Mark Jaccom, the company’s CEO, says he has 20 contracts out to new brokers and is “talking to another 30.”
Mark Jaccom is trying to poach brokers from rival firms, and he seems to want everybody to know it.
Sitting at the head of a large conference table in the Madison Avenue headquarters of Colliers International Tri-State last month, Jaccom held up a two-page spread imprinted with a baseball diamond, and smiled. Next to each base were the corporate logos of firms like CBRE, Cushman & Wakefield and Newmark. Next to each logo: a name.
“If they’re on first base, we’re starting to talk,” said Jaccom, the pugnacious, 55-year-old CEO of Colliers’ Tri-State operations. “At second, they’re really interested. And at third base, we’re in contract. I have 20 contracts out. And I’m talking to another 30.”
These are busy times at Colliers Tri-State’s offices, which Jaccom and his corporate partners in Toronto have vowed to grow along with the rest of the international firm into a powerhouse that can compete with the biggest industry players.
Jaccom is already touting his outfit as top tier — as he has been from virtually the moment it sold a majority interest to FirstService Corp., the $2 billion Toronto-based, publicly traded real estate services firm, back in 2008 on the very day that Lehman Brothers went bust.
“In the past, sometimes we’d have to scrape and scratch to get a chance to make our case” for a deal, he said. “Today, we compete head-on. We’re invited to the dance for every major presentation.”
It’s a boast that some local industry insiders dismiss outright as bluster.
“Everyone is a good sales person, but it’s a little bit of a stretch” to compare them to CBRE, Jones Lang LaSalle or Cushman, said an executive at one of the big firms. “I think they’re Williams Real Estate with a new name.”
Said another: “Anybody can talk about aspirations. And really, to date, that’s all I have heard from those guys.”
In terms of local leasing activity, that still appears to be true.
Colliers’ officials declined to provide a breakdown of their Manhattan leasing activity, but said their leasing totals in the Tri-State area rose to 10.5 million square feet in 2010, up from 8.9 million square feet in 2008. That’s about a 10 percent increase — not bad for a recession, but still far below that of its top competitors.
Meanwhile, figures from CoStar and the firms themselves show that as of last month, Colliers had 1.8 million square feet of listings in Midtown, Midtown South and Downtown Manhattan, compared to 6.7 million for Cushman and 11.2 million for CBRE.
Of the top 50 office leases in Manhattan last year, Colliers did five, including a nearly 200,000-square-foot lease at One Broadway for law firm Kenyon & Kenyon, where it repped the landlord, and a roughly 195,000-square-foot lease at 304 East 45th Street for the United Nations Development Programme, where it repped the tenant, according to CoStar numbers, as reported by Crain’s New York. CBRE did 23 of the top 50 deals, Cushman did 17, Newmark did 10 deals, and Studley and Jones Lang LaSalle each did six.
As for building sales, Colliers closed 50 transactions in the Tri-State area in 2010, up from 23 in 2008, according to stats provided by the company, which declined to provide dollar amounts.
In the sales arena, too, most agree they’re still a relatively small player. However, there’s little doubt that Jaccom’s firm is growing — and growing fast.
When Jaccom joined what was then GVA Williams in 2006, originally to head its tenant representation division, the firm had three offices in Connecticut, New Jersey and Manhattan, with about 70 brokers. Today, under the Colliers umbrella, it has 109 brokers in its Tri-State division, and plans to hire at least 30 more.
Jaccom said he’s also built a 35-person consulting shop to provide background to his teams, and has beefed up project management, appraisal and evaluation services, as well as the capital markets group.
Among his new hires: James Emden, Alan Desino and Vince Tuminelli (a former CBRE executive vice president, and two senior vice presidents, respectively); Andrew Simon (a former executive managing director at NAI Global’s New York City office); Jeffrey Oram (a capital markets broker who directed Marcus & Millichap’s National Office & Industrial Properties Group); and Peter Kozel (Newmark’s former chief economist).
That’s likely just the start. In two years, when the firm’s lease is up at its current 50,000-square-foot headquarters on 380 Madison Avenue, Jaccom hopes to move and double the space.
Of course, the door swings both ways when it comes to poaching. Late last month, Cushman announced that it had hired away Harry Blair as a senior director and Sean Kearns as director. According to news reports, the two were the leasing agents on a number of high-profile buildings, including 500 Fifth Avenue and 126 East 56th Street.
