The talk of the town last month was the demise of Town.
Andrew Heiberger’s residential brokerage, which at one point touted 600 agents and amassed $13 billion in sales, shut its doors abruptly.
Heiberger made his name building up scrappy rental brokerage Citi Habitats when he was in his 20s, later selling it for a reported $50 million. Town, which he launched in 2010 with a focus on the more lucrative luxury sales market, was supposed to be an even bigger score. But the need for high commissions, fancy offices and lots of agent support amid an ultracompetitive recruiting environment did it in — as well as a toxic partnership between Heiberger and the firm’s financial backer, Joe Sitt.
And Town’s collapse raises the broader question about how residential brokerage pencils out in the era of tech disruption, celebrity brokers and self-empowered buyers and sellers. Our cover story asks: What is the future of residential brokerage?
As reporter E.B. Solomont writes, “in the age of discount firms, star agents, open data — and huge sums of venture capital money flowing into real estate technology — are traditional brokerage firms obsolete?”
Competition from the likes of Zillow, Compass and Redfin have fueled a tech arms race and taken competition to a new level. “There is as much unrest in residential brokerage around the country as there has been in my 31 years in the business,” says Steve Murray, founder of real estate data firm Real Trends. Check out the story here.
The challenges for brokers don’t end there. In this story, we detail the rise of so-called whisper listings. While press-shy sellers sometimes prefer to unload their properties in off-market deals, it creates less transparency in the business and less exposure for properties — blasting out listings to a wider group generally translates to higher prices. It’s also against REBNY rules, and the organization is figuring out how it should crack down.
Developers also have their own issues to deal with, on top of a slower market. Lawsuits over construction defects in new buildings are on the rise, over everything from warped floors to fireproofing problems. Some observers say this is the hallmark of every building boom, and no surprise given that construction has been unrelenting since 2012. Attorneys say latent defects usually spring up a year or so after buildings open.
In this issue, you’ll also find our first-ever ranking of the private universities with the largest property holdings in New York City, at a time when many are expanding. Columbia University came in first with 14.9 million square feet across 232 properties. A testament to its size is that it’s half as big as the city’s largest commercial landlord, SL Green Realty, which owns 29.5 million square feet of Manhattan real estate.
If there’s another group not struggling in this transitory period of real estate, it’s commercial debt brokerages. Click here for our sizing up of brokerages across the city, with global giants like CBRE and Cushman facing off against local firms like Meridian. And read up on the quick success of WeWork competitor Knotel, which is worth $500 million and is now the city’s third-largest flexible office space operator. Co-founder Amol Sarva has plenty to say about the culture of “the bros hanging out doing keg stands at WeWork.”
Finally, don’t miss out on our annual Showcase and Forum on May 14 at the Metropolitan Pavilion in Chelsea. We’ll be talking with key industry players about everything from the intersection of tech and real estate to new development frontiers to the future of construction in NYC and more. Get the details at TheRealDeal.com/Events.
Enjoy the issue!