Tenant-rep firms grow amid industry consolidation

The number of tenant-only boutique office leasing firms in Manhattan has grown over the last few years, a trend opposite the wave of consolidation seen among commercial mega-firms.

“It seems like there are more [companies] now,” said Joshua Winslow, president of the boutique firm Winslow & Co., which he founded in 1999. The firm works with a number of TAMI tenants, from the tech, advertising, media and information businesses.

New entries to the tenant-rep market include Hudson Real Estate Partners and LSL NY, both founded last year. Other boutique tenant rep firms that have been around longer include VIZA Group and Vicus Partners.

Real estate professionals said the smaller firms are leaving their mark on the industry.

“About a third of our signed leases in the past 12 months have been negotiated by smaller, boutique tenant-rep firms,” said David Zar, a principal with mid-sized commercial and residential landlord firm Zar Property NY. “Many of them specialize in a neighborhood or industry, such as tech or fashion.”

Their specialized knowledge and contacts make boutique firms attractive to larger brokerages, which often court the independent shops to bring their brokers to the big time.

“We get approached two to three times a year. Which is flattering,” said Andrew Stein, a principal with Vicus. “But at the end of the day, you need to know who you are. Are you Jerry Maguire or IBM? Because there’s not much in between.”

The Manhattan office brokerage community is undergoing a sea change, impacted by global mergers, including the private equity-backed consortium that purchased DTZ and Cassidy Turley and is combining them with Cushman & Wakefield.

At the same time, JLL aggressively poached teams from rivals such as Cushman and Newmark Grubb Knight Frank. And Newmark’s parent, BGC Partners, for its part, acquired Grubb & Ellis in 2012.

More competition is also coming in as national groups like Lee & Associates and Transwestern open offices here, often by partnering with a local company.

The consolidation trend is, counterintuitively, also proving a catalyst for the creation of smaller firms. That’s because some senior brokers are peeling off to form their own firms, after being squeezed out through a merger or finding that the new larger firms aren’t a good fit.

And there’s plenty of business for the startups. Despite the “bigger is better” drumbeat, a significant portion of tenants in Manhattan’s active office leasing market turn to specialists in search of more personal service.

In some cases, larger brokerage firms that don’t yet have a presence in New York are also reaching out to displaced veteran brokers, looking for help launching offices here.

One veteran industry broker at a firm undergoing a merger said he was contacted by several private equity firms that wanted his expertise as they try to get established in the city.

Winslow said that’s happened to him as well. “I’ve been approached by a couple of companies,” this year, he said, but
declined to elaborate.