A new partner
Much of the ambitious expansion plan Colliers Tri-State has been pursuing has been made possible by the sale of a 65 percent stake in GVA Williams to FirstService.
Indeed, FirstService has been sinking hundreds of millions of dollars into acquiring firms worldwide and transforming the loose conglomeration of Colliers franchisees from Australia to Latin America into a cohesive corporate unit.
FirstService began the roll-up effort in 2004, when it acquired its first stake in a Colliers franchise — Colliers Macaulay Nicholls International, the largest Colliers affiliate. It’s been growing the percentage it owns in the Colliers name ever since, acquiring franchises outright and, when necessary, buying non-affiliated shops like GVA Williams to expand its reach.
The old Colliers “was an international franchise, but the way it was run was more discombobulated than anything else,” explained Frederic Bastien, an analyst at Raymond James Ltd., who follows the company. “You had established affiliates that only focused on their own market. It was owned by a bunch of different guys who really had no incentive to work together to make this firm a better and competitive player.”
In 2010, however, FirstService’s ownership stake in the company’s franchises reached a tipping point. At 70 percent, they gained control of the Colliers board, rebranded the company, and set stricter requirements for dealing with issues like referrals and fees (among other things).
“FirstService has been able to implement a lot of their mindset and mentality and have the entire organization roll in the same direction,” Bastien said. “To say that they are on par with JLL and Richard Ellis wouldn’t be a fair assessment, but they have definitely made some significant headway in the last several years. There is huge potential.”
FirstService’s activities in New York City have caused confusion among local brokers as the rebranding campaign led to the removal of the Colliers moniker from what used to be known as Colliers ABR. When Colliers ABR severed its ties with the Colliers brand, it merged with several other former Colliers affiliates, and rechristened itself as Cassidy Turley.
At the time, Cassidy Turley chairman Mark Boisi told The Real Deal that his firm had “outgrown” Colliers International. A source claimed that FirstService had tried to “bully” the partnership into joining the new Colliers International, but that they refused.
Because Cassidy Turley still had rights to the Colliers name when FirstService’s deal with GVA Williams was complete, GVA was temporarily rebranded as Williams Real Estate, a FirstService Company. But in March 2010, Williams assumed its new name: Colliers Tri-State International.
When asked how much capital FirstService had provided Colliers Tri-State to expand since then, Jaccom responded: “I can’t give you that. But I will tell you it’s a lot of money — a lot of money.”
The blueprint
For GVA, merging with an international player was part of a plan that had been in the works for some time.
Jaccom was vice chairman and principal at Studley when GVA’s Robert Freedman called him in the summer of 2006 with an intriguing business proposition. Michael T. Cohen, president and CEO, along with Andrew Roos, executive vice president, had decided to step back from day-to-day operations. Would Jaccom be interested in jumping to GVA Williams and helping Freedman transform the company?
The goal, Jaccom said, was to build up the brokerage, and then look for partners who could help take it global — an increasing imperative in a business that had been transformed in recent years by the worldwide expansions of CBRE, JLL and Cushman.
When Jaccom arrived at GVA, the first order of business, he said, was “to get rid of bad blood.” He fired 10 brokers he determined were either “bullies,” “negative,” or “resistant to change.”
Jaccom visualized a firm where brokers would feel comfortable “leaving their doors open,” collaborating on deals, and where backbiting wouldn’t be tolerated, he said.
So, he and Freedman began building a consulting team that included a chief economist, researchers, graphic designers and lawyers. In all, they hired 30 consultants as part of a plan to provide even their most junior brokers with “backbone and resources to secure clients.”
To win a big account to represent Colgate, Jaccom said, his consultants analyzed new potential office sites and provided area wage contours, zip code analysis, crime statistics and even traffic studies. Williams won the deal, but in the end Colgate didn’t move. Instead, GVA Williams helped it restructure and renew a 530,000-square-foot lease at its 300 Park Avenue headquarters.
In 2007, Jaccom started hiring brokers, and GVA’s stable quickly grew from 70 to 85.
But the firm was “still David in Goliath’s world,” Jaccom noted, and he and Freedman were eager to find a partner that could give it a global reach.
“We looked at what Insignia did with CB Richard Ellis. I saw what Jones Lang LaSalle did, how they grew; Cushman with their Italian backers,” Jaccom said. “We were a regional player. But if I had a client with offices all over the world, I couldn’t service them outside my own backyard, so I was losing them.”
