How do the major office brokerages rank in NY?

Comparing the biggest commercial leasing firms to their listings in Manhattan markets

Click to enlarge
Click to enlarge

The battle to be the top commercial listing brokerage in Midtown is surprisingly fierce between rivals CB Richard Ellis and Cushman & Wakefield. And successful leasing transactions over the coming months could determine who leads the way when the economy recovers.

Top national firms represent more than 41 million square feet of vacant space in the Manhattan office market today, and every foot represents not only potential commission income, but also space that each company could fail to lease.

While CBRE and Cushman are neck and neck when it comes to Midtown listings, Downtown is a different story. CBRE has made a strategic bet and taken on far more assignments than rival Cushman. And in the smaller Midtown South market, Cushman holds a comfortable advantage.

This month, with the help of CoStar data, The Real Deal ranked commercial firms to see who had the most landlord and sub-landlord listings in each of the three Manhattan markets. The list looks at the largest national and international brokerages that have a presence in New York in buildings larger than 100,000 square feet. The rankings include non-office listings such as retail, but those listings did not account for a significant amount of space.

For the overall Manhattan market, CBRE captured about 32 percent of landlord and sublandlord listings held by the nine major brokerage firms, followed by Cushman with 25 percent and Newmark with 21 percent. Far behind them were Jones Lang LaSalle and FirstService Williams, then Cassidy Turley and Studley. Grubb & Ellis and UGL Equis were at the bottom of the list.

The amount of space firms list is generally based on two lines of business. First is agency representation, in which the brokerage represents a landlord on an ongoing basis. CBRE leads this category with about 57 million square feet, ahead of rivals Newmark with 44 million square feet and Cushman with 43 million square feet, CoStar data showed. The second line of business is tenant representative work, where the broker lists sublease space no longer needed by the client.

In addition to third-party brokers, many landlords such as SL Green or Rudin Management list space in their own buildings without hiring third-party agents. Those firms were not included on the list because they are not competing with other firms for listings in their own buildings.

Also, two firms on the list own some of the space they also represent. Newmark Holdings, an affiliate of Newmark, owns approximately 8 million square feet of buildings in Manhattan, the company said, while FirstService Williams principals own an estimated 4 million. But the two firms’ primary business is brokerage and commercial services.

Simply having the most space listed is not a victory in itself, but brokers say it does indicate a breadth of representation in the market. Indeed, while jockeying for listings is expected during normal times, it’s been heightened by the downturn as firms look to grab listings for the huge amount of empty space coming to market.

Landlords are also watching to see how long the space sits on the market, and competition among brokers for high-quality space that yields more commissions is intense.

Cassidy Turley vice chairman Robert Billingsley said a firm can get burned if it does not lease space fast enough.

“Having inventory for inventory’s sake is a double-edged sword because if you are not able to move it, it is unproductive,” he said, noting that the customer might change agencies in search of a “white knight” with a fresh approach to leasing up the building.

Some firms said they did not seek out such office listings at all. For example, Mitchell Steir, chairman and CEO at commercial advisory firm Studley, which only represents tenants, said his company doesn’t want sublease listings.

“We try to keep the number of listings as low as possible,” Steir said. “We do sublease work for our existing clients when needed. So therefore, our objective is to not increase the number of listings, because that means our clients have excess capacity.”

Click to enlarge

Spreading listings in Midtown

The Midtown market is the largest of the three submarkets and the one with the tightest battle between the two dominant firms, CBRE and Cushman.

The closely matched competition in the city’s central business district is not a coincidence, experts said.

Matthew Van Buren, executive managing director at CBRE, said the parity in Midtown between his firm and Cushman may be in part because landlords want healthy competition and therefore tend to spread out the agencies among different firms.

“If you are competing as a landlord with a set of buildings … by the virtue of a firm having a building in close proximity that you compete with having that agency, you are in all likelihood going to pick another firm to represent you, so that you know the firm’s interest is completely dedicated to you,” said Van Buren, who oversees the firm’s Manhattan brokerage operations.

