Cushman may top CBRE as largest commercial firm

$2B buyout puts brokerages on par in revenue

Jun.June 01, 2015 07:00 AM
An old Cushman & Wakefield storefront

An old Cushman & Wakefield storefront

When Brett White’s DTZ completes its $2 billion acquisition of the giant global firm Cushman & Wakefield later this year, the newly combined New York office will displace CBRE as the largest commercial brokerage in the city.

CBRE has been the recognized top firm in the city for years, both in the number of brokers and salespersons, and in revenue.

There are 416 licensed brokers and salespersons in CBRE’s three New York City offices, according to figures from the state Department of State’s licensing division.

That is far fewer than the 555 agents at the four firms — Cushman, Massey Knakal Realty Services, DTZ and Cassidy Turley — that will be combined under the Cushman & Wakefield name. (Cushman bought Massey Knakal on Dec. 31, the same day DTZ closed its buyout of Cassidy Turley.)

Of course, that figure may change in the future. Shortly after buying out Cassidy Turley, DTZ parent TPG Capital laid off 45 employees nationally, including at least nine New York brokers.

Still, a better marker for success in the brokerage world is revenue, and reported figures show that the combined firm is on par with CBRE locally.

For the entire tri-state area (the only figures available) CBRE had an estimated $500 million in 2014, compared with the combined Cushman firm’s roughly $490 million.

That latter figure is based on reported figures of $350 million for Cushman, $70 million for Massey Knakal, $50 million for Cassidy Turley and $15 million for DTZ.

One thing is certain, blending the four firms’ personnel, commission structure and office culture into one will not be easy.

“The more people you are bringing together, the more complicated it is,” said Constantine Korologos, managing director for the real estate advisory firm Situs, who is not involved in the deal. “The biggest challenge is the culture of the organizations and which culture will take the lead.”

While the global and national leadership of the combined Cushman firm is set, little on the regional level has been decided, insiders said.

However, as The Real Deal reported last month, one important position was announced: DTZ CEO White said Cushman Tri-State President Ron Lo Russo will keep the top job locally.

That decision, made public at a large meeting for current Cushman employees at the New York Hilton Midtown, was a surprise to some.

In fact, later that day, at a much smaller gathering of DTZ employees, sources said Joseph Stettinius, the top DTZ executive for the Americas, told the group he did not know if the decision had been finalized as to who would run the local office. The head of the local DTZ office is veteran broker Peter Hennessy, who Lo Russo beat out for the top regional post.

Lo Russo, a former Vornado Realty Trust leasing executive who has two years under his belt as president of the regional Cushman office, was not the only candidate considered, sources said.

Several insiders said that before the Cushman deal was announced, top producers like CBRE Vice Chairmen Patrick Murphy and John Nugent were considered for a top managerial job.

Murphy has history with White: In 2002, when White was building up CBRE in the U.S., he hired Mary Ann Tighe and Murphy from the dominant regional firm ESG/Insignia in a multimillion-dollar poach. A year later CBRE bought ESG/Insignia, and cemented CBRE as the leading firm in the city.

Murphy went from being a top producer to a manager of the New Jersey office, which he built into a regional powerhouse, before returning to a brokerage in Manhattan in 2007.

But despite Murphy’s credentials and history with White, DTZ leadership decided to stick with Lo Russo.

Nonetheless, some industry insiders speculated that a top management opportunity for a senior producer like Murphy could open up in the future.

DTZ and Murphy declined to comment. Cushman referred calls to DTZ. Nugent did not immediately return a call for comment.

In addition to the leadership, the new firm needs to nail down where its global and national offices will be located. DTZ has a headquarters in Chicago, and Cushman in New York, while White lives in California. Right now, New York is a leading contender for the global office, and is certainly going to be the headquarters for the Americas, one insider told TRD.

Meanwhile, the personal nature of the brokerage business is coming forward, as agents try to get a feel for how things will pan out at the combined firm.

“They just want to see how it will play out,” said one broker at DTZ, who was not authorized to discuss the deal. He said senior brokers at Cushman wanted to reach out to their counterparts at DTZ-Cassidy Turley, because now they will shift from competitors to colleagues. “It’s very tough at a brokerage. They are just trying to reconnect.” TRD


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