It’s been a rocky couple of years for the real estate market on Long Island’s East End. But now that the worst of the downturn has passed, the region’s major residential firms are seeing a slight increase in size compared to the last two years.
Click to enlargeThis year, the 10 biggest brokerages in the Hamptons, Shelter Island and the North Fork collectively had a total of 1,230 agents — up 7 percent from 1,149 in 2011, according to The Real Deal’s annual ranking of the biggest East End firms. While that is not a huge jump, it is the second year that the agent headcount has gone up. In 2010, the 10 biggest firms had a total of 1,140 agents.
“There are enough brokers out here to choke a horse,” said Paul Brennan, Prudential Douglas Elliman’s Hamptons regional manager, laughing.
Click to enlargeThe Corcoran Group was the largest firm on TRD’s list this year, taking the No. 1 position from Elliman for the first time since 2009, although the firms are currently about the same size, with 327 and 326 agents, respectively. Both have grown slightly since last year, according to TRD’s count.
At No. 3, Brown Harris Stevens dropped slightly from last year, from 146 agents to 132 agents.
While size is not the only marker of a firm’s success, it does shed light on how firms attract and retain talent. Lately, however, industry watchers described a sense of stability in the Hamptons brokerage world, underscored by less broker turnover than in the years immediately following the recession.
“For the most part, I don’t see [dramatic] movement anymore,” said veteran broker Judi Desiderio, founder of Town & Country Real Estate. She added: “Usually when the market gets better and people start to make money and have business, it’s more difficult for them to move.”
According to TRD’s data — which was compiled by counting agents listed on brokerage websites, not including those who are solely in management or administrative positions — Town & Country is the fourth largest brokerage in the area. It has 119 agents, the same number as last year. But the firm is in the midst of opening an additional 1,600-square-foot office in East Hampton to house management and support staff, as well as a handful of new agents. It’s also moving into a new 2,000-square-foot building near its current location in Southampton, Desiderio said.
Rounding out the top five is Saunders & Associates, the 88-agent brokerage that developer and broker Andrew Saunders opened in October 2008.
Overall, the industry is made up of fewer — but larger — brokerages than in the past, since many of the smaller firms closed or were acquired by bigger companies, noted Aspasia Comnas, executive managing director of Brown Harris Stevens of the Hamptons.
Brennan agreed. “The big firms have come, and they’ve sort of taken over,” he said. “I don’t know how much room there is for more companies.”
From left: Elliman’s Paul Brennan, regional manager for the Hamptons; Judi Desiderio, founder of Town & Country Real Estate; Saunders & Associates’ Andrew Saunders; and Stuart Epstein, manager of Devlin McNiff Halstead Property
New strategies
Several firms have recently made aggressive moves to expand their presence in the Hamptons — notably Saunders & Associates, Nest Seekers International at No. 7 and Devlin McNiff Halstead Property at No. 10.
Saunders continued to increase its ranks in 2012, overtaking Sotheby’s International Realty, where Saunders was once a broker. Sotheby’s dropped to No. 6 with 87 agents.
And Saunders said he added several brokers in the weeks since TRD gathered its data. Additionally, he said, a number of agents have committed to joining Saunders in his new East Hampton office, set to open in 2013.
He also noted that his agents had found the buyers for three properties — 171 Great Plains Road, 329 Highland Terrace and 95 Surfside Drive — that appear on TRD’s list of the biggest East End sales so far this year (see “The Hamptons’ 10 priciest sales of the year”).
Meanwhile, the Manhattan-based Nest Seekers swelled in May 2011 when it took over the floundering local franchise of Germany’s Engel & Völkers, a global luxury brokerage that had offices in Southampton and East Hampton.
Along with the firm’s facilities, Nest Seekers — which was founded by Eddie Shapiro in 2002, and has operated in the Hamptons for several years — scooped up many of its agents. Nest Seekers now has 26 agents in Southampton, 17 in East Hampton, two in Water Mill and one in Bridgehampton, according to TRD’s data.
The firm’s pricier Hamptons listings include a six-bedroom Water Mill home, asking $24 million, and a 40-acre swath of land in Sagaponack on the market for $49 million.
