Manhattan residential real estate firms are invading the Hamptons, with several recent acquisitions following Corcoran’s purchase of Cook Pony Farm in October.
Brown Harris Stevens is negotiating to buy fellow Christie’s affiliate Dunemere Associates, a boutique Hamptons firm, while Prudential Douglas Elliman bought Celic Realty, a 25-year-old North Fork firm, early last month. A third deal is reportedly in the works.
While other Manhattan firms already have a presence in the Hamptons, either directly, like Sotheby’s, or through affiliates, like Halstead, the stakes seem to have been raised when Corcoran bought Cook Pony. Corcoran’s move, itself a response to Prudential Douglas Elliman’s presence in the market, gave it the top East End firm in total sales transactions for 2002, with 10 offices and 160 agents.
Owners of some independent East End brokerages acknowledged they were not happy about the recent deals and the prospect of a battle between Elliman, Corcoran and others on their turf.
“I’m curious about how much they paid to invade another person’s territory,” sniped Tina S. Fredericks, who owns a firm bearing her name, of the Corcoran deal. “They are clearly attempting to come in and buy the know how of local brokers.” Fredericks, who has been in business for the last four decades in the area, said some of the local firms were grouping together to run ads against the Manhattan-based firms.
Stuart Epstein, owner of Devlin-McNiff Real Estate, another independent firm, said the Corcoran deal would “stiffen up the competition” in the area, even if “no one was getting heart palpitations yet.” He said Prudential, which has had offices on the East End since 1996, “understandably likes to throw their weight around. They tout how big they are. They have a sledgehammer approach.”
However, Ginger Bittner Andrews, owner of First Hampton Realty, maintained the acquisitions were “mostly a name change.”
While Epstein and several others had heard rumors of a Brown Harris Stevens acquisition, a spokesperson for BHS said the company had “no comment” on a deal to buy 10-year-old Dunemere. Brown Harris Stevens would get 70 full-time agents working in five offices, mostly on the South Fork, if the deal happens.
Meanwhile, Prudential’s purchase of Celic Realty, a 40-agent firm, consolidated its position on the East End, giving it an added 20 percent market share on the North Fork. The 25-year-old Celic was expected to do $105 million in sales in 2003.
Finally, another possible acquisition in the works may involve Prestigous Properties, according to an unnamed executive. Prestigous is based in Westhampton Beach and specializes in high-end homes, land and rental properties.
Going forward, Epstein said other Manhattan companies may look to the Hamptons. But he opined that it was unlikely that Corcoran and Elliman would continue to expand through acquisitions there, since they both already have offices throughout all sections of the East End. “There is nothing more to buy,” he said.
But Pam Liebman, CEO of Corcoran, and Dottie Herman, President and CEO of Elliman, disagreed.
“I wouldn’t rule anything out in terms of buying more firms,” said Liebman, who said decisions wouldn’t necessarily be made according to geographical considerations.
Herman said her company planned additional acquisitions in the Hamptons, the rest of Long Island and New York City. However, she also said that there are fewer and fewer companies to buy in the Hamptons. “There’s lots of little companies,” she said. “There’s not that many left to buy.”
Fredericks estimated that there are some 250 brokers on the East End, but only a small handful of agencies have more than one or two agents. As a result, it seem likely there will always be room for independents, as is the case in other markets like Manhattan, Andrews of First Hampton Realty said.
“This market out here is very personal,” she said. “Independent companies can offer so much more of a hands-on approach. Sales agents don’t have to deal with big corporations, either.”
But there are many challenges inherent in being a small independent, Herman said. “It’s not a high margin business to begin with,” she said. “And if you’re the main producer, it’s hard to take time to build a business. You don’t have time to develop people.”
Both New York City companies plan to change real estate practices in the Hamptons. While Herman has made changes to East End real estate since starting out there in 1996, Liebman said she plans to modernize the quiet, word-of-mouth business that is real estate in the Hamptons, at least in the area of technology.
“We’re going to make a good investment in technology, and try to make life easier for agents,” she said. ‘They’re behind Manhattan. They’re probably where we were a couple of years ago.”