With Eastdil Secured in flux, Roy March has become a key player on deals

In 1985, Roy March — then a senior vice president at Eastdil [TRDataCustom] — relocated from San Francisco to Los Angeles to arrange the $650 million sale of Arco Plaza, a pair of Art Deco skyscrapers now known as City National Plaza.

March, who was raised by working-class parents in Sacramento in the 1950s and ‘60s (see the Closing), remained based in L.A. until the early ’90s, having launched the company’s office there. In the decade and a half that followed — as he rose to president in 1994 and CEO in 2006 — he barely stayed in one place, bouncing around from his homes and offices in New York, L.A. and London.

But since Eastdil’s top two investment sales brokers, Doug Harmon and Adam Spies, jumped ship to competitor Cushman & Wakefield last October, the 60-year-old husband and father has taken up a more permanent residence in New York City, at Museum Tower in Midtown with his wife, Barbara. His move to the East Coast is just one of several aggressive steps that Eastdil has taken in the last six months to ensure that it does not lose ground to Cushman or any of its other rivals in the wake of the Harmon-Spies exit.

While the duo’s departure left industry spectators wondering if Eastdil would lose its steam, the firm — which has dominated the city’s investment sales market for the last six years — is still on track for a strong 2017.

As of mid-May, the combined value of the assets the firm is marketing, including partial stakes in properties, is north of $6 billion, according to an analysis by The Real Deal.

March, who now spends all of his time on the clock at Eastdil’s New York office in Midtown, said the firm’s year-to-date volume of closed deals is up by about 25 percent from the same period in 2016 — and there have been significantly more debt than equity deals. Last year, Eastdil handled $63 billion in debt deals nationally, according to March. Eastdil’s marquee loan closing so far this year has been the Morgan Stanley-led $2.3 billion refinancing of the GM Building for Boston Properties.

And despite the NYC investment sales market’s first-quarter lull, Eastdil is handling one of the year’s largest deals to date: Ivanhoe Cambridge’s $650 million purchase of 85 Broad Street from MetLife and Beacon Capital Partners — which went into contract in April and has not yet closed. Sources said March’s close relationships with Beacon Capital’s Fred Siegel and Ivanhoe Cambridge’s Daniel Fournier played a big role in his firm’s involvement in the deal.

“We have a deep bench, and when given the opportunity, we play pretty fucking well,” said longtime Eastdil senior managing director David Lazarus, who along with Jeff Scott has been running the firm’s New York office at 40 West 57th Street since December 2016.

As of the end of the last year, Eastdil was leagues ahead of its competition with a record $22.9 billion in investment sales across 47 deals in New York City, followed by CBRE with $6.7 billion and Cushman with $4.6 billion, according to TRD’s annual ranking.

Now, it remains to be seen whether Eastdil will hold onto the top investment sales spot in the city. And its competition isn’t exactly backing off. CBRE and HFF each had big wins in early 2017, with the $2.2 billion sale of 245 Park Avenue and the $1 billion sale of a majority stake in 60 Wall Street, respectively.

“Eastdil maintaining their No. 1 spot will be harder — as it will be a fight over clients,” said Yoron Cohen, whose team left JLL for Colliers International late last year.

“The counterculture”

In positioning March as the face of its New York operations, Eastdil — a Wells Fargo subsidiary with outposts in 13 cities worldwide and 325 employees — has steered clear of poaching talent.

Rather than investing time and money in new hires, its strategy has been to promote from within and amplify the involvement of its top executives. Lazarus and Scott, two former real estate investment banking veterans, now oversee 65 people, mostly brokers, at the firm’s New York office. And sources say Eastdil’s founder and chairman, Ben Lambert, and president, Michael Van Konynenburg, have also become more involved in the firm’s dealmaking.

But March argued that he, and other executives, have always been hands-on.

“It’s player-coach for all of us senior people,” he told TRD. “I’m the transaction leader for this firm — the chief execution officer, I call it. I wish I could actually put that on my card without it looking corny.”

That said, Harmon and Spies’ departure highlighted just how outsized a role March has had in some of the firm’s biggest deals.

March — not Harmon and Spies — reportedly led the sales of the Waldorf Astoria for $1.95 billion, 3 Bryant Park for $2.2 billion and stakes in 330 Hudson Street for $318 million and 1211 Sixth Avenue for $913 million over the past two years, according to sources inside Eastdil and others involved in its deals.

Based on multiple visits TRD made to Eastdil’s New York office in recent months, the firm’s CEO proved to be a mainstay in its hallowed halls. During one visit, March — a towering presence, clad in suspenders — shot into the conference room, interrupting a meeting between this reporter and one of his brokers to say, “Tell him about the counterculture!”

 In a later interview, March elaborated. He said he views Eastdil as an uncommon breed in the New York market — one that specializes in capital markets instead of leasing and has a salary-and-bonus structure instead of commissions. March noted that CBRE and JLL have always been run by capital markets people who are fixated on commissions. 

 “It’s tough to get an entire company to transform into that. Our goal is to be a trusted adviser, not simply an intermediary or a bang-bang brokerage,” he said.

 March’s swift rise from an investment banking intern in the ’70s, after graduating from the University of California, Davis, to a powerful negotiator as an executive at Eastdil caught the attention of several industry power players including Harry Macklowe, Jonathan Gray and Bill Tresham. Over the years, those relationships further broadened his reach in the business.