By the time FirstService came calling, GVA was already deep in negotiations with another firm, the British company DTZ. But that changed when Freedman and Jaccom flew up to Toronto to meet with FirstService CEO Jay Hennick, a protégé of management guru Peter Drucker.
Hennick laid out the firm’s vision. FirstService had been acquiring Colliers offices around the world and then snapping up franchises west of the Mississippi in California, Phoenix and Seattle. But they still didn’t own offices in New York, Washington, Boston, London or Chicago. That was the next step.
Acquisitions in those markets would help tip FirstService’s ownership stake over the 70 percent needed to control the company. Then it could rebrand the name, play a large role in who could use its brand, and standardize methods for global cooperation.
GVA Williams — which advised on more than $3.4 billion in commercial real estate transactions, managed 16 million square feet of commercial property, and generated about $70 million — agreed to sell a 65 percent stake to FirstService for undisclosed terms. In a report to clients analyzing the deal, Bastien estimated that FirstService paid roughly $35 million for the New York-based firm. Jaccom, Freedman, Roos (now vice chairman and principle) and Cohen (now president of the Tri-State region) each retained a 5 percent stake in the company, while the rest was split between senior brokers.
It’s a blueprint FirstService is implementing elsewhere. In general, FirstService — which had revenues of $1.99 billion in 2010 — prefers to gain a controlling interest in the companies it acquires, allowing local ownership to retain a stake so they have an incentive to grow it and stay on board.
Only a year old
At the time it bought GVA Williams, FirstService had 147 offices in 46 countries and generated about $1 billion in revenues. The new Colliers, Jaccom said, has 510 offices in 61 countries and by sheer revenues is “the third-largest in the world.”
Jaccom said instead of losing clients because his firm cannot service all of their needs around the globe, the firm is now winning new ones who have dealt with Colliers elsewhere.
In addition to Colliers International, FirstService owns a number of other real estate firms, including PKF Consulting and PKF Hospitality Research, as well as a residential property management arm that oversees 24 million residential units worldwide and generated $662 million in revenue in 2010. Locally, it owns Cooper Square Realty, which manages 400 condos, co-ops and rental properties valued at more than $5 billion.
National Real Estate Investor, a commercial real estate trade magazine, ranks Colliers International fourth, with investment sales and leasing transactions totaling $59.6 billion last year. That compares to CBRE, which had $128.1 billion, JLL with $67.2 billion, and Cushman at $66.8 billion.
FirstService, said Stephen MacLeod, an analyst with BMO Capital Markets, is in “great shape” financially.
“They have growing EBITDA [earnings before interest, taxes, depreciation and amortization], they’re not very highly leveraged, and they have pretty good cash flow,” he said. “Globally, as part of the strategy, they have been going out and aggressively recruiting brokers and they appear to be going out and taking some away from the likes of Jones Lang LaSalle and Grubb & Ellis. They are becoming more competitive against CBRE and JLL.”
Jaccom, for his part, remains in full recruitment mode.
“Maybe this sounds pompous, but I’m a broker for 32 years, and brokers are insecure,” Jaccom said. “This is a place where they can trust each other, leave doors open. At other places, a lot of junior brokers get screwed around by senior people. That doesn’t happen here. I weed out the assholes. And commissions for junior brokers are negotiated up front.”
Alan Desino, one of Colliers’ prized recruits, joined the firm from CBRE. He said he joined Colliers because he wanted a firm with more of a focus on tenant representation. He also cited the collaborative culture, and noted that information “doesn’t reside in silos.”
“Every time we have potential new clients, we meet as a group … to really create a specific package and recommendations to that client,” he said.
Still it’s competitor JLL that has garnered attention for reeling in the bigger fish lately. In the spring of 2010, the firm hired investment sales brokers Richard Baxter, Ron Cohen, Scott Latham and Jonathan Caplan. And, more recently, it brought on leasing brokers Mitch Konsker and Paul Glickman, among others.
“I’m not aware of Colliers hiring,” said Peter Riguardi, president of JLL’s New York region. “We’ve hired a dozen of the top producers in town over the last couple of years, so we’re pretty excited by that.
“We consider anyone in the game a competitor, particularly locally in New York,” he added. “But on a comprehensive international basis, competing for a global type of project, we don’t discount them, but don’t see them as much as we see CBRE.”
That may soon change.
“We’re a year old,” Jaccom said, dating the new era to the launch of FirstService’s rebranding campaign. “Are we CBRE, JLL? Not yet. But are we competing with them? Absolutely; we got them on the run.”