Top dog reigns

<i>Elliman and Corcoran swap spots in key categories amid downsizing and gloom</i>

Go to: Top residential firms of 2009

 

In a year in which the real estate rules were all but suspended due to the uncertain economy, behemoth brokerage Prudential Douglas Elliman cemented its position as the largest residential firm in Manhattan, chipping away market share from its rival, the Corcoran Group. But as the competition intensified between the two companies in this challenging market, Corcoran bested Elliman in several key categories, including the dollar value of its listings.

In The Real Deal’s sixth annual survey of the biggest Manhattan firms, Elliman beat out Corcoran in sheer size. In a reversal from last year’s results, Elliman also topped Corcoran in the number of exclusive sales listings — and unlike last year, it added agents, while Corcoran saw its ranks depleted. Still, Corcoran topped all other firms in the total dollar value of its listings and also outdid Elliman in terms of median listing price and number of listings per agent.

The game changer this year, of course, is the altered marketplace, which serves as the backdrop for this neck-and-neck competition. By the end of the first quarter of 2009, nearly 10,500 available listings were on the market, a jump of 34.9 percent from 7,778 in the same period last year, according to a market report by real estate appraiser Miller Samuel.

But as experts pointed out, “bigger” does not necessarily mean “better” in today’s market, especially as firms trim expenses in an effort to cushion their bottom lines.

Indeed, this year five companies saw a year-over-year decrease in agents, according to data collected by The Real Deal in early April from firm Web sites and the OLR residential listing portal. That’s more firms showing a decrease than any year since The Real Deal survey began in 2004.

“I’m pickier about who I put in my seats,” said Frederick Peters, the president of Warburg Realty, which dropped 16 percent of its agents between April 2008 and April 2009.

“This isn’t an environment in which you can afford to spend money on people who aren’t making you money,” he added.

Elliman has been the largest firm in Manhattan since The Real Deal began conducting its annual survey in 2004. At that time, the firm had 940 agents and Corcoran had 718.

This year, Elliman has 1,513 agents, up 3.3 percent from 1,464 in April 2008. Corcoran, by comparison, has 1,030 agents in total: 964 at Corcoran and 66 at the company’s new development wing, Corcoran Sunshine. That’s a drop of 6.4 percent from last year’s total, 1,100.

Much of the decrease came from Corcoran Sunshine, which had 110 agents last year at this time.

“In a market where traffic at new developments is slower, we decreased the number of agents at certain sites,” said Pamela Liebman, president and CEO of Corcoran, adding that her philosophy is to “stay ahead of the curve” when it comes to cutting costs.

“We’re adapting to a changing market,” she said.

Meanwhile, Corcoran had 1,981 active sales listings last month, falling short of Elliman’s 2,342, despite the fact that two large and high-profile Upper East Side developments, amenity-laden Miraval Living and condo conversion Manhattan House, switched exclusive sales contracts from Elliman to Corcoran this winter.

The ranking is an upset from last year, when Corcoran had 1,829 exclusives to Elliman’s 1,777.

But Liebman said Corcoran is carefully hand-picking its listings to avoid being stuck with homes it can’t sell. “We’re trying very hard not to take listings that are overpriced,” she said. “We turn down a lot of listings. We’d rather let you go than let you down.”

Moreover, the value of Corcoran’s listings totaled $4.803 billion, edging out Elliman’s $4.398 billion.

Dottie Herman, president and CEO of Elliman, said her firm, too, has enacted cost-cutting measures, and that while it has added brokers overall, it has seen some brokers leave because of the tougher market. “Usually, in a down market you don’t see as many agents come into the business,” said Herman.

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Still, the firm has seen an influx of agents from other companies, as well as from finance and other industries affected by the economic downturn, she said.

“Who we are, and our reach, is certainly a plus” in attracting new talent, said Herman. However, she noted: “We’re very selective, too — we’re not looking to take everyone. It’s not about having the most agents, it’s the best agents.”

Elliman’s growth in the face of dire market conditions can be attributed in part to its recruiting of 50 to 75 new agents for the new rental department the firm started in January. The goal is to capitalize on a rental market that at the moment is more active than the lackluster sales sector.

At Corcoran, rentals are handled by its sister company Citi Habitats, which ranked as the third largest company in the annual survey, with 719 agents. Despite its ranking, Citi Habitats saw a 12 percent decrease in number of agents from last year, when it had 816.

Gary Malin, president of Citi Habitats, said the difficulty of landing deals has led some of his agents to leave the industry. “The time and dedication required thins out the agent population,” he said.

But like Elliman, Citi Habitats also has experienced an influx of new agents from other companies and industries, he said. The firm has added 120 agents so far this year, he said, though he noted many of them are still being trained and were not captured in The Real Deal’s survey.

Other firms whose work forces dropped between April 2008 and April 2009 included Bellmarc Realty, eighth on the list in number of agents, which dropped 3 percent, to 225 agents; Warburg Realty, in 12th position as it fell from 175 agents to 147; and Fenwick Keats Goodstein, at 14th, which slipped nearly 15 percent, to 98 agents.

Peters said he lost several agents through attrition as well as letting others go, adding that the current market, which requires skillful salesmanship, is a good time to “weed out” weaker agents.

“We’re actively trying to improve our mix,” he said, noting that The Real Deal’s survey, which includes exclusive sales listings, does not reflect the success of buyers’ brokers.

“I’m trying to bring in people with real experience and ability,” said Peters.

Even firms that increased their ranks said they are employing a similarly cautious strategy.

Sotheby’s International Realty, for example, grew 18.4 percent from 152 agents last year, to 180, moving up from 12th on the list last year to 11th. But the firm does not actively solicit new agents, said Ellie Johnson, vice president and brokerage manager for Sotheby’s Upper East Side office.

“We’re not a training company,” she said. “From time to time, we’ll hire someone who’s introduced to us. We have to protect the quality of the agents.”

Other growing firms included fourth-ranked Halstead, which jumped 1.9 percent to 550 agents, and its sister company Brown Harris Stevens, which came in at fifth with 367 agents, up nearly 12 percent from last year. Relative newcomer Charles Rutenberg Realty, which gives its agents a larger share of each commission than is typical for the industry, has swelled its ranks since its founding in November 2006, and now has some 213 agents, up 36.5 percent from last year and putting the firm at 10th.

Paul Purcell, the president of the New York division of Charles Rutenberg Realty, said the company is attracting more brokers as it becomes better-established. “People needed to know that we’re here to stay,” he said, adding that the larger commission model is attractive to many brokers as the downturn deepens.

In a testament to the increased activity at the low end of the market and declining sales prices throughout the city, most of the top 15 firms saw decreases in their median listing prices.

Firms with access to foreign buyers had an advantage this year, said JoAnne Kennedy, the chief operating officer of Coldwell Banker Hunt Kennedy. Her company is a subsidiary of international firm Coldwell Banker, which has some 111,500 sales associates on seven continents.

Kennedy’s 214-agent firm grew around 9 percent from last year and improved its Manhattan market share significantly, increasing its exclusive listings 113 percent and moving up to sixth from 10th in the rankings for number of exclusive listings.

“Our ability to be in touch with our foreign colleagues in Asia, South America and Eastern Europe has allowed us to take many listings that may have gone to someone else in a previous market,” said Kennedy.

She added that the growth of the company’s high-end Coldwell Banker Previews International brand is helping the company in Manhattan, as many New Yorkers “associate the Coldwell Banker logo with the suburbs.”