High commission costs, competitive recruiting led to Town’s downfall: Heiberger

Brokerage shut down its resales and rental divisions

New York /
Apr.April 21, 2018 08:42 PM

Andrew Heiberger

Town CEO Andrew Heiberger said it was the cost of commissions and competitive recruiting climate that led to the decision to shutter the brokerage’s resales and leasing divisions last week.

“Due to the new realities of the new marketplace, it is simply impossible [to] profit from those lines of business when considering the primary factors of the rapidly increasing agent commissions stemming from fierce competition to attract and retain the best talent; lead generation platforms; and the disruptions on the tenant side of the rental brokerage business,” he wrote in a Linkedin post.

Related: Town shutting down its sales, leasing business: sources

Heiberger said that in its eight years, Town did $13.5 billion in real estate deals and generated more than $360 million in commissions, but in the end it was “not possible to make sustained profits, regardless of the restructured footprint.”

“Understandably, and to say the least, there are a lot of mixed emotions; and please know that there was no other alternative and every single stone was turned over three times before reaching this monumental decision,” he wrote. “It was for the benefit of all whom were employed by or associated with Town.”

Town on Thursday informed employees that it would be closing down its resales and rental arms while keeping its new development division, as The Real Deal first reported.

Related: What’s to come for Town agents’ millions in exclusives?

Competing brokerages are already looking to hire Town brokers, and agents were told they could take their exclusives to new firms if they paid a 25 percent referral fee to Town.

Heiberger hinted there would be more to come for the company.

“There will be another great endeavor to come,” he wrote. “Stay tuned…”


Related Articles

arrow_forward_ios
1384 Meadow Lane
The 10 priciest Hamptons sales this year
The 10 priciest Hamptons sales this year
Airbnb CEO Brian Chesky. (Airbnb, Getty)
Airbnb’s losing spree continues with $1B loss in Q1
Airbnb’s losing spree continues with $1B loss in Q1
Madison Realty principal Josh Zegen, Raphael Toledano with the properties at 325-329 East 12th Street and 223-235 East 5th Street (Madison Realty, Google Maps, Toledano by Michael McWeeney)
Madison Realty Capital closes on Toledano’s bankrupt East Village portfolio
Madison Realty Capital closes on Toledano’s bankrupt East Village portfolio
Manhattan and Brooklyn saw all-time records in lease signings in April (iStock)
April leases soared across city; so did concessions
April leases soared across city; so did concessions
Council member Ben Kallos and Airbnb CEO Brian Chesky (Getty, iStock)
City Council bill would tighten screws on Airbnb
City Council bill would tighten screws on Airbnb
Blackstone CEO Stephen Schwarzman (Getty, iStock)
Blackstone buys San Diego apartment complexes in $1B deal
Blackstone buys San Diego apartment complexes in $1B deal
City Council Majority Leader Laurie Cumbo and 840 Atlantic Avenue (Getty, Google Maps)
Atlantic Avenue project gets haircut — and is rejected anyway
Atlantic Avenue project gets haircut — and is rejected anyway
Opendoor CEO Eric Wu (iStock)
Opendoor revenue bounces back in Q1
Opendoor revenue bounces back in Q1
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...