‘Core’ Confusion

As first anniversary approaches of development giant’s investment in the boutique brokerage, questions linger

Shaun Osher and Jeff Blau
Shaun Osher and Jeff Blau

It was supposed to be a hat, horns and champagne moment last fall when brokerage chief Shaun Osher summoned nearly 100 CORE agents to the firm’s main office at 104 Fifth Avenue.

As they filed into a conference room on the 17th floor, agents were greeted by their boss, flanked by Jeff Blau, the CEO of the mega development firm the Related Companies. During a brief meeting, Osher and Blau announced that Related had acquired a 50 percent stake in CORE, the 10-year-old firm founded by Osher and the Cayre family.

Many of the agents on hand for that announcement were, no doubt, elated to be associated with a brand-name developer like Related.

This month, a year after the October 2014 acquisition, The Real Deal looked at how the deal is playing out.

What we found is that much of that initial excitement has been replaced by questions and lingering confusion over the exact parameters of the deal and what it means for the new development marketing operations of both companies.

In addition, the acquisition has raised questions about a $5 billion deal Related has with Corcoran Sunshine Marketing Group to work on a number of its residential buildings. While officials at both of those companies adamantly deny that there will be any changes to their agreement, some wonder whether that’s truly the case.

Overall, few changes have been implemented yet and some say the details of the deal were never publicly explained.

“The day the announcement was made, the roadmap and goals were never articulated,” said one former CORE staffer, who asked to remain anonymous. “People just thought, ‘Oh, I guess they’ll fill [CORE’s] office with Related people or use Hudson Yards to lure top brokers in.’” 

Osher, Blau and the Cayres — who still own an undisclosed stake in CORE along with its investment and development firm Midtown Equities — all declined to comment for this story, saying the relationship was still evolving. But Blau was unequivocal that Osher was the “No. 1, 2 and 3” reason for Related’s investment, according to a New York Times story at the time the acquisition was announced in October 2014. For months, Blau said, he tried unsuccessfully to woo Osher to Related. “As the slogan goes, ‘I liked it so much I bought the company,’” he said.


The comment rubbed more than a few current and ex-CORE agents the wrong way, though most who spoke to TRD declined to speak on the record because of concerns about upsetting Osher or Blau.

“It’s a foolish thing to say, even if it’s true,” said a former agent. “What you’re saying is, if Shaun is kidnapped by pirates, there’s no company.”

Whatever Related’s motivation for investing in CORE, the developer gained a residential resale division overnight.

Related officials said they were losing touch with buyers after selling them condos and, therefore, leaving good money on the table. A resale division, in which they would get a piece of the commissions, could capture additional business if those clients decided to sell and buy something else down the road.

And despite Corcoran Sunshine’s sales and marketing muscle, Related undoubtedly benefits from having CORE agents out networking and bringing in more customers.

So far, Related and CORE have rolled out a “building specialist program,” with several CORE agents assigned to each Related building.

Andy Gerringer, managing director of new business development at the Marketing Directors, said it seems logical that Related wanted to beef up its resale division and its in-house research operation, which had been lacking. “Taking CORE for those reasons would make sense to me,” he said.

Of course, Related also has a history of acquiring businesses — like the high-end fitness chain Equinox and Union Square Events, the catering arm of Danny Meyer’s restaurant business. But the deal with CORE is different because it directly feeds into Related’s bread-and-butter real estate business. And, some industry insiders speculated that Related could eventually absorb CORE entirely.

“It’s not food, it’s not a spin class or a gym membership. It’s buying and selling real estate. That’s our heartbeat,” noted one insider.

But Andrew Heiberger, CEO of Town Residential, called the deal a “win-win” for the companies.

“Shaun immediately [gained] a pipeline of inventory that could yield tens of millions worth of commissions,” he said in a recent interview with TRD. “Jeff [added] another line of business and revenues through the Related Cos. platform because now he can collect sales commissions.”

Still, several sources speculated that the cash portion of the transaction may only have been in the $10-million range, though Related may also have assumed debt from CORE. Osher disputed that in an email to TRD, which did not offer additional details.

‘Sunshine’ state

From the outset, many industry insiders questioned what impact the Related-CORE deal would have on Corcoran Sunshine.

In 2013, Related announced a deal with the firm — which has 150 new development agents, 30 projects in active sales and a pipeline of $30 billion worth of new development — to market roughly $5 billion worth of projects, including Hudson Yards’ two residential towers 15 and 35 Hudson Yards.

It’s still unclear if CORE will play any sort of role in the sales and marketing of Related’s new development projects, and if so, what that will mean for Corcoran Sunshine. There are, however, some fuzzy lines being drawn.

For example, at Related’s Zaha Hadid-designed 39-unit condo at 520 West 28th Street, which sits on the High Line just outside the Hudson Yards footprint, CORE brokers Heather McDonough and Henry Hershkowitz — formerly of Corcoran Sunshine, and, more recently, Douglas Elliman — have been brought on along with a sales team from Related and Corcoran Sunshine.

Related’s Zaha Hadid-designed 520 West 28th, which CORE and Corcoran Sunshine brokers are working on.

Related’s Zaha Hadid-designed 520 West 28th, which CORE and Corcoran Sunshine brokers are working on.

Through a CORE spokeswoman, both McDonough and Hershkowitz declined to comment.

Kelly Kennedy Mack, president of Corcoran Sunshine, told TRD that her firm is “thrilled” to be collaborating with Related at Hudson Yards on the Hadid project, as well as at Carnegie Park, a 325-unit condo at 200 East 94th Street. And she said there’s been no change in her company’s relationship with Related. “The relationship has been great,” she said in a statement.

Nonetheless, the deal with CORE rattled Corcoran Sunshine insiders.

