Boutique residential brokerage Bond New York is diving into the commercial real estate game and, appropriately, taking on new office space.
The firm is in the process of leasing an additional floor at its Union Square office at 21 West 19th Street to accommodate a new 10-agent commercial sales and leasing division, according to Bruno Ricciotti, a principal at Bond.
The nine-year-old firm plans to lease a third floor of the building, where it already has 3,300 square feet of space on two levels, adding another 2,500 square feet and 67 desks, Ricciotti said.
Since it launched in January, the new division has garnered some $70 million in commercial sales exclusives and has sold two mixed-use buildings, said Frank Gerage, Bond’s new managing director of commercial properties. Bond hired Gerage away from Coldwell Banker Hunt Kennedy, where he was the commercial director, this winter.
The expansion wasn’t the original plan. In the midst of this fall’s economic fallout, Ricciotti said, Bond was considering closing the 19th Street office, which is the oldest and smallest of the company’s five offices.
“We thought, ‘if we’re going to cut any expenses, why not that one?'” he said.
Instead, Gerage approached them about joining the company and almost immediately became “a raging success,” Ricciotti said, by specializing in sales of mixed-use buildings priced between $5 million and $20 million. Gerage brought two agents from Coldwell Banker and hired several more, and the office is now overcrowded, necessitating an expansion of the 53-desk office, Ricciotti said
“We were very excited, and rather than take a step back to cut expenses, we increased revenues instead,” Ricciotti said.
Gerage said he saw a unique business opportunity in launching a commercial division at Bond, which started out primarily as a rental firm, he said.
“Bond is in a unique position to capitalize on the commercial market,” he said. “These landlords have great relationships with the agents because for years they put tenants in their buildings. That’s a huge referral base for commercial.”
Instead, Bond agents generally sent building sales referrals to other firms, like Massey Knakal Realty Services, which specializes in small building sales. Residential firms Mark David Real Estate and Century 21 NY Metro have also recently started doing commercial business.
“[Bond] would get this business and refer it to other companies,” Gerage said. “I said, ‘look, we’re really giving a lot of money away here.'”
Ricciotti said he had considered starting a commercial division, but didn’t think the current downmarket was the time to start a new venture. That is, until Gerage convinced Ricciotti and co-principal Noah Freedman of the idea’s merits.
“We thought, ‘there’s no way this guy’s not going to pull it off,'” Ricciotti said. “He did everything he said he would do.”
Gerage said the key to his success is that Bond allows him a “seller-friendly” flexible listing agreement that has allowed him to scoop up exclusives. Instead of a set 6 percent commission, he said, the commission varies based on the size of the property.
“It’s really given me the opportunity to grow market share in a big way,” he said, adding that Bond also allows him to work on open listings.
The company’s exclusive listings include a five-story, mixed-use walk-up at 33 Canal Street priced at $4.35 million, and 73 Thompson Street, a 22-unit apartment building with a commercial tenant, priced at $8.25 million.
Gerage has two deals in contract, he said: a $5.5 million listing in Hells Kitchen and a $3 million building in Kips Bay.
He said while higher-end building sales are suffering, the market for small mixed-use buildings seems healthy.
“I’d be very happy to develop a niche market in small buildings,” he said.