Gap widens between rivals

Ranking of top investment sales firms finds CBRE losing ground; </br>Stacom says team is being rebuilt

CBRE’s Darcy Stacom and Eastdil’s Doug Harmon
CBRE’s Darcy Stacom and Eastdil’s Doug Harmon

One of New York City’s longest-standing rivalries, between Eastdil Secured and CBRE for the lead in investment sales, now appears to be on ice.

A new ranking this month by The Real Deal of New York City’s top investment sales firms for 2014 reveals a yawning gap between the two top firms.

In 2014, Eastdil brokered nearly twice as many investment sales deals as CBRE in the city, expanding its lead over its competitor to nearly $6 billion, according to TRD’s survey.

Eastdil’s investment sales office in New York — led by the dogged Doug Harmon and his younger counterpart Adam Spies — closed $11.2 billion in property trades in the city last year.

CBRE, meanwhile, ranked a distant second with $5.4 billion.

Massey Knakal Realty Services, which was purchased by Cushman & Wakefield at the end of 2014, snagged the No. 3 spot with just under $4 billion in closed deals. Global giant JLL and Aaron Jungreis’ Rosewood Realty Group rounded out the top five with $2.2 billion and $2 billion in deals respectively. 

Top NYC investment sales firms, 2014
1Eastdil Secured $11.2 billion436%$50 to $65
2CBRE $5.4 billion 43-20%$35 to $40
3Massey Knakal Realty Services$3.8 billion 25656%$65 to $75
4JLL$2.2 billion2815%$15 to $20
5Rosewood Realty Group $2.0 billon1300$20 to $25
6Savills Studley $1.8 billion 15220%$10 to $14
7Eastern Consolidated$1.52 billion6989%$25 to $35
8HFF$1.51 billion1712%$10 to $14
9Newmark Grubb Knight Frank$1.14 billion31-5%$15 to $20
10Marcus & Millichap $1.1 billion 18558%$30 to $35
11Westwood Realty Associates$889 million25286%$10 to $14
12Cushman & Wakefield $875 million 9-51%$8 to $12
13Besen & Associates$639 million7997%$20 to $25
14Ariel Property Advisors$528 million441%$10 to $14
15GFI Realty Services $448 million5960%$10 to $14
16TerraCRG$305 million5164%$10 to $14
17Avison Young$301 million6367%$5 to $8
18Pinnacle Realty of New York$275 million 2659%$8 to $10
19Prince Realty Advisors$268 million 2n/a$1 to $3
20HPNY$247 million1367%$5 to $8
21Berko & Associates$242 milllion4n/a$2 to $4
22Friedman-Roth Realty Services $229 million2329%$5 to $8
23Cignature Realty Associates$223 million18n/a$5 to $8
24Epic Commercial Realty$208 million32148%$5 to $8
25CPEX Real Estate$188 million27166%$5 to $8
26Carlton Group $184 million1-35%$1 to $2
27Capin & Associates$183 million33n/a$8 to $10
28ABS Partners Real Estate$182 million7n/a$4 to $6
29Brookfield Financial $181 million4-51%$3 to $5
30Highcap Group $155 million1919%$5 to $8
Source note: Ranking compiled through industry databases such as Real Capital Analytics and CoStar Group, as well as information from the firms. In addition to investment sales of $1 million and up, sales for ground leases and leaseholds were included. All firms that represented an ownership interest in a transaction were credited with the value of the stake that they brokered. Minority interest deals were not included. The commission figures are estimates made by TRD using a sliding scale based on the size of the deal. Massey Knakal and Cushman were tallied separately because the ranking covered 2014. The companies' merger closed on Dec. 31, 2014, after these deals were complete.

The rankings — which included investment sales of $1 million and up, ground leases and leaseholds — were tallied using industry databases such as Real Capital Analytics and CoStar Group, as well as information from the firms. TRD also estimated the commissions that each firm made on these deals, using a sliding scale based on the size of the transaction (see chart).

The Eastdil-CBRE rivalry should not go without some historical context. During the boom years, CBRE brokered a string of headline-grabbing deals, most notably the $5.4 billion sale of the Manhattan housing complex Stuyvesant Town and Peter Cooper Village in 2006. But the investment sales team at the firm began falling further behind Eastdil in the post recession years. While CBRE has managed to hold onto its second-place standing, the gap between it and Eastdil has widened in the last few years going from under $2 billion in 2011 to $5.8 billion today.

