When Elizabeth “Libba” Stribling launched her eponymous brokerage in 1980, listings were still captured on index cards. The concept of co-brokerage barely existed, and small mom-and-pop firms dotted the city.
But a wave of brokerage consolidation — fueled by a shift in power to national listing aggregators and tech-focused firms — caught up this week with the Manhattan brokerage, which announced a deal to be acquired by Compass. Over the next few weeks, the SoftBank-backed firm will absorb Stribling’s agents and managers, who represent an increasingly dying breed of independent brokers.
“I’m the last man standing,” said Frederick Peters, CEO of Warburg Realty, who said in the current environment, boutique firms don’t have to look hard for potential suitors. “We’re all receiving calls, so then it just becomes about how compelling it is.”
Over the past decade, smaller firms like Mercedes/Berk, Edward Lee Cave, Key-Ventures and others have been absorbed by larger counterparts — names like Engels & Volkers, Brown Harris Stevens and Berkshire Hathaway HomeServices (which some have said looked at Stribling, too). Last year, citing the financial burden of competing in high-split environment, Town Residential abruptly shuttered its doors. With Compass’ acquisition of Stribling — its first on its home turf of New York City — the $4.4 billion company is closing in on the two dominant players here, Douglas Elliman and the Corcoran Group, which are in the midst of their own national expansions.
“This highlights the difficulties of mid-sized firms competing in today’s ever-changing real estate market,” said Corcoran CEO Pam Liebman. “With all the competition from within the industry and from without, you need deep pockets and short- and long-term strategic thinking to stay ahead.”
Both on the national level and locally, there are seismic shifts taking place in the brokerage industry. In a brief phone interview, Elizabeth Ann Stribling-Kivlan acknowledged the pressures facing all residential brokerage firms, big and small.
“What’s most important is the future of the industry, and the agent and standing up to the numerous forces that are hitting us,” said Stribling-Kivlan, who became president in 2013 and pushed the firm to change its stuffy image and embrace social media and technology. “We felt it was important that we be able to scale up and work with a company that was doing it at a national level.”
She called out listing portals as one of the biggest threats and drivers of the deal with Compass.
“Aggregators are not agent first,” she said. “To work with a company focused on making the agent as relevant as possible and ensuring their livelihood is paramount to this. It’s not just about today but about where are we in five years, in 10 years.”
Traditional firms are going head-to-head with listing portals, iBuying platforms, virtual brokerages and technology that looks to circumvent the real estate agent. Meanwhile, brokerage consolidation has left a shrinking slice of market share for smaller firms, who’ve been most vulnerable in a fast-changing, competitive market.
“Stribling’s a fabulous firm; but it’s a boutique firm,” said Diane Ramirez, chairman and CEO of Halstead, which, like BHS, is owned by Terra Holdings. “We’re in a very competitive marketplace and you look around and this may have been a very good alternative for them.”
For Compass, the acquisition has plenty of upside. With 270 agents in Manhattan, Stribling closed $1.62 billion in sell-side deals last year in the borough, according to The Real Deal’s annual ranking of top residential firms. It had mastered the art of co-op brokerage by specializing in providing white-glove service to well-heeled clients. Given its size, it also had a robust new development marketing division — where Compass has struggled to gain traction.
Assuming they don’t walk, Stribling’s star new development agents include Alexa Lambert (who closed $256.5 million in deals, according to TRD’s 2018 top agent ranking) and Pamela D’Arc (who closed $230.3 million). D’Arc has been heading up sales at World Wide Group and Rose Associate’s 252 East 57th Street, a Billionaire’s Row tower with a sellout of $648 million.
“Everyone is trying to find ways to increase market share; it allows them to increase volume,” said Jacqueline Urgo, president of the Marketing Directors, which does consulting and marketing for new development projects.
“End of an era”
To many observers, Compass and Stribling are strange bedfellows. Compass bills itself as an innovative tech firm upending the status quo, while Stribling portrays a genteel image with a stable of loyal agents who’ve been with the firm for decades. It also has a special division for luxury properties above $5 million, Stribling Private Brokerage, headed by Kirk Henckels.
“It’s a lot of old-school agents,” said Bess Freedman, CEO of Brown Harris Stevens. “Elizabeth Ann created a special vibe there, the culture is unique.”
On Wednesday night, Stribling-Kivlan acknowledged the move took some by surprise. “I see the shock in it; it’s shocking to everybody,” she said during a panel discussion hosted by the New York Residential Agent Continuum. Looking at Peters, she said she is “100 percent for” independent firms. “I have more admiration for the independent brokerage today than I ever have; aggregators are looking to put every one of us out of business and that scares the hell out of me.”
Donna Olshan, of Olshan Realty, said it’s never been easy to be an independent firm. “You can’t fault any owner in any business — real estate or otherwise — for taking a check and going,” she said. But, “it’s the end of an era.”
In an email Wednesday night, Henckels said “it’s the end of an era but the wave of the future.” He argued that, “Oddly, the two firms complement each other a lot; a certain style and experience combined with tech. I think it is exciting. And yes, I will stay,” he added.
But for other Stribling agents, the change may be jarring; sources speculated some would walk in the coming weeks and months. In the hours after the deal was disclosed, rival firms began reaching out to Stribling’s top agents.
“It’ll be interesting to see how two very different and diverse cultures can mesh together,” Liebman said. “Stribling has an incredibly talented pool of agents who have a lot of choices to make in the next few days and weeks.”
In an email to Stribling agents, Compass CEO Robert Reffkin highlighted the firms’ shared focus on supporting agents, saying it laid the groundwork to begin merger talks. “Let me say simply that I am in awe of Stribling and the impeccable reputation you have,” he wrote.
In her own note to agents, Stribling-Kivlan shared logistical details: the date and time for several planned info sessions with both company’s leaders; a timeline for when Stribling’s signage and marketing collateral would be rebranded; and “suggested talking points for use with clients.”
For now, she said in the email, Compass plans to retain Stribling’s four offices, located on the Upper East Side, Chelsea, Tribeca and Brooklyn. Stribling’s leadership team and managers will also remain intact, the email also said. “In the short-term, nothing will change,” wrote Stribling-Kivlan, whose new title is not known. (Neither she nor her mother is going anywhere, she said Wednesday.)
“Everyone is committed to making this transition as seamless as possible,” she said, “and we recognize that leadership is critical to that process.”