At No. 8, Daniel Gale Sotheby’s International Realty, a Long Island franchise of the high-end brokerage, has also grown on the North Fork, doubling its agent count in its four offices there to 44 agents. However, the bulk of its 600 agents are still spread across its other 18 locations. (The firm did not return requests for comment.)
North Fork–based Century 21 Albertson Realty was the ninth-largest firm on TRD’s ranking with 42 agents.
And finally, Halstead Property, which hasn’t had a presence in the Hamptons for some time, acquired East Hampton brokerage Devlin McNiff this past October. Despite the merger, the firm now has 19 agents, slightly less than Devlin had last year.
But Stuart Epstein, Devlin’s managing director, said the partnership “gives us a strategy for the future and a path forward.”
The newly merged firm plans to open additional offices in the bigger Hamptons markets, Epstein said, although he declined to reveal specifics. The relationship with Halstead “gives us the horsepower and the back-up and the capital and the marketing and the technology to do so,” he said.
However, competitors described the partnership as “mystifying” and “weird,” given that Brown Harris Stevens, which is also owned by Terra Holdings, already has an established presence in the Hamptons.
The sister companies already compete in Manhattan and Brooklyn, and largely operate as wholly separate entities, spokespeople for the firms pointed out. But there are far fewer listings and agents in the Hamptons, and competition is already fierce, some brokers said.
Clockwise from left: The Normandy House in Southampton, which is listed for $35 million; 351 Bridge Lane in Sagaponack, which is listed for $65 million; 612 Halsey Lane in Bridgehampton, which is listed for $43.5 million; and 376 Daniels Lane in Sagaponack, which is listed for $21.9 million.
Action areas
Even with these new firms on the scene, the East End brokerage industry is not facing the kind of upheaval of recent memory, brokers said.
That stability is partly the result of a market that is showing signs of more sales activity, brokers said. As a mild winter gave way to spring, brokers said they saw more homeseekers, bids and accepted offers than last year.
In the second quarter of 2012, there were 414 sales in the Hamptons, a 9 percent increase over the same period last year, but the median sale price slid 14.3 percent to $900,000, according to Town & Country.
Some have seen that activity continue through July: Saunders noted that there was no Standard & Poor’s downgrade of U.S. debt this year to throw off a nascent recovery.
But Elliman’s Brennan said he had seen activity slow down since the end of the first quarter. “It’s been busy, but not to that extent,” he said.
Others are seeing increasing demand in particular areas.
Sotheby’s said it has seen more customer interest — and transactions — in Sag Harbor, leading the firm to turn its satellite location in the village into a full-fledged office.
About five dedicated brokers who used to work from other locations will soon start working there full-time, said Debra Reece, manager of the firm’s Bridgehampton office.
In other coveted areas — particularly south of Highway 27 in Sagaponack, Southampton, Wainscott and Bridgehampton — prices are up due to a lack of supply, a significant change from last year, Saunders said.
If there is a more challenging corner of the market, it’s likely rentals, brokers said, since inventory has spiked as more homeowners list their properties for rent and for sale at the same time to hedge their bets.
“Even new construction today is often staged with a dual purpose of having the new house show better to prospective buyers, and having it in furnished condition so that it can be rented prior to sale,” Comnas said.
Continuing a trend from last year, realistic pricing is still the lynchpin of securing a speedy sale, brokers said.
“You might think, ‘Well, that’s pretty obvious,’ but it was not really like that in 2005, 2006,” said Saunders, when desirable properties south of the highway sold above their asking prices.
The story is somewhat different on the less-pricey North Fork and on Shelter Island.
Sales at the high end of those markets — typically, properties above $1.5 million — have slowed down somewhat from this time last year, said Tom Scalia, the owner of Century 21 Albertson. Meanwhile, sales of properties at the low end — those priced between $400,000 and $500,000 — have picked up, he said.
Scalia, who took over the family business from his father in 2010, theorized that buyers were reining in their purchases.
“They’re settling for a walk to the beach instead of [a house] on the beach,” he said.