need some extra backing.”
“Hopefully, [Coldwell Banker Bellmarc] will make it,” she added.
In June, Bellmarc outlined its two-pronged strategy for doing just that. The new firm, Coldwell Banker the Bellmarc Group, is comprised of a sales division, Coldwell Banker Bellmarc, and a rental division, Coldwell Banker AC Lawrence. Coldwell Banker Previews, the brand’s luxury real estate arm, will soon launch as the third division.
DeGrotta is president of Coldwell Banker AC Lawrence, Friedman is president of Coldwell Banker Bellmarc and Binder is president of Coldwell Banker the Bellmarc Group. The three still own the company, but pay a franchise fee to Coldwell Banker.
They’ve since set about opening new offices, in addition to the company’s seven existing locations. A new Coldwell Banker AC Lawrence office, with room for up to 100 agents, opened last month at 155 East 56th Street in Midtown East. There’s also an office in the works at 2679 Broadway in Morningside Heights. The firm is in the process of gut-renovating the space, which will hold about 75 agents from both Bellmarc and AC Lawrence.
Binder declined to say specifically how many new agents he plans to hire, but did say the company now has around 650 agents, up from 511 in March, when TRD did its ranking of Manhattan’s biggest residential brokerages.
Binder’s even talking about acquiring more brokerages in Manhattan, but remained mum on the details.
“There are a number of firms that have been in active negotiations with us, and we hope to complete these negotiations at the earliest possible time,” Binder said.
Hostile to outsiders
But Coldwell Banker Bellmarc faces formidable obstacles.
The Manhattan real estate market has traditionally not taken well to outside brands, noted Rutenberg’s Purcell.
The New York market “marches to its own drum,” he said, in part because of several unusual features: unlike most other areas of the country, Manhattan doesn’t have a comprehensive Multiple Listings Service. And the majority of the homes here are co-ops, which can reject buyers without giving a reason.
On top of those nuances, New Yorkers take a certain pride in shunning chains like Olive Garden and Red Lobster, leaving them to the tourists, Purcell said. Manhattan “doesn’t care about national stores and chains and franchises,” he said.
That’s proved true for real estate brands as well.
Coldwell Banker Hunt Kennedy — which was founded in 1988 but became a Coldwell Banker franchise in 1996 — shuttered with millions of dollars in debt, sending its 214 agents to other firms across the city. And it wasn’t the only New York franchise to dissolve during the recession. Century 21 New York Metro closed in November 2010, only four years after it was founded.
CBHK founders David Michonski and JoAnne Kennedy were both unavailable to comment on the reasons their firm went under. In a 2009 interview with TRD shortly before the firm closed its doors, Kennedy said that many New Yorkers “associate the Coldwell Banker logo with the suburbs.”
But Huskey, as well as various sources, said CBHK expanded too fast on the eve of the recession. Acquiring Charles H. Greenthal and several other companies, CBHK grew from 25 agents in 1996 to 250 in five offices less than a decade later.
“It has been principally a story of over-committing, overexpansion and overreach when you’re in a market that’s beginning to decline when going into the recession,” Huskey said.
Despite that cautionary tale, Bellmarc and AC Lawrence principals haven’t given up on big brands. In fact, when Century 21 New York Metro dissolved, AC Lawrence hired many of its agents, and took over the firm’s old office space at 228 East 45th Street.
Binder attributed CBHK’s failure to management and the recession rather than the brand name.
“It was not that the Coldwell Banker name was a problem or that it didn’t serve them well,” Binder said. “It’s that … their timing was bad.”
Coldwell Banker’s name and national presence will set Bellmarc apart from other firms in the city, the owners said.
“When you pitch an exclusive right now, one of the first things a seller wants to know is, ‘How are you going to expose my property?’ ” Bellmarc’s Friedman said. “We have such an enormous network, and affiliates in all these different countries, and one of most trafficked websites in the country.”
Binder is betting that the name will help him break into the higher-end Manhattan market. In particular, he hopes the new Coldwell Banker Previews division will give Bellmarc more international exposure, since Previews has its own website, where buyers can search for luxury properties worldwide. Binder said he also plans to open a number of new offices specifically targeted at the high-end consumer, although he didn’t say specifically when that would occur.
“Putting together a relationship with the rest of the Previews community is powerful,” Binder said. “It is something only people of a certain caliber will be a part of.”
Already, Binder said the company has been getting referrals from franchises in Asia and Europe, so many that he’s already set up a referral department, though he wasn’t planning to do that until later on. Binder installed Darla Delayne, formerly a sales manager at Bellmarc’s office at 16 East 12th Street, as director of referrals and relocation.
Ann Guttman, who was a managing director and top agent at CBHK, agreed that Coldwell Banker’s national networking events can indeed result in lucrative referrals, as long as agents take advantage of them. “You really need to work” the system, said Guttman, who is now at Keller Williams NYC.
Purcell said it’s possible that this incarnation of Coldwell Banker will be the one that sticks.
“It remains to be seen how [Bellmarc] plays this out,” he said, “how they use the Coldwell Banker name, and does that name mean something to us in our marketplace.”
Room to grow?
Other real estate insiders were more skeptical, saying that Bellmarc has never really competed with the top firms in the city, despite its size. At the time of TRD’s 2013 brokerage ranking, Bellmarc had only 115 exclusive sales listings, down 23 percent from the previous year, despite the fact that it doubled its agent count during that time, thanks to the merger with AC Lawrence.
Binder acknowledged that Bellmarc hasn’t grown much in some areas since the 1990s, when it began to focus on acquiring investment properties in addition to brokerage. In recent years, Broxmeyer’s absence and the recession have compounded the situation.
“We pretty much were staying at a standard level of performance,” Binder said.
And he realizes that the Coldwell Banker name is a “tool, not a cure-all.”
Still, firm executives told TRD that they’ve already seen an increase in agents showing interest in the firm because of the Coldwell Banker brand. They said they are currently in negotiations with a number of well-known brokers to join the Previews division, though they declined to give specific names.
“The power of a franchise is having a strong brand and strong local operators,” Friedman said. “And if you put those two together, a franchise will be very powerful. If you have one without the other, it’s not going to work.”