But regardless of the deals that Eastdil has snagged because of March’s connections and the fundamental differences he pointed to between the firm and its competitors, its brokers are feeling the heat.

Lazarus said the landscape “feels more competitive,” particularly with the heightened presence of Cushman vying for assignments. 

Changing tides

Sources close to Cushman said the Harmon-Spies team was not expected to reach full speed for two years but has already established a firm footing in just a few months. Harmon and Spies declined to comment for this story.

Roy March at Eastdil’s Midtown office

In recent months, Eastdil and the Cushman brokers have received joint credit in clients’ press releases — and shared payment for a handful of deals that Harmon and Spies had been working on. Meanwhile, Cushman is increasingly representing some of Eastdil’s past clients.

Two of the deals in which Eastdil and Cushman were jointly credited were Columbia Property Trust’s pending $88 million purchase of the land beneath 149 Madison Avenue and CIM Group’s $87 million buy of the rental high-rise Gilman Hall in Gramercy Park.

Yet March denies that Eastdil is losing ground to Cushman because of Harmon and Spies. “The bottom line is that was part of a negotiated process when they left,” he said, referring to the shared credit and payments. “There’s no co-brokerage.”

A source close to Eastdil said these were deals that one or both “remained involved in on a personal level,” in an effort to maintain a relationship with a client.

And while the duo has yet to close a juggernaut deal at Cushman, the global firm has been competing on more coveted office building contracts than before. Cushman recently snatched up a string of Manhattan retail condo assignments for the likes of Vornado Realty Trust, Ashkenazy Acquisition Corporation and Magnum Real Estate Group.

Despite any big deals completed since the duo’s departure, Eastdil is still largely associated with its former star brokers, according to some industry players.

“When people talk about Eastdil, they still mean Spies and Harmon,” said one investment sales broker who is not at either firm. “Those guys are so closely associated with this cycle, and for that reason they will do well in the short term.”

The two brokers had been with Eastdil for most of its record year in 2016. But March said that even that year didn’t start off strong.

“This time last year, we were just recovering from what was a paralysis in the market in terms of execution,” he said. “We had a price collapse and a severe retrenchment in the Chinese stock market, and the outlook was not that positive. If you look at the first quarter of 2017, there has been a slowdown. The outlook is much more positive. It doesn’t have those other elements associated with it.”

Moment of uncertainty

If overall dollar volume continues to drop off and trophy deals remain scarce in the market, however, this year may not be an accurate representation of what all the broker shuffling means for competing firms.

Marcus & Millichap’s Nat Rockett, an investment sales broker who left Cushman in 2015, said that this year “will be a bad barometer, because there’s so little volume that one big deal can totally skew the numbers in what will likely be a small sample set.”

The market, by most accounts, has been on a downward spiral for more than a year now. Investment sales dollar volume dropped 25 percent to $58 billion in 2016 from the sunny highs of $71 billion in 2015, according to data from Cushman. In the first quarter of 2017, that volume plummeted by more than 50 percent year over year, to $7.1 billion, Cushman data show. On the debt side, commercial real estate lending volume in the city fell to $82 billion in 2016, down 17 percent from $99 billion the year prior, according to the finance data firm CrediFi.

Yet among several big debt and investment sales deals this year, Eastdil arranged China Construction America’s $140 million purchase of a majority stake in a Hudson Square development site last month. And the brokerage is currently negotiating the LeFrak Organization’s nearly $120 million buy of the Affinia Dumont NYC hotel in Kips Bay. In addition to Eastdil’s more straightforward property assignments, it has also served as a strategic adviser to New York REIT on the mergers-and-acquisitions front and led negotiations on Rockpoint Group’s $300 million purchase of a stake in an arm of Mack-Cali Realty. 

The firm has been tapped to exclusively market HNA Group’s 1180 Sixth Avenue, Bentall Kennedy’s 757 Third Avenue and partial stakes in Brookfield Property Partners’ Brookfield Place and Paramount Group’s 900 Third Avenue. Meanwhile, Eastdil senior managing director Larry Wolfe and March have been aggressive on bagging a string of hotel assignments — from Witkoff’s Park Lane Hotel to UBS’s  Quin hotel.

Those deals have given the firm a strong leg up. But the competition extends beyond market conditions and beyond Cushman. The commercial brokerage giant CBRE recently stepped in to jointly market One Worldwide Plaza with Eastdil, which initially had an exclusive contract on the property — a sign that the firm might need extra muscle in some cases to pull off big deals. Sources said New York REIT tapped CBRE’s Darcy Stacom because of her relationship with the REIT’s new CEO, Wendy Silverstein, and her real estate expertise beyond Eastdil’s capital markets wheelhouse.

Colliers, which poached a total of five of JLL’s investment sales brokers in December and January, is also increasingly in the running for office building assignments. The firm is now marketing an 115,000-square-foot office-and-retail condo at 86 Chambers Street, with pricing around $70 million, the New York Post reported in February.

Regardless of how 2017 shakes out, several industry sources said they expect Eastdil to maintain a spot either at or near the front of the pack.

“The key to success in the high-end transaction is a strong national platform, coupled with a strong debt platform,” Cohen of Colliers said. “Eastdil was wise to create both, and they’re hard to beat.” 

(To see five years of NYC investment sales rankings dominated by Eastdil Secured, click here. To see dozens of Eastdil Secured’s deals that appear in TRData’s Deal Sheet since 2007, see here.)