Behind Elliman’s new partnership

What does the firm’s new alliance with London-based Knight Frank really mean?

Oct.October 01, 2014 07:00 AM
DE_KF_logo_O-L_CMYK_Get used to saying “Douglas Elliman Knight Frank Residential.”

The two firms are launching a new “global brand alliance” that is several years in the making.

That new partnership will mean a new branding campaign in New York City and in select Knight Frank locations around the world — such as Hong Kong and Russia — aimed at selling the top 10 percent of each company’s listings to international buyers. To do that, the firms will solidify a global network of brokers who will refer business to each other, akin to relationships that several of Elliman’s competitors have forged with other firms around the world.

Elliman and Knight Frank Residential, the London-based international brokerage, began working together informally in 2011.

“It was the engagement before we got married,” Elliman Chairman Howard Lorber described the period. “We wanted to know if they were right for us, and they wanted to know if we were right them.”

Since then, the firms’ agents have been quietly referring clients to each other and showcasing select luxury listings on each other’s websites.

This isn’t Elliman’s first marriage.

The firm was, of course, affiliated with the national franchise Prudential for nine years until 2012, when it decided not to renew its agreement.

Elliman said the split was partly prompted by the fact that the partnership prevented it from expanding to locations such as Boca Raton and South Beach, where it now has offices.

It’s also not the first time Elliman and Knight Frank have teamed up with each other.

In 1979, Knight Frank — then known as Knight Frank & Rutley — partnered with Elliman to open an office in New York City. More recently, the two began more formally branding themselves with the joint release of a supplement to the closely watched Knight Frank Wealth Report.

The new partnership gives Elliman entrée to overseas markets, particularly those in Europe and Asia, where Knight Frank has an established presence. In return, it gives the British company a strong presence with the largest real estate brokerage in New York, as well as in markets such as the Hamptons, Westchester, South Florida, Los Angeles and Aspen, where Elliman either has offices or is planning to expand.

Elliman COO Stephen Kotler said the two firms will begin prominently displaying their top listings on each other’s websites within the coming months and the New York brokerage’s literature will be distributed to Knight Frank offices overseas.

“You’re going to see more interactivity between the companies,” Kotler said. Select U.S. offices will also have Douglas Elliman Knight Frank Residential signage.

Unlocking value

The partnership is centered on agents referring clients to one another when they’re looking to buy overseas, where a local broker has more in-depth knowledge of the market. While brokers in New York receive a referral fee for sending buyers to agents abroad, sources said the real value of an exclusive affiliation is building a network of trustworthy colleagues to hand off clients to. (Elliman declined to comment on referral fees.)

The international cache of the relationship could also attract more top brokers to Elliman.

In September, the firm made two big hires, luring Lauren Muss away from the Corcoran Group and Brett Miles from Town Residential. Muss said the new partnership was a major factor in her decision to make the jump.

“Everyone knows the Knight Frank brand,” she explained.

Several other local brokerages already have international affiliations. Sotheby’s International Real Estate and Brown Harris Stevens, the exclusive affiliate of Christie’s International Real Estate, are tied to their respective auction houses.

In 2010, meanwhile, Stribling & Associates formed a marketing partnership with Savills, the London-based brokerage that goes toe-to-toe with Knight Frank.

Stribling Vice Chairman Kirk Henckels said Elliman/Knight Frank will be competing globally with Stribling/Savills.

“I wouldn’t call it a threat, but I would call it a competition,” he said. “A friendly competition.”

Success vs. failure

What this new affiliation means for each firm’s share of the international-buyer pool is hard to pin down.

Because of the federal Fair Housing Act, the firms say they do not keep tabs on buyers’ national origins, and in an increasingly global market, it is harder to specify who is an international buyer.

“We don’t break it down that way,” Lorber said when asked what percentage of international buyers Elliman represents. The chairman said his company holds the bulk of the local market share over competitors Corcoran and Brown Harris Stevens, so it figures Elliman has the largest share of international buyers.

BHS, for its part, claims it reps the most international buyers.

BHS said that in 2012, the company repped either the seller or buyer in 34 percent of condos over $10 million and 72 percent over $20 million — just the types of high-end properties international buyers are purchasing. Former Elliman broker Leonard Steinberg, now president of Urban Compass, worked at the company through the initial phases of the relationship with Knight Frank.

“They tried several ways to make it work,” he said. “There were some success stories. Ultimately, what matters most to the consumer is the actual product.”

Steinberg said he thinks some strategic partnerships can have value, while others fail. He cited Insignia Financial Group’s short-term ownership of Elliman in the early 2000s and the former co-branding with Prudential.

“Some work, some didn’t work,” he said. “It remains to be seen how this plays out.”

Correction: An earlier version of this post misspelled the name of Douglas Elliman’s chief operating officer.

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