“They have become dinosaurs with antiquated ways of doing business and thinking, all within a culture that could prosper pre-credit crises but not post,” one industry source said.

But Darcy Stacom — who along with William Shanahan leads CBRE’s New York investment sales team — told TRD that she expects to regain some market share this year as a shift in strategy that she implemented about two-and-a-half years ago begins to bear fruit.

“This infrastructure is now largely in place and I will be able to get back to doing deals, which I really look forward to,” Stacom said over coffee in Midtown.

Top 5 Manhattan investment sales firms, 2014
1Eastdil Secured $10.9 billion40
2CBRE $4.5 billion30
3Massey Knakal Realty Services$2.8 billion120
4JLL $2.0 billion24
5Savills Studley $1.8 billion13
Source note: See main chart.

Stacom said the jack-of-all-trades approach that her 10-member team was using in the past was replaced with a more specialized approach with top agents focusing on sub-specialties such as multifamily and office. 

“If you don’t have someone in charge [of each specialty] you are not going to be able to deliver to the client the right services,” Stacom said.

While the change has cost the firm in the short term, several insiders noted that rivalries tend to flip flop — tennis fans think John McEnroe and Björn Borg — and said they expect the firm to rally going forward. Stacom has already started this year with momentum, including the anticipated sale of 32 Old Slip in Lower Manhattan to RXR Realty for $675 million.

Stacom said broker Paul Leibowitz is now exclusively targeting multifamily, while Marcella Fasulo is focused on attracting foreign investors. Meanwhile, Shawn Rosenthal, who Stacom hired in 2013 from financial firm Ackman-Ziff Real Estate Group, is working on debt origination. Office specialist Paul Gillen, meanwhile, is departing CBRE, leaving an opening on her team. 

Top 5 Brooklyn investment sales firms, 2014
CompanyTotal # deals
1CBRE $618 million6
2Marcus & Millichap $327 million96
3Massey Knakal Realty Services$487 million83
4Rosewood Realty Group $361million41
5TerraCRG$305 millon51

The past several years have brought other challenges as well. Beginning in 2013, Stacom said she was flying to Florida every several weeks to tend to her sick father, the legendary office leasing broker Matthew Stacom. He died in January 2014.

“I did not even notice how much it wore on me. It was very trying,” said Stacom, commenting on both the emotional and professional toll.

Meanwhile, during that turmoil, Eastdil was continuing to oil its already-well-greased machine.

One former Eastdil broker said Harmon and Spies have a supreme level of confidence. “They treat every deal like, ‘How could you not hire us?’” he said.

He said Eastdil also has a leg-up because it’s a “pure-play shop,” meaning it focuses exclusively on investment sales and finance, rather than a wide range of brokerage and management services.

And that approach seems to have paid off.

Furthermore, its numbers are even higher than its $11.2 billion total because it brokered billions of dollars of partial-interest deals that TRD did not include. It represented Paramount Group, Blackstone Group, Beacon Capital, and others in those deals.

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“Eastdil had a biblical year,” said another broker at a competing firm. “All the stars seemed to be aligned.” 

Tier two

The rankings below those two heavyweights have fluctuated in recent years, and will likely go through another shake-up because of Cushman’s $100 million purchase of Massey Knakal Realty Services.

Massey Knakal’s third place showing came with an impressive 56 percent jump in dollar volume over 2013. That mega gain was driven largely by company co-founder Robert Knakal taking on larger deals. The firm’s deal volume has exploded in recent years, ballooning its closed deals to $3.8 billion from roughly $880 million in 2011. Its largest 2014 deal, which was brokered by co-founder Paul Massey, was SL Green Realty’s $282 million purchase of the land under 760 Madison Avenue and two adjacent properties.

Top 5 Bronx investment sales firms, 2014
1Rosewood Realty Group $335 million38
2Newmark Grubb Knight Frank$270 million1
3Ariel Property Advisors$229 million9
4Besen & Associates$222 million33
5JLL$114 million1
Source note: See main chart.

By comparison, Cushman’s investment sales team had a tough 2014, closing just $875 million, or about half the $1.8 billion it closed in 2013.