Sign Up for the undefined Newsletter

Cushman declined to comment.

According to the CoStar data, CBRE held a slight advantage as of the middle of last month. The firm had 7.5 million square feet of landlord and sublandlord listings, while Cushman had 7.2 million. Their combined totals represent about 60 percent of the market. They were followed by Newmark with 4 million square feet and Jones Lang LaSalle with 2.7 million square feet listed.

CoStar, citing client relationships, would not comment on individual firms and their place in the market.

CBRE and Cushman hold the lion’s share of the listings because they represent more of the district’s big landlords as well as large clients such as law firms, insurance companies, and financial giants that are the gold standard for brokers seeking the big assignments and big commissions. Cushman & Wakefield, for example, is representing 94,000 square feet of space for accounting firm Ernst & Young in the 1.1 million-square-foot 5 Times Square.

Click to enlarge

Space dump Downtown

The Downtown market is just beginning to see the long-anticipated dumping of unneeded space that bruised Midtown last year.

The largest availability as of last month was Goldman Sach’s 1.1 million-square-foot 85 Broad Street, being marketed by Jones Lang LaSalle. (Goldman is moving staff into its new West Street headquarters.) But more sublease space was just put on the market in February, including 204,000 square feet of Dow Jones & Co. space at 1 World Financial Center, being marketed by CBRE.

The largest gap between the brokerages in the first and second spots was Downtown. CBRE held a wide lead over Cushman in a market with about 107 million square feet of office space.

The firm has listings for 5.1 million square feet, or about 40 percent of the third-party listings. Cushman was next with 3.7 million square feet, or about 29 percent, following by Newmark with 1.6 million square feet, or 12 percent.

CBRE’s Van Buren said the company led because it had the largest Downtown office, and focused heavily on the district, where its rivals Cushman and Newmark also have satellite offices. CBRE is listing space in buildings such as 1 Financial Square and 180 Maiden Lane; Cushman at 140 Broadway; and Newmark at 26 Broadway.

Click to enlarge

The Midtown South shuffle

Cushman, the leader in the much smaller Midtown South district, said last month it won an assignment for the 173,000-square-foot building at 300 Park Avenue South, furthering its advantage in the submarket. The century-old building has the smaller 12,000-square-foot floor plates common in the district, making it less valuable for large financial or insurance firms.

Gordon Ogden, a principal and broker with the Midtown boutique tenant representative firm Byrnam Wood, said with the exception of Credit Suisse, Midtown South is not a base for large financial firms.

The smaller buildings with older space do not allow for the same commission levels seen in the newer, larger buildings, brokers said.

That might explain why in the much smaller Midtown South district — with just 70 million square feet, representing a quarter of the total office space in Midtown — the hierarchy of the top three firms was rearranged. Cushman had the most listings, with 1.4 million square feet, followed by Newmark with just under 1 million square feet, and then CBRE with 862,000 square feet.

A December report from CBRE showed how the building stock in Midtown South compared to the other markets. Nearly 70 percent of the buildings in Midtown South were built before 1930, compared with less than 25 percent each in Midtown and Downtown. Many buildings in the district have not been upgraded, and therefore command lower rents. That, in turn, means lower commissions.

Jones Lang reports that 75 percent of Midtown South space is in Class B buildings, compared to 40 percent in Midtown and 36 percent in Downtown.

Billingsley said Newmark and FirstService Williams have relatively stronger representation in Midtown South compared with the other markets because they specialize in such buildings. They also own property in the district and have long-term relationships with landlords. Additionally, he said they perform well because CBRE and Jones Lang concentrate on the two other major Manhattan markets.

“I think also probably [because] CB and JLL say, ‘Listen, I’d rather concentrate my efforts in Midtown and Downtown because of the nature of the properties,’ you get higher rents and bigger commissions,” he said.