Mid-sized Manhattan-based brokerage firm MLBKaye International Realty is taking a gamble on new storefront offices in the midst of a downturn.
The family-owned company, which is looking to double in size, has opened a new office at 38 West 8th Street between Fifth and Sixth avenues, according to Marilyn Harra Kaye, the firm’s president. The new office is approximately 500 square feet and boasts double windows overlooking 8th Street, which are perfect for posting real estate listings, she said.
The new location brings the firm’s total number of offices to three. Other branches include executive offices at 641 Lexington Avenue at 55th Street and a storefront location at 1067 Park Avenue between 88th and 87th streets.
And MLBKaye, which handles residential and commercial real estate, also plans to open two more small storefront spaces — one on the Upper West Side and one in Washington Heights — in the next six to eight months, Kaye said.
The expansion comes at a time when sales have fallen off steeply in Manhattan, causing some brokerages to close their doors. Others are rapidly closing offices in the city and surrounding areas.
But Kaye said the expansion represents an attempt to meet the recession head on by expanding the company’s reach into new neighborhoods.
The 48-year-old company, which spent seven years as part of the Prudential Real Estate Affiliates network before leaving in 2001, now has only about 100 agents, but in previous eras had many more, she said. Kaye, who recently returned to work after taking some time off, said the firm is actively hiring agents and would like to see her staff grow to around 200 agents.
This time, however, the firm will set up small offices as it grows.
“We used to have offices with 150 people,” she said. “The new thing is small but everywhere rather than big in one or two places.”
She said the company plans to keep overhead low by having some brokers work from home. For example, the new West Village office will have 25 agents assigned to it — 15 in the office and 10 based at home.
“Buyers like you in their neighborhood,” she said. “But you don’t need the biggest office in the world as long as there’s a place where they can contact you, where they can walk in and see a body.”
She added that having locations in the neighborhoods will help keep brokers in the loop. “When you’re in the neighborhood, you know more about what’s happening,” she said. “You become more knowledgeable.”
Crucial to that strategy is picking offices in high-traffic areas, like the new Eighth Avenue office, she said. “Traffic is important now because everyone is striving to get that one person who really has to move,” she said. “You can make more money with 100 brokers in a high-traffic area than 1,000 brokers in a non-traffic area.”
That may be true, but experts have said that high-fixed costs, such as opening too many offices, may have contributed to the downturn of brokerages that have closed recently, including JC DeNiro & Associates, which was evicted from at least one of its offices before it ceased operations, and Homestead New York.
In hopes of avoiding a similar fate, many brokerages have preemptively closed offices. For example, the Corcoran Group and Warburg Realty have shuttered their Harlem locations, Bellmarc Realty closed its corporate headquarters, while Citi Habitats closed locations in Midtown and the Financial District.
“I like the idea of having offices in neighborhoods, but it’s a very expensive way to do business,” said Barbara Fox, president of Fox Residential Group, which has only one office, in the May issue of The Real Deal. “A lot of these offices aren’t as productive as they need to be, and we’re in an environment where we have to be very smart and we can’t waste money.”
But Kaye said her company has been through recessions before, and she relishes the challenge of growth.
“It’s just our way of building in a recession environment, when there’s opportunity,” she said. “We’re entrepreneurs.”