It didn’t take Brett White long. As soon as his non-compete clause expired last March, CBRE’s former CEO publicly took on his former employer about as aggressively as one could imagine.
Within weeks of ascending to a new role as the head of the Chicago-based global real estate giant DTZ, White announced a $2 billion deal to acquire CBRE’s top New York rival, Cushman & Wakefield. The deal closed on Sept. 2.
He also touted his intention to put heat on his former firm and on the industry’s global No. 2, JLL.
“We are now truly a head-to-head competitor with CBRE and JLL,” White told the U.K. business magazine Estates Gazette, adding that more acquisitions were likely.
Asked whether he wanted the No. 1 spot, White said: “Who wouldn’t?”
Certainly few in the industry are better trained to attempt the feat. White’s nearly three-decade rise through CBRE’s ranks is inextricably linked to the buildout that catapulted the company to the top of the industry.
When he stepped down from CBRE in 2012, White told the Wall Street Journal he planned to spend more time with his three children. But in his new position, the 50-something arguably has even more reason to put in long hours: This time, in addition to serving as CEO and chairman, White personally invested an undisclosed amount alongside a consortium of private equity investors led by TPG in the deal to purchase DTZ for $1.14 billion in June 2014.
“I left CBRE with the intent of slowing down a bit after almost 30 years in the industry, but found that fully engaged and full speed are really all I know,” White told The Real Deal through a spokeswoman.
Now his new mega firm is aiming to go public in 2017, according to a source at DTZ.
The Cushman deal was just the latest on DTZ’s acquisition juggernaut. (And, of course, that deal came on the heels of Cushman’s $100 million purchase of Massey Knakal Realty Services, the dominant outer borough investment sales firm.)
Last January, DTZ bought commercial firm Cassidy Turley for $557 million, bringing its revenue to $2.9 billion and its employee count to 28,000.
If approved by regulators, a move expected by the end of this year, the $2.04 billion Cushman acquisition will almost double DTZ’s size.
Even so, some analysts say DTZ — which will take Cushman’s name once the deal closes — has a long way to go before catching up with the industry’s biggest fish.
“There are two industry leaders, CBRE and JLL, and this entity is still clearly a step below,” said Mitch Germain, an analyst with Manhattan-based investment bank JMP Securities, which tracks global commercial brokerages.
Several analysts and industry players said they expect Cushman’s New York operation to see a shakeup as duplicate positions are eliminated and brokers jump ship for rival firms.
But while some Cushman brokers may already be eyeing the door, White is not one to yield ground when it comes to top talent in New York.
Sources say he is likely to raid his stable of former CBRE protégés, even as other firms are already trying to capitalize on the shakeup by poaching talent at DTZ and Cushman.
“It’s a cutthroat business,” noted Brandon Dobell, a partner at the global investment bank William Blair & Co., and a veteran real estate industry analyst.
“If you are going to go build a business and you’ve got a big private equity firm behind you, it’s not like you’re not going to call all the top people at CBRE and say ‘Hey, I’m running Cushman, let’s have a conversation,’ Dobell said. “My guess is everybody is going to have that conversation … why not?”
Those who know White describe him as a charismatic, well-connected straight shooter, with a track record of recruiting top players and thinking big. He did indeed bring on star brokers Mary Ann Tighe and Patrick Murphy from Insignia/ESG when he was at CBRE. (Both are still top CBRE executives.)
After recruiting them, he was also the driving force behind CBRE’s 2003 purchase of Insignia in a deal valued at roughly $430 million, which according to news reports created the largest real estate services firm in the world.
White declined to be interviewed for this article, but in a statement described his mission in lofty terms, saying his goal was to create a business that “competes at the highest level.”
“We’ll remain focused on making large investments in technology and infrastructure,” he said. “The opportunity I have as CEO is to build the next generation of incredible people.”
Already in place are: Ron Lo Russo, president of Cushman’s New York tri-state region and his DTZ counterpart Peter Hennessy, though Lo Russo beat Hennessy out to lead the newly merged local office. Cushman’s Bruce Mosler, Robert Knakal and Paul Massey are also in leadership positions. And the firm recently poached a leading tech broker, Sean Black, from JLL, one of its first aggressive hires in years, after being raided by competitors during the downturn. Several top officials at both firms declined to comment.
A senior official at one of the firms involved in the mergers, however, predicted that the coming months will inevitably prove frustrating to some brokers at the newly formed mega firm.
The fact that TPG is looking to take the firm public will only increase paperwork for brokers. That’s because in preparation for an IPO, the company will want to show at least one year of combined operating histories, the source said.
In addition, eliminating duplicate operations is par for the course with mergers. That was the case when BGC Partners acquired the bankrupt firm Grubb & Ellis in 2012 and merged it with Newmark Knight Frank.
Joel Herskowitz — who was CEO of Grubb & Ellis and is now COO of Lee & Associates NYC — said there is “a lot of good, and then there is the negative,” when two firms join forces.
“When it’s like a big fish swallowing a bigger fish … a lot of redundancy and a lot of little fish [are eliminated]. What happens to them?”
Herskowitz said while support staff and those in research and administration are more likely to be let go, mergers could also affect brokers.
“You’ve got brokers … under one roof finding too much in-house competition,” he said. “It’s wonderful for a firm like Lee & Associates. It gives us an opportunity … to reach out to people who might not otherwise be available to us.”
