A precipitous drop in sales like Manhattan saw in the first quarter of 2009 can be particularly challenging for boutique real estate firms.
That became painfully clear this year when a number of small firms went out of business, including several newer boutiques just starting to make their presence felt on the New York City real estate industry, like JC DeNiro & Associates, Homestead New York and New York City Dwellers. Other firms with longer track records, like venerable Edward Lee Cave, were absorbed by larger companies.
But there are smaller firms that are still surviving, and even thriving, in the current market, most notably the three that ranked at the top of The Real Deal’s survey of boutique Manhattan firms — Leslie J. Garfield & Co., Gumley Haft Kleier and Fox Residential Group.
The firms have some common threads: a long history in New York City and a well-established client base. That, combined with advances in technology, low overhead and a hands-on managerial style, can even give some smaller firms an advantage over their larger competitors, brokers say.
“I’m interviewing people weekly who are leaving big firms because they’re not feeling satisfied with what they’re getting,” said Barbara Fox, the president of Fox Residential Group, which was ranked third.
According to data collected by The Real Deal in early April from firm Web sites and the OLR residential listing portal, townhouse specialist Leslie J. Garfield & Co. ranked at the top with 35 active listings totaling just over $270 million. Family-owned Gumley Haft Kleier followed with 32 listings worth about $51.8 million and Fox was next with 25 listings valued at $47.7 million. The Upper West Side-based Barak Realty, which has 39 agents, and the 41-year old Key Ventures, which has 19 salespeople, rounded out the top five.
The survey defined a “boutique” agency as a firm that has between 10 and 60 agents, though the survey did not include those that specialize primarily in new development, like Core Group Marketing, the Marketing Directors or Shvo.
Jed Garfield, managing partner of Leslie J. Garfield & Co., said his 15-agent firm recently inked a contract for 18 East 82nd Street for close to the $21.9 million asking price, and a 21-foot-wide brick townhouse at 66 East 93rd Street for roughly $7 million.
Still, business has been slow, as it has been across the industry. And because the company does only a few deals (a good year usually brings about 20 sales), it can sometimes feel even slower.
“We’ve had Fridays within the last two months that might as well have been August,” Garfield said. “Our phones wouldn’t ring for an hour.”
Garfield said the company’s ability to do any deals at all in the current market comes from a long history of specializing in townhouses, thanks to his father Leslie, who started the company in 1972.
“We have good name recognition,” he said. “I’m fortunate to have Leslie for a father. Within the realm of townhouses, he was the only game in town for a long time.”
In a rocky market, customers seem to want well-established firms, and brokers who have weathered such storms in the past, said Michele Kleier, president and chairman of Gumley Haft Kleier, which she founded in 1995.
Kleier said her company, which recently closed on a $30 million listing for a 15-room home at 1030 Fifth Avenue, has been garnering more exclusives recently.
“People feel that they need somebody who is experienced,” she said. “Sellers now are looking for a comfort level and stability.”
That may be one reason why several newer boutiques went out of business this year. The casualties included 35-agent firm Homestead New York, which was only four years old when it closed, and NYC Dwellers, a rental firm founded in 2003. Most recently, JC DeNiro & Associates surprised the real estate community by ceasing operations last month.
Had it not closed down, JC DeNiro would have been ranked eleventh on the list with 16 active listings worth $22.17 million and some 34 agents. Company founder Jack DeNiro (uncle to actor Robert De Niro, despite the slight difference in the spelling of their last names) got his start in commercial real estate in the 1960s, but he was based in Florida when he tasked partner Christopher Mathieson with taking residential brokerage JC DeNiro & Associates into the New York market.
The company opened its first New York City office in Tribeca in 2002.
Meanwhile, longstanding white-shoe firm Edward Lee Cave was acquired by Terra Holdings’ Brown Harris Stevens, though it will continue to operate as a separate division under the larger company’s umbrella, and veteran broker Alice Mason closed her Madison Avenue office after 45 years.
By contrast, Kleier said she is expanding. She recently hired two new agents, and she hasn’t had a single broker leave in the past year. Her firm had 38 agents at the end of April, according to the survey data.
Fox said while she’s lost several brokers to attrition, she’s added new brokers to her firm, which had 45 agents at the end of April.
“When the market goes south, a lot of brokers feel the need to move around,” Fox said. “It presents a really great opportunity for a boutique firm to pick up some terrific brokers who are unhappy with where they are.”
Boutique firms, if they are well-established, are attractive in challenging markets because they often offer their brokers more training and guidance than bigger shops, she said.
“I’m very hands-on in terms of helping the brokers,” Fox said. “There’s a vibe here that’s very warm and fuzzy.” Her company recently sold a 12-room home on Park Avenue in Carnegie Hill, though she neglected to say how much the apartment sold for.
In the past, small firms in Manhattan were at a disadvantage because they didn’t have the same access to listings as the larger companies, which had large internal databases. But that’s now changed thanks to OLR and Web sites like StreetEasy, which allow buyers and sellers to peruse everything on the market, Kleier said.
“StreetEasy changed everything,” Kleier said. “Everyone is now on an even playing field. If [a buyer] is looking for a three-bedroom, they’ll look at every three-bedroom, whether it’s mine or Stribling’s. That’s improved our ability to get exclusives and have buyers be loyal.”
And if a boutique company has a large enough client base to continue doing deals in the current market, it may be better prepared than larger firms to weather the storm because it has lower overhead.
“I think at a lot of the [bigger] firms, there’s a lot of dead weight,” Garfield said. “Statistically, we have less of it.”
While some larger firms are forced to make drastic cuts in advertising and marketing budgets to help their bottom lines, many smaller firms were unable to spend much in the first place.
“We’ve been really careful in the way we spend our marketing and advertising dollars,” Fox said. “We’re not really cutting so much. We’re trimming a little bit, but we’re not doing any major surgery or changing our normal way of business.”
Moreover, many smaller firms have fewer branches, said Garfield, who has just one office on Park Avenue after an attempted expansion to Brooklyn several years ago.
“When you’re a boutique, it’s really hard to expand,” said Garfield, who closed his Brooklyn branch in 2007. “Unless you’re willing to work seven days a week, you can’t do it.”
While it was frustrating at the time, he said that now he is glad the company is down to one office, which means less of his bottom line goes to rent.
“Looking back on it today, it’s great that we’re not a bigger firm,” he said. “Quite frankly, I consider myself lucky.”