The Real Deal New York

From left: 444 Madison Avenue, 666 Fifth Avenue, and 1301 Sixth Avenue

New York City’s top commercial brokerages have jockeyed for market share over the past few years, but in a surprise upset, Eastdil Secured has emerged on top.

According to an analysis by The Real Deal — which was based on data provided by Real Capital Analytics for Manhattan commercial transactions of $5 million and above — the firm had more than $15 billion in sales from the first quarter of 2007 through the third quarter of 2009.

CB Richard Ellis ranked second with more than $12 billion in building sales, while Cushman & Wakefield ranked third with more than $10 billion, according to the RCA data.

But Eastdil’s ranking is largely due to a unique set of circumstances: The firm handled the $7 billion sale of Equity Office Properties’ Midtown portfolio to Macklowe Properties in 2007. Without that deal, Eastdil would have slid to third place.

The brokerage declined to comment on the rankings. “We are not in a position to discuss these transactions at the moment,” said Martha Wallau, a senior managing director with Eastdil. “In general, we don’t comment on the deals that we do.”

Like all brokerages, most of Eastdil’s other deals were also in 2007 and 2008, before the bottom fell out of the building sales market in Manhattan (sales have dropped a stunning 92 percent from $40 billion in the first three quarters of 2007, to about $3 billion for the same period last year, according to Massey Knakal data).

However, Eastdil was able to pull together some of the biggest trades of 2009. It handled the $600 million sale of Worldwide Plaza at 825 Eighth Avenue, the biggest deal of last year, along with the sale of 1540 Broadway at $355 million, the third-biggest deal.

The Real Deal‘s review looked at the top 10 firms both by dollar sales volume and by the number of properties sold during the specified period (see accompanying charts below). It also detailed the top three deals at each firm during the timeline. Incidentally, only one of the deals that made it onto that list took place during last year’s nearly paralyzed market — a year when brokers who in the past went after deals for hundreds of millions of dollars started going after smaller, eight-figure transactions.

The data also didn’t consider other commission-producing activities such as office leasing, which might have been keeping some firms afloat in a year in which sales transactions were practically nil.

In terms of the number of properties sold, Massey Knakal dominated the field, ranking first with more than 100 transactions. That put the firm — which has made smaller sales under $50 million its bread and butter — in a tie for fifth place with Jones Lang LaSalle in the dollar volume rankings, with more than $1 billion in total sales.

Meanwhile, Eastern Consolidated, which also focuses on doing a high volume of smaller deals, ranked second in number of property sales (it had more than 75) and came in fourth by dollar amount (it racked up more than $2 billion in deals).

Dan Fasulo, managing director of research for Real Capital Analytics, called 2009 a “bloodbath for everyone,” but said diversified commercial firms were better positioned for the recession than those that rely mainly on business from building sales.

“Holding up better are the [brokerages] that have revenue sources from other areas in the real estate services world that haven’t seen the same type of drop-off of revenue [as building sales]; groups that have strong property management arms, asset management arms, and even leasing to an extent,” he said.

Fasulo pointed out, however, that most of the top brokerages have done a good job in the last decade of diversifying away from being dependent solely on transaction-based income.

(Click chart above to view larger PDF)

“All of the majors have kind of added platforms to diversify their income,” he said. “Like Cushman & Wakefield purchased [the investment banking firm] Sonnenblick Goldman. CB Richard Ellis bought Trammell Crow, which bolstered its property management and asset management side of the business.

“Jones Lang LaSalle has always been strong in the property and asset management side, as well as just pure corporate representation,” he continued. “And some of those players a bit further down in the rankings, like a Newmark Knight Frank or a First Service Williams, have good income streams from the property management side or the owner representation side.”

Darcy Stacom, a vice chairman at CBRE, noted that the firm did 10 sales that closed last year (see related story on CBRE on page 58).

“That’s a large portion of the volume of the entire New York market in terms of number of deals of any size,” she said.

Stacom pointed out that most of CBRE’s 10 sales that closed in 2009 were also negotiated in 2009 — not during the previous boom years.

“For the other major firms, a lot of the sales that occurred this year are actually closings of deals that started in ’07 or ’08,” she said. She included the $370 million sale of 1334 York Avenue handled by Jones Lang LaSalle, the only 2009 transaction to make it into any major brokerage’s top three deals.

Meanwhile, although Real Capital Analytics clocked CBRE at $12 billion, the company asserts that it did $13 billion worth of deals (which wouldn’t change its standing in the rankings).

In addition, the firm, which according to Real Capital had more than 40 property sales, putting it in a tie for fifth place in terms of number of transactions, also contends that it completed 58 deals, which would bump it up in the rankings into a tie for third place with Cushman & Wakefield and GFI Realty Services.

Paul Massey, the CEO and founding partner of Massey Knakal, noted that The Real Deal‘s data didn’t include sales under $5 million. Had those been included, he said, Massey Knakal would have had about $3 billion in sales in Manhattan. He also noted that the data didn’t include sales outside Manhattan — which might favor certain brokerages.

“If you injected our entire metro area sales in this we’d be way ahead of the pack, both in terms of dollars and deals.”

Massey said he believes last year was hardest on brokerages that do larger transactions, leaving Massey Knakal well-positioned. Even so, the firm had two new initiatives to help it cope with a sluggish 2009 — launching quarterly reports with market data, which are being purchased by finance firms, and establishing a “special asset group” to help coordinate its agents as they interact with new customers, who are going to be mostly financial institutions.

Several brokerages, such as Eastern Consolidated, have done the same thing.

“I think everyone is developing an advisory business, going after the banks,” said Brian Ezratty, a vice chairman with Eastern Consolidated.

“It’s basically the same business we’ve been doing, just calling it a different name,” he added. “If the bank is a seller, we’re going to all be dealing with the bank as a seller, but now we’re also an advisory division and a workout division.”

Stacom said CBRE is not doing that, but is focusing on building sales.

She said in this sluggish sales market, CBRE is directing much of its energy toward off-market deals.

Data compiled by Margaret Daisley

(Click chart below to view larger PDF)