The land grab is on in Brooklyn. With prices and sales activity rebounding, the borough’s major real estate firms are competing for market share as smaller mom-and-pop firms disappear.
The borough’s three largest firms — Fillmore Real Estate, the Corcoran Group, and Prudential Douglas Elliman — have all added more Brooklyn agents in the past year.
The 45-year-old, family-run Fillmore jumped to 350 agents on The Real Deal‘s ranking of biggest firms in the borough this year, taking the top spot. That was up from 288 last year, and last month the firm had some $130.8 million worth of active residential sales listings.
The Corcoran Group, which ventured into Brooklyn in 1998, now has 248 agents, up from 233 last year. Elliman, meanwhile, clocked in at 132 Brooklyn agents, an increase from 104 in 2010.
Corcoran and Elliman also both increased the number and dollar volume of Brooklyn properties they’re marketing. As of last month, Corcoran had 619 Brooklyn listings worth $421.2 million — by far the highest listings volume of any firm in the borough, and up significantly from last year at this time. Elliman, meanwhile, had 311 listings worth $190.3 million, up from $178.3 million in 2010. By contrast, both firms saw their total dollar volume of Manhattan listings shrink in the same period.
These and other firms say they are in expansion mode, and are looking to buy or merge with smaller Brooklyn companies.
“We’re looking for opportunities,” said Corcoran CEO Pamela Liebman, adding that if the right situation arose, “we would go for it.”
Michael Guerra, head of Elliman’s Brooklyn division, said he is “always looking” for acquisition opportunities and is currently “in conversations with a couple of different parties.”
He added that Elliman, which entered the Brooklyn market in 2004, aims to grow its Brooklyn staff by 10 to 20 percent each year, and this year relocated its Williamsburg office to a larger, 40-desk office at 490 Driggs Avenue.
The expansion into Brooklyn “is not a casual venture for Dottie Herman or Elliman,” he noted.
But not all Manhattan-based firms are expanding rapidly in the borough.
The number of Brooklyn agents at Brown Harris Stevens, which crossed the river in 2004, stayed mostly flat from last year at this time. And unlike Corcoran and Elliman, BHS saw its Brooklyn listings decline. In April 2010, BHS had 123 listings worth about $137 million. Last month, by contrast, the firm had 99 listings worth $110.4 million.
Fillmore is, however, looking to expand, especially when it comes to the neighborhoods popular with transplants from Manhattan, like Park Slope, Brooklyn Heights and Williamsburg.
For years, the large Manhattan-based firms have stuck to Northwest Brooklyn neighborhoods near Downtown Brooklyn, while Fillmore has dominated the lower-priced Southern Brooklyn market.
Fillmore had made some forays into “Brownstone Brooklyn,” but has recently retreated somewhat, closing its Park Slope office during the downturn and moving those agents to its Atlantic Avenue office.
The firm has consolidated a number of offices in recent years, John Reinhardt, the CEO of Fillmore, said, with its previous total of 19 Brooklyn offices dropping to 14. Its total number of agents, while up from last year, is still down from its peak of some 500 in the mid-2000s.
Fillmore also appears to have lost some ground to Corcoran and Elliman when it comes to listings, with $130.8 million in active Brooklyn residential properties for sale, down slightly from $136.7 million last year at this time.
But Reinhardt said the firm is now “taking it up a notch.”
He recently hired Charles Olson, who previously worked at both Corcoran and Elliman, as COO. Olson will help take Fillmore “to the next level,” Reinhardt said, adding that his firm may eventually expand to Manhattan, Queens and possibly New Jersey.
Now, however, Fillmore is making a “big push” into Downtown Brooklyn and its environs, said Reinhardt. He said he is looking to acquire firms in the area, and will likely soon return to Park Slope.
“We’re going to expand more into the Downtown marketplace,” Reinhardt said.
Other smaller firms are in the midst of aggressive expansions. In September 2010, Staten Island-based RE/MAX Metro opened its third Brooklyn office, at 85 Livingston Street in Brooklyn Heights, and is looking for another space in Southern Brooklyn, according to Larry Cricchio, the company’s general manager.
The firm also has offices in Bay Ridge and Bensonhurst.
In an even bigger step, RE/MAX Metro recently signed a lease for a new office in Manhattan, according to CEO Sal Calabrese, who founded the firm as Calabrese Realty in 1980.
Calabrese declined to give further details about the new office, but noted that his will be the only RE/MAX franchise in Manhattan. He said he believes the company’s worldwide branding will help it gain a foothold amidst stiff competition.
“It’s a tough market for most brokers, but we are one of the few brands that is international,” Calabrese said.
