The world of residential real estate was hit with huge news Monday, with Compass announcing it had reached a deal to acquire Chicago-based @properties, as well as its Christie’s International Real Estate flag.
The deal for the Windy City’s hometown hero made waves particularly among Chicago agents.
Some were upset, others were congratulatory. One Compass broker said he thought the email was spam when he first received it.
@properties broker Jena Radnay, whose work within the North Shore luxury market earned her the No. 7 spot on The Real Deal’s list of Chicago’s top brokers, said she is proud of her company and its co-founders Thad Wong and Mike Golden.
“This is the business. You gotta be versatile and you gotta roll with what the market demands,” Radnay said, adding that Wong and Golden “created an incredible business and a loyal following.”
Wong and Golden co-founded the brokerage firm in 2000 after rising as two of Chicago’s top-selling agents in the ‘90s, according to the company’s website. The founders are expected to get $150 million in cash at the deal’s closing along with 44.1 million shares of Compass stock, according to a filing with the Securities and Exchange Commission. The deal, which is expected to close next year, also includes title and mortgage businesses and a total value of $444 million.
The two co-founders announced their company’s acquisition in a YouTube video viewed by TRD Monday. “Yes, Compass,” Wong confirmed in the video with a smile after Golden broke the news. “We know this is probably surprising.”
The news was a surprise ending to @properties and Compass’ fierce rivalry since the New York-based firm first expanded into Chicago in 2017.
In TRD’s most recent ranking of Chicago brokerages, @properties boasted $7.55 billion in total sales volume across 12,814 deals — accounting for more than a quarter of the total sales volume of the city’s top 20 firms. Compass had narrowed its gap from the previous period but claimed second place again with almost $5.6 billion across 8,617 deals.
“I literally can’t believe it because let’s remember that Compass and @properties hate each other,” said Matt Laricy of The Laricy Team at Americorp Real Estate. He pointed to Compass’ 2017 arrival in Chicago, which prompted @properties to take out “anti-Compass” ads and buy billboards across the city that said things like: “Make sure you’re working with a company that knows the directions of the city.”
Then again, Laricy said he understands the motivation to let bygones be bygones.
“You offer me $150 million, I mean, fuck, I’ll sell out in two seconds as well,” said Laricy, who claimed the top spot on TRD’s ranking of Chicago’s top brokers this past year. “Who blames them? They worked their asses off and built a great company.”
Laricy predicted some brokers will choose to move to different brokerages in the city as a result of the deal, specifically “higher up” @properties brokers he’s spoken with who are upset they weren’t informed of the acquisition ahead of time.
Change, often in the form of acquisitions, is a part of doing business in any industry, Radnay said, so Chicago brokers can “either get on with the show, or be left behind.”
“It’s like the Cubs acquiring the Sox, or the Sox acquiring the Cubs,” Radnay said. “We all love Chicago, don’t we? Doesn’t matter who you’re batting for, it’s just being part of a team. That’s the perspective everyone should have moving forward.”
Wong and Golden will stay on as co-CEOs to run @properties’ day-to-day operations, as the firms will continue to operate as separate companies, according to Compass CFO Kalani Reelitz.
Compass’ top Chicago broker Jeff Lowe compared the plans for the firms continuing independent operations to how Anywhere Real Estate owns and oversees several brokerages such as Sotheby’s International Realty, Coldwell Banker and Century 21, among others, whose agents also compete with each other in local marketplaces.
“It probably would have taken a really long time for Mike Golden and Thad Wong to continue their franchising to create the market share they were hoping for with @properties,” Lowe said. “The future of real estate is going to be fewer large firms because it’s expensive to run real estate companies.”
He added that Compass’ efforts with title and mortgage services in the Chicago area hadn’t appeared to catch fire, so @properties’ ties to those businesses will be a welcome addition.
Radnay predicted a strengthening of new competitors in Chicago.
“With change will come another competitor,” she said. “Someone else is going to be jumping into the forecast here. This is not over.”
Consumers, however, likely won’t see the two top firms as separate brands anymore, Laricy said. For those who don’t want to work with a big corporation, this may sway them toward working with other agents.
“It’s gonna be an advantage for independent people,” he said. Whereas @properties tried to distance itself from appearing too corporate, “now you’re dealing with a big box corporation, and a lot of people don’t like big box.”
At the same time, Compass is now powerful enough to “squash” any boutique firm like Laricy’s “like a bug,” if they wanted to, Laricy said. “If you’re Compass, you literally now completely dominate the Midwest from a company standpoint.”
The Compass agent who spoke anonymously said he initially wondered if the acquisition raised any antitrust concerns, but later waved this away.
Working for a different brokerage is one way that top brokers set themselves apart, and make a case to clients about why they are the better choice, the Compass agent said. With Compass acquiring its biggest competitor in the Chicago market, trying to stand out is going to look different.
“In other words, at a certain level, top agents were able to say, ‘Well, I’m different. Compass is different because of this,’” the broker said. “Now, you’ve just added a bunch of other top agents into the mix, and there’ll be less to differentiate ourselves.”
Sam Lounsberry contributed reporting.
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