Brokers famously sell the mantra of location, location, location. But when it comes to their own offices, that refrain may be changing.
During the boom times, real estate companies large and small rushed to open glittering storefront offices, like Halstead Property’s mammoth 408 Columbus Avenue office across from the Museum of Natural History, or the Tribeca office that Brown Harris Stevens has on the ground floor of a 19th-century Romanesque Revival building. The hope was to stake out their turf in prime neighborhoods while attracting passersby.
But New York’s housing slump has prompted the rapid closing of some real estate offices, as firms seek to cut costs, and the opening of others, as they seek to take advantage of falling rents to gobble up new territory. And while closing an office inevitably means ceding territory to competitors, with real estate sales down nearly 50 percent from last year according to a quarterly market report by Prudential Douglas Elliman, satellite offices are a luxury many firms can no longer afford.
“I like the idea of having offices in neighborhoods, but it’s a very expensive way to do business,” said Barbara Fox, president of Fox Residential Group, who has only one office at Madison and 79th Street, though her brokers work all over the city. “A lot of these offices aren’t as productive as they need to be, and we’re in an environment where we have to be very smart and we can’t waste money.”
Real estate storefronts first emerged in the 1980s when Halstead opened a ground-floor office on the Upper East Side. During the recent real estate boom, they popped up all over the city.
Having a physical location in a neighborhood helps build brand recognition, especially in emerging areas, said Clark Halstead, the founder of Halstead Property.
“If you have a good-looking office in the neighborhood, where people can see that you’re hard at work, it goes a long way,” Halstead said. “It says to people, ‘we’re really making a commitment to this neighborhood.'”
Still, brokers say office locations are no longer as important as in the past, thanks to recent changes in technology and transparency of real estate listings.
“It used to be, when I started, that there were little fiefdoms,” said Rob Anzalone, the chairman and CEO of Fenwick Keats Goodstein. “Wherever your office was is where you worked. Now it’s not unusual for someone in our West Side office to have something in Brooklyn or in the Village. [Physical location] really does not matter.”
Some well-known brokerages have been shuttering branches lately. JC DeNiro & Associates surprised the real estate community by going out of business and closing all three of its Manhattan branches. Meanwhile, within weeks of each other, Warburg and Corcoran shuttered their Harlem offices, both located on Frederick Douglass Boulevard.
Corcoran, which has expanded aggressively in the East End of Long Island in recent years, shuttered four Hamptons spaces and one North Fork office.
At the same time, many companies are on the hunt for cheaper office space. “It’s a good opportunity to upgrade because the commercial market is terrible right now,” said Fox, who said she is considering moving her operations to an office where she can get more of a “sweetheart” deal.
Although each firm has its own strategy when it comes to physical location, the opening and closing of real estate offices appears to have no discernable geographical pattern.
For example, Warburg Realty shuttered its office at 65 West 13th Street in the West Village, while Prudential Douglas Elliman opened a new storefront office in the neighborhood at 690 Washington Street. Corcoran downsized its corporate headquarters at 660 Madison Avenue, while Brown Harris Stevens annexed brokerage Edward Lee Cave’s headquarters at 790 Madison, a few blocks away.
Elsewhere in Midtown, Prudential Douglas Elliman added space to its 205 East 42nd Street location specifically for a rental department, while rentals giant Citi Habitats closed its office on West 57th Street.
In Brooklyn, 20-year-old brokerage Brooklyn Properties closed an office on Fifth Avenue in South Park Slope, while Halstead and Prudential Douglas Elliman both opened new offices in Boerum Hill and Fort Greene, respectively.
The reshuffling of office space has already had an impact on some firms’ market share in some parts of the city.
Now that Corcoran and Warburg have closed their Harlem offices, Prudential Douglas Elliman and Halstead are the last of the major New York firms with branches in the neighborhood.
Diane Ramirez, president of Halstead Property, said she believes those closures give her company a strategic advantage in the area.
“We are very much the name up in Harlem,” she said. “I’m very proud of that office — it’s doing extremely well.”
In recent months, Halstead has taken over the marketing of several Harlem projects from other firms: Strivers West on Frederick Douglass Boulevard from Coldwell Banker Hunt Kennedy and the Kalahari on West 116th Street from the Marketing Directors.
Prudential Douglas Elliman and Halstead are also narrowing the gap in Brooklyn, which has traditionally been Corcoran’s territory.
“Corcoran got there first and did the biggest thing as an outsider,” Clark Halstead said of Brooklyn. “We thought a lot about that before we plunged in. How hard was it going to be to carve a piece of pie out of what is already a pretty small pie?”
With its new Boerum Hill office, Halstead now has three Brooklyn offices to Corcoran’s five. Elliman, meanwhile, also has five with the addition of its Fort Greene office.
Brown Harris Stevens has two offices, in Brooklyn Heights and Park Slope.
But there are still large swaths of the Brooklyn market that the large Manhattan firms haven’t yet penetrated.
“Brooklyn is the Wild West,” said Paul Purcell, a partner at real estate consultancy Braddock + Purcell and the former president of Prudential Douglas Elliman. “In the old days it was only the truly Brooklyn firms. Corcoran and Elliman have a presence there, but there are still a lot of local shops to contend with.”
Still, office locations now play a smaller role in these turf wars than they once did. Brokers are constantly reachable by BlackBerry, and listing services like OLR and Web sites like StreetEasy have made the real estate market more transparent to both buyers and brokers.
Since contracts are often signed in attorney’s offices, many clients never even venture into a brokerage office anymore.
Likening storefront offices to a particularly expensive form of advertising, Purcell recalled that he kept Elliman’s Madison Avenue gallery open, though it didn’t turn a profit, only because “it was like a big sign in front of the Carlyle [hotel.]”
Still, closing an office seemed to have little direct impact on the number of sales, he said.
“When I closed an office, it didn’t hurt my business at all,” he said. “It’s more important to have a great broker population who knows how to stay in touch with clients than it is to have a storefront office.”
Dottie Herman, the president and CEO of Elliman, said while she looks for strategic locations for new offices, brokers’ skills are more important.
“You could have the most beautiful office in the world, but I would not have opened those offices had I not had the right people for them,” she said of the new Brooklyn and West Village offices.
Gary Malin, the president of Citi Habitats, said his company has invested heavily in its Internet presence while cutting costs by closing two Manhattan offices.
“Eighty percent of people start their real estate searches online,” he said. “A Web site, regardless of whether you have one office or 15, is the most important marketing tool you have.”
Moreover, having too many offices can become a serious handicap in a down market. Months after opening a prime street-level retail space on the corner of Eighth Avenue and West 54th Street, in addition to two other branches, boutique broker Homestead New York announced in January that it was going out of business.
“I know so many companies closing offices, I’m just thankful that I never [opened additional offices],” Fox said. “It’s a luxury that can become an enormous liability.”
Even if it may result in some loss of brand recognition, reducing expenses by closing extra offices is a shrewd move in a down market, Purcell said.
“Every time I got an opportunity to shut down an office, I loved doing it, because then I’d be more fungible,” he said. “It’s smart business.”