Beach kid, no bum
The best predictor of White’s future actions may simply be his own record.
A native of Southern California, White graduated from the University of California, Santa Barbara with a B.A. in biology.
He first joined CBRE’s predecessor firm, Coldwell Banker Commercial, as a sales trainee in San Diego in 1984.
Sean Doyle, an industry veteran who now runs the San Diego-based Mexico Retail Advisors, one of the largest Mexico property investment funds, knew White when they were both in their mid-20s. White, he recalled, was “always a beach kid.”
But White didn’t have a beach-bum mentality.
He was extremely well connected in
Even back then, White had a laser-like focus. That’s why Doyle brought on White to help him open up Coldwell’s Mexico-focused international offices in the mid-1980s, despite the fact that White didn’t speak Spanish.
But White rose to the occasion.
In 1991, his work paid off when he was promoted to sales manager of the San Diego office. He was later bumped up to the regional manager for all of Los Angeles.
Around the same time, in the early 1990s, White attended a pivotal meeting with James Didion, then-CEO of the company which is now called CB Commercial.
Didion, White told interviewers, challenged his colleagues to start building “a global platform on a scale unprecedented in the real-estate services sector.”
Over the next two decades, White went on a quest to fulfill that vision.
In 1998, White was head of CB Commercial’s core brokerage services division. The company, which had been on an acquisitions spree, acquired Richard Ellis International Limited, a London-based firm with sprawling international operations, and CB Richard Ellis was born.
A year later, when COO Ray Wirta was appointed to replace Didion, White ascended once again, folding Wirta’s duties into his portfolio, and assuming the role of chairman of North American operations. (By then, CBRE’s revenue had almost doubled to $1 billion, and it had offices in 30 countries.) White was appointed president in 2001 and CEO in 2005 and during those years helped to take the company private.
But it was his role in leading three signature acquisitions that proved most transformative for CBRE — the $500 million Insignia/ESG deal in the early 2000s, the $2.2 billion Trammell Crow Company deal in 2007 and the $1.4 billion ING Real Estate Investment Management purchase in 2011.
For White, the buildout was grueling. During conference calls he was almost always on the road, recalled William Blair’s Dobell.
“He was out in the field getting deals done, working on hiring people, working on acquisitions,” Dobell said. “Just 100 percent of his time was in the business.”
“You could tell wasted time was a massive pain in his ass,” said Dobell, who often saw White in action during road shows, investor days and analyst events. “There was no slack in the schedule, there was no downtime, there was no hanging around, there was no idle chit-chat. In between meetings with investors, he was on the phone talking to his guys.”
One industry leader described White as “relentless, focused, organized and disciplined.”
“He’s a deal guy,” the source said. “He was a broker originally, so he understands doing deals, and that’s really what his vision is about, you know, ‘this is how you put all the pieces of the puzzle together.’”
Tapping a template
White developed the template he is likely to use for DTZ relatively early on.
Analysts say he recognized a huge shift in the industry to a one-stop-shop atmosphere driven by large multinational clients who wanted to consolidate their sprawling real estate operations to just a few leading global companies.
In that new landscape White believed the largest global companies would have an edge, small boutique firms would have a place and the middle-sized companies would be squeezed out. “I honestly believe and believed this for years,” White told analysts in 2009, “that we’re going end up with a commercial real estate services industry where your number one and two players are dominant in share and most major markets [and will] capture together something between 50 percent and 70 percent of the market. The rest is shared by smaller firms that do certain things very, very well.”
If anything, these trends have only accelerated while White has been on the sidelines.
Both JLL and CBRE have been growing their corporate business services by double-digit percentages in the Americas for several years, Dobell noted. They have done so by picking up business from many of the small regional firms that have disappeared over the last five years — or absorbing them into the fold. “I think those [smaller] guys looked at the market landscape and said if we don’t sell out and become part of a bigger firm … we’re going to get marginalized,” Dobell said.
Although in 2009, White predicted that the world’s two biggest firms would stand apart, now he’s emphasizing that size isn’t everything and there is room for one more.
“While breadth and depth are important to serve clients, it’s not just about size,” White said when he unveiled the Cushman deal. “Local expertise and deep customer service” will ultimately differentiate the firm, he said.
The question now: Will it work?
Dobell believes that “it’s going to be really difficult to catch CBRE,” which has revenue of $9 billion.
“Unless you buy a whole lot of medium-sized facilities and property management companies, there’s just not brokerage firms out there big enough to buy,” he said.
Barry Gosin, CEO of Newmark Grubb Knight Frank, suggested those who remain at the combined firm might suffer because they are owned by a private equity firm looking to take the company public. “I sold my business to BGC, because they offered the best opportunity to provide permanent capital,” Gosin said. “They are already public, have leadership with incredible knowledge and experience. They are not looking for an exit.”
“If I want to grow in a minute, all it means is spending more, more money buying more people, more quickly,” he said. “Our goal is to be full-service, not necessarily highest-volume, but hopefully highest revenue per capita … and that may take a little longer.”
For his part, White said: “Our goals today are the same today as they’ll be five years from now. That is, to create the very best business that competes at the highest level, with employees who are the best in the industry and armed with the right tools and skills to excel at their jobs and serve our global clients.”