Brokerage commission models have been making it into headlines and conversations a lot lately, and last night was no exception.
At a real estate summit hosted by the Young Jewish Professionals at The Mcgraw Hill Building On West 42nd Street, Bruce Mosler, chairman of Cushman & Wakefield, waxed lyrical on the downsides of lowering commissions to attract clients, saying it turned reputable firms into “discount brokerages.”
The event, which attracted droves of eager young professionals ready to network and a bevy of New York’s top property dogs, featured panelists Mosler; Jason Muss, principal of Muss Development; Eric Hadar, chairman of Allied Partners and Charles Cohen of Cohen Brothers Realty. Industry hotshots in attendance included Maurice Mann of Mann Realty, Bill Brodsky of Tribeca Associates and Mitchell Steir of Studley, all of whom were also honored at the red-carpet event and addressed the crowd of 350 attendees.
The Real Deal caught up with Cohen and Mann outside the conference space pre- and post-panel, when drinks were served up alongside food, such as tropical fruits, sushi and sweet trifles. Cohen, who was hobnobbing with Mosler (his broker for projects at 135 East 57th Street and 622 Third Avenue), kept characteristically mum, saying he had nothing to say given that was “already been in The Real Deal last week,” referring to a January feature in The Real Deal.
Meanwhile, Mann showed off the ornamented shofar he’d been awarded by YJP for his contributions to the real estate community, a ram horn used in Jewish religious culture, and said he was gearing up to market two pre-war building on Central Park West. He declined to provide The Real Deal with further details, saying he would have more to report within a few months.
During the panel, which was moderated by David Bolen of the law firm Greenberg Taurig, the night’s speakers fielded questions about 2011’s biggest failures and plans for 2012.
Cohen, who limited his responses to little over a sentence apiece, said he will be reinvesting his currently portfolio in 2012, as opposed to new acquisitions, adding that “property values are way above what you can get in rent.” Some of Cohen’s other properties include office towers at 750 Lexington Avenue and 805 Third Avenue.
Mosler prioritized the leasing of Cohen’s towers when citing his plans for 2012, (perhaps because Cohen was sitting next to him on stage) but also mentioned the leasing of Brookfield’s Manhattan West, a sprawling 5.4 million-square-foot development at Ninth Avenue and 31st Street that Cushman took on towards the end of last year. Mosler was previously quoted as saying he hopes to land the first anchor tenant for the complex by the end of 2012; the project is slated for completion in 2015 if a tenant is secured.
Mosler also asserted that traditional brokerage commission models may have lost their way in recent years. His statements were applauded by Steir, who declared “hear, hear” from his spot in the audience.
Discounting brokerage fees to further a long-term relationship with a client is acceptable, Mosler said, but “if you’re not doing it as a one-off, I don’t get it. It degrades the brand.”
Earlier in the evening, while accepting his award, Steir advised the brokers in the room to take charge of their own careers. He said when he first arrived at Studley in 1988, the company was like “pre-48 Israel” with no organization and no listing system. He said Julien Studley was “not a spender.” By 2002, Steir and a group of partners bought the company from Studley.
Allied’s Hader was responsible for the most sobering moment of the night, admitting that his biggest failure was a battle with drugs.
“It’s a sensitive topic for me,” he said, referencing his well-publicized addiction to painkillers and cocaine following brain surgery to remove a tumor a few years back. He was thankful, he said, that the industry was not as judgmental as he had feared, and had allowed him to pick things back up.
He also weighed in on the market from the prospective of a lender, saying that the landscape had changed in New York in the last few years. Before the recession, he said, he would regularly invest in buildings with a view that, if they failed, he could eventually take control. That’s no longer the case.
“The courts have really started protecting property owners,” he said, “and made it difficult to foreclose and take title of a property. It’s also not economic; trying to litigate anything today [is impossible.] The costs are so out of whack.”
When The Real Deal finally made its way out of the building, young professionals were still eagerly mingling. One attendee was overheard saying he saw the event as not just a networking opportunity, but also a way to meet “nice, single” Jewish women.
With additional reporting provided by Jill Noonan.