“A lot of us looked at them like, ‘What?’” one high-level Corcoran Sunshine executive told TRD. “We know everything going on. We have great research, great anecdotal information. We have a full infrastructure that could help them overnight.”

If there is a common thread in the deals Related struck with CORE and Corcoran Sunshine, it’s that both deals reflect Related’s attempt to bulk up its sales and marketing operation.

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Prior to 2008, Related employed 50 people in its new development division, but those ranks have since dwindled to fewer than 10, according to sources. When the market crashed, Related lost top talent including Susan De França, who left to become president and CEO of Douglas Elliman Development Marketing; David Wine, who left after 32 years to launch Oliver’s Realty Group, and Alicia Goldstein, who took a job at Miami-based developer Faena Group.

This past summer, Leslie Wilson also jumped to Elliman to work with De França.

In recent months, though, industry insiders speculated that Related could give CORE agents a piece of the sales and marketing work at Hudson Yards, despite Corcoran Sunshine’s contract. But it’s unclear how that would play out and whether Related could face financial penalties for doing so. A Related spokeswoman told TRD that Corcoran Sunshine is a “great partner” and flatly denied that there will be any changes to its agreement with the firm.

Scaling up

Not surprisingly, the narrative about the deal has played out differently at CORE than it has at Corcoran Sunshine.

On day one, many CORE agents and managers assumed they’d get a piece of Related’s new development pipeline. So far, though, that hasn’t been the case, although sources said Osher is personally involved in Related projects.

A rendering of 35 Hudson Yards, center, which Corcoran Sunshine is working on for Related.

A rendering of 35 Hudson Yards, center, which Corcoran Sunshine is working on for Related.

Still, it would seem that CORE’s long-term success involves two key factors: Expanding beyond the Related deal and claiming a piece of Related’s new development business.

However, it’s unclear if Corcoran Sunshine has tied up all the buildings, or if there are pieces left for CORE to scoop up.

Giving CORE a piece of the new development pipeline would make sense given the acquisition, one former CORE agent said.

“You’re throwing away money. You now have a new-development marketing firm that you’re a half owner of. That money should be coming back into the house.”

For its part, CORE, which stands for Cayre Osher Real Estate, has had ups and downs in recent years, although the firm has lately been on an upward trajectory. In 2013, it had $344 million worth of listings on TRD’s annual brokerage ranking. The following year that number fell to $157 million and this past spring it rebounded to $277.5 million. It also grew its ranks to nearly 130 agents this year, up from 78 last year.

When Related and CORE announced the deal last year, Osher and Blau sketched out plans to expand CORE beyond its three offices in Chelsea, the Flatiron District and the Upper East Side. “It’s a huge game-changer for us as a company,” Osher told TRD at the time.

However, those expansion plans have not yet materialized as the firms work out the finer points of their relationship.

Some sources say CORE’s deal with Related will make it harder to convince other developers to hire them.

But CORE is currently marketing nine new development projects, including two projects for Izaki Group Investments at 15 Renwick and 93 Worth. (The brokerage is also involved in a third project for Izaki at 155 West 18th Street, which is in predevelopment.)

Eldad Blaustein, CEO of Izaki subsidiary IGI-USA, admitted that when he heard about Related’s acquisition of CORE, he was concerned about the conflict of interest. But a frank discussion with Osher convinced him that the deal only strengthens CORE and gives it more resources.

“Related is a huge company. We are not competing in the same area with the same type of building, so I don’t think it’s direct competition,” said Blaustein.

He also noted that Osher is meticulous about finishes, unit mix and comparables: “We’ve felt like we have the attention of the owner and founder,” Blaustein noted.

But it’s unknown how many new clients the firm has bagged in recent months.

While it has not added offices, CORE has been scaling up its new development division.

Corcoran Sunshine President Kelly Kennedy Mack

Corcoran Sunshine President Kelly Kennedy Mack

In January, Osher tapped Tim Crowley — former managing director of development and architecture firm Flank, which worked on 224 Mulberry Street and the Boerum at 265 State Street in Brooklyn — to oversee its new development pipeline, which it pegged at $10 billion worth of projects. That same month, McDonough and Hershkowitz joined CORE, citing the firm’s new development work and the Related partnership as reasons for doing so.

But growing the firm’s new development business in Related’s shadow is a tall order.

“Shaun lured big developers from larger firms, not by slashing commissions, but by giving it a personal touch and being very hands-on. He’s great with floor plans, he intuits the flow of space and knows how to maximize dollars per square foot,” a former agent said. “But when he leaves the room, something changes. If Shaun is devoting the bulk of his time to Related, who’s sitting in that room with developers?”

Agent churn

CORE’s uncertain role in the new development space has reverberated among some high-producing agents.

In May, Tom Postilio — a founding member of CORE — and business partner Mickey Conlon joined Elliman, hinting that CORE’s limited reach was a motivating factor. The duo, known for their appearances on HGTV’s reality show “Selling New York,” cited Elliman’s alliance with Knight Frank as a reason for moving. “We are eager to expand our business,” Postilio said at the time.


Tom Postilio and Mickey Conlon

CORE has weathered the departure of star brokers in the past.

In 2010, celebrity broker Fredrik Eklund, who stars in “Million Dollar Listing New York” and his business partner John Gomes decamped to Elliman. Two years later, 10 agents followed suit, including Vickey Barron, Lawrence Rich and Kirk Rundhaug. Last year, Reba Miller — whose firm CORE acquired in 2011 — went out on her own again.

But for CORE, having Related’s backing is no small matter.

And if Blau’s personal real estate portfolio can be seen as a sign of what’s to come, CORE is in good shape. Indeed, when the Related CEO put his co-op on the market this fall, he gave the listing to CORE. The full-floor pad at 1040 Fifth Avenue sold for $30 million in August.