According to The Real Deal‘s data, RE/MAX Metro is the 11th-largest firm in Brooklyn, with 40 agents on its website. (Cricchio said the firm actually has close to 90 agents, but agents are not listed on the firm’s website until they achieve a certain threshold of earnings.)
Calabrese noted that the Southern Brooklyn firms RE/MAX 1st Choice Realty and RE/MAX Professional recently merged with his company.
Why all this emphasis on acquisition and expansion?
“Opportunities [for acquisition] are presenting themselves more frequently,” said Reinhardt. “It’s a lot more difficult for the mom-and-pops to survive today.”
He noted that technological improvements — like websites — require a capital outlay that can be prohibitive for smaller firms. “It’s better sometimes and it makes more sense for the smaller broker to just join someone who has it in place,” he said.
Gerard Longo, head of the Marine Park-based firm Madison Estates, said a small Coldwell Banker franchise “rolled in” to his company this year. “We’ve seen a lot of that,” said Longo, who added that his firm now has some 60 agents (though only 44 of them could be verified on the website, which Longo said is under construction).
Another challenge for small Brooklyn firms is increased competition, in part from major Manhattan firms venturing into Brooklyn.
“We’re constantly increasing our market share in Brooklyn,” said Liebman, who noted that Corcoran recently doubled the size of its Park Slope office at 125 Seventh Avenue to 3,800 square feet.
One way that the Manhattan-based firms have impacted business in Brooklyn is through co-broking. As REBNY members, Manhattan firms like Corcoran and Elliman are required to “co-broke,” or share listing information with other firms within 24 hours of signing an exclusive sales agreement, and split the commission with another broker if that broker produces a buyer. The Brooklyn New York MLS also requires firms to co-broke with each other, but members of the two organizations are not required to share listings with each other.
Once rare in Brooklyn, co-broking has become more common in recent years, and is now picking up even more traction as more Brooklyn firms join REBNY.
For example, RE/MAX Metro is in the process of joining REBNY to help its new Brooklyn Heights and Manhattan offices compete with local firms, Calabrese said.
Another new REBNY recruit is Warren Lewis Realty, a venerable 25-year-old Park Slope firm purchased in January by the Boerum Hill-based marketing and sales firm Atlantic Realty Partners. The firm’s new president, Aroza Sanjana, has big plans for the 20-agent company.
“Our goal is to be the best and biggest independent [company] in Brooklyn,” said Sanjana, who approached Warren Lewis founder Marc Garstein with the purchase offer. Garstein has since retired, but acts as a consultant to the firm, she said.
Sanjana is in the process of revamping the firm’s website and doubling the size of its office. But a crucial element of her plan, she said, was joining REBNY. Because Warren Lewis was not previously a REBNY member, it rarely co-broked with firms like Elliman and Corcoran. Sanjana said she believes that co-broking provides additional exposure for clients selling their homes, but it wasn’t easy to convince the long-independent Warren Lewis management.
“I had to sell them on REBNY,” she said. Eventually, “I helped them understand the value to the customer.”
Madison Estates joined REBNY two years ago, when it opened an office on Court Street in Cobble Hill, Longo said.
Reinhardt said he, too, is considering joining REBNY, and has recently altered his policy on co-broking. “We’ve changed our tack over the last few months,” he said. “My position is that I will co-broke any listing.”
Last month, he said, Fillmore began using the online listings platform Realplus, which makes it easier for the firm to electronically share their listings with companies that aren’t in the BNYMLS. And a new training program called Fillmore Pro is helping educate agents about the importance of co-broking, he said.
In the past, Fillmore co-broked “most of the time, but it wasn’t 100 percent of the time,” he said. “It is now.”
But the growing prevalence of co-broking can present another challenge for small firms.
“It’s really hard for the small independents to cut their brokerage fees in half, to go from getting 100 percent of the deal to getting 50 percent of the deal,” said Sanjana. “Unless you’re in real growth mode, for most independents it’s a tough pill to swallow.”
Another fast-growing firm is Ideal Properties, founded three years ago by Aleksandra Scepanovic and Erik Serras in the spare bedroom of their brownstone apartment. The firm now has offices in Gowanus and Park Slope, and opened a new office at 232 Court Street in Cobble Hill last August. But because Ideal’s agents aren’t easily accessible on its website, it’s difficult to confirm how many agents work there. (The Real Deal‘s research found 46 agents on the site, but Ideal says it has 72.)
At first, Ideal focused almost exclusively on rental properties and commercial transactions, but in the past year it has “focused aggressively” on residential sales, Serras said.