Meanwhile, JLL is gaining ground. Its New York investment sales group, including Richard Baxter and Jon Caplan, jacked up its deal volume, giving the local office a boost of about 15 percent year-over-year to $2.2 billion. The largest of its 30 deals was the sale of the Lower Manhattan office building 61 Broadway to RXR Realty for $330 million.

“The rankings ebb and flow each year, but the bottom line is we are happy there is so much activity, and that everyone is making money,” said Stephen Shapiro, a senior vice president in JLL’s New York capital markets group.

Rosewood, the tiny Midtown-based powerhouse headed by Jungreis, impressively remained in the top five with $2 billion in deals, but unlike the others its dollar volume didn’t really budge from 2013. Jungreis’ biggest deal was a Queens portfolio that he co-brokered with Knakal for $216 million. And while most of the firms on the ranking are familiar names, some, like Westwood Realty Associates, which is headed by Steven Vegh, did an impressive $889 million in business.

The borough breakout

When the numbers are crunched by borough, a bunch of other firms with geographic specialties make the cut. 

The one exception to that is in Manhattan, where four out of the top five firms were the same as the citywide top players. The only difference there was that Savills Studley clocked in at the No. 5 spot rather than Rosewood. Savills Studley was buoyed by a giant $1 billion deal in which Brookfield Property Partners bought a majority interest in the nearly 4,000-unit residential “Putnam portfolio” in Upper Manhattan and on Roosevelt Island that was controlled by Urban American Management, a firm that remained in the deal. 

Meanwhile in Brooklyn, CBRE, Massey Knakal and Rosewood were followed by Marcus & Millichap and TerraCRG in the top five.

Top 5 Queens investment sales firms, 2014
1Rosewood Realty Group $482 million11
2Massey Knakal Realty Services$457 million37
3CBRE $192 million4
4Pinnacle Realty of New York$109 million14
5Marcus & Millichap $87 million 21
Source note: See main chart.

Forest City Ratner’s $547 million sale of the majority ownership to Chinese investment firm Greenland Holdings at Pacific Park in Brooklyn, formerly known as Atlantic Yards, was a big boon for Stacom. That mega-deal was one of only six deals that CBRE closed in the borough. But those deals were big enough to give the firm a higher dollar volume, by far, than any of its competitors.

By comparison, Massey Knakal closed 83 Brooklyn deals and Rosewood closed 41.

Ofer Cohen, the president of TerraCRG, said the dollar volume of buildings sales has soared in Brooklyn since the economic recovery took off.

The firm, which was founded in 2008, closed $305 million in deals in 2014 versus just $28 million in 2011.

“The market went from $1 billion to $6.7 billion, so you can get a sense of the transformation in this market,” Cohen said. “We think there is a lot more upside for us as a brokerage.”

But, he said, the competition to represent sellers in Brooklyn is intensifying.

“We used to go and pitch business and there was no one else. Now there are often at least three firms pitching,” Cohen said. “That shows the level of sophistication in the market. There are lot more brokerages trying to get a piece of the business.”

In Queens, Rosewood dominated, with 11 deals totaling $482 million. That included the $216 million sale by Hudson Realty Capital to an affiliate of the Midtown-based A&E Real Estate.

Massey Knakal took second place, boosted by that same deal.

They were followed by CBRE, which sold the office building 37-18 Northern Boulevard in Long Island City for $110 million. The Queens-focused Pinnacle Realty of New York and Marcus & Millichap took the fourth and fifth spots in the borough, which, of course, has seen an enormous amount of residential construction in Long Island City.

Finally, in the Bronx (Staten Island was excluded from the ranking because there is not enough brokerage data) Rosewood was the top firm. It was followed by Newmark Grubb Knight Frank, Ariel Property Advisors, Besen & Associates and JLL.

In that borough NGKF was boosted by one giant multifamily deal, in which the Related Companies bought a 35-building portfolio from SW Management for $270 million.

Rosewood’s Jungreis said with interest rates low and sellers desperate to secure tax breaks by plowing profits back into building purchases as they sell properties, the market will keep rising.

“It will keep going up unless something happens,” he said. “It’s eight times rent, then 8.5 times rent then nine. Yesterday’s price is always cheap.”