Paydirt: My broker’s keeper
Plus: Turmoil in the GCC, Gary Barnett makes headlines & more news you need to start the week
The brokerage has traditionally played second fiddle to the broker. It is a place where make-your-own-luck types hang their hats (and licenses), a platform that is leveraged by the agent for maximum personal benefit. The level of guidance and support for talent varies widely from firm to firm: An Elliman broker can ride the wave of a flashy marketing campaign, while at Nest Seekers, the strategy more closely mimics what the Chicago Bulls did with Jordan vs. the Cavs in ‘89 : “Give the ball to Ryan and everyone else get the fuck out of the way.”
All the brokerage bosses, from the legacy firms to the venture-backed Johnny-come-latelies, speak of “empowering agents.” This model is in stark contrast to other consumer-facing sales professions such as advertising, where the firm is the star, and the talent enables the firm. It’s allowed residential brokers to become brands onto themselves, and made recruitment and retention the thing that chiefs lose the most sleep over.
But a new breed of firms is trying to flip that model, spending time and investor cash on developing a platform that makes the firm the rainmaker. Companies such as Triplemint, LG Fairmont and Elegran Real Estate are betting the farm on online lead generation, as my colleagues Kathy Clarke and E.B. Solomont report in a fascinating piece in TRD’s June issue. They’re buying leads and distributing them to agents, who take a lower commission split (50 percent) on leads that become deals. They track how those leads are doing, hoping to use the data to eventually predict when owners are most likely to list or buyers are most likely to transact.
By scaling this approach, the firms reckon they’ll be better off than traditional firms, who rely on the broker to win business and keep only a sliver of the commissions their top agents make. But the strategy comes with its own risks: Triplemint et al. rely on buying leads from programs such as StreetEasy’s Premier Agent, so they’re at the mercy of someone else’s pricing model. They also risk killing a solid lead by handing it off to an agent who might not be the best person to capitalize on it. Overall, though, it’s an approach I think could have legs, and could seriously poke at the star-broker complex many of their competitors are saddled with.
Turmoil in the GCC, party in the USA?: When the United Arab Emirates was coming together in 1971, both Qatar and Bahrain were meant to be a part of it. Negotiations broke down in the 11th hour, however, and the U.A.E. moved ahead with seven emirates led by the ruler of Abu Dhabi, Sheikh Zayed bin Sultan al Nahyan. Qatar and Bahrain became their own sovereign states, but maintained close business and social ties with the U.A.E. through the Gulf Cooperation Council, or GCC. Every weekend, the streets of Dubai are filled with supercars and SUVs bearing Doha license plates, and Qatar invests a good chunk of its considerable wealth in the region.
On Sunday, however, five Arab countries – the U.A.E., Saudi Arabia, Bahrain, Egypt and Yemen – formally cut off ties with Qatar, alleging, among other things, that the country engages in state-sponsored terrorism. Qatari aircraft are banned from Saudi and U.A.E. airspace, and its citizens are to be expelled from Saudi Arabia, the U.A.E. and Bahrain.
What will the sudden and dramatic isolation mean for Qatari property investments? For one thing, it could lead to an even greater bet on regions like the U.S., where foreign investments are less subject to the whims of monarchs. The Qatar Investment Authority is already New York’s ninth-largest commercial property owner, according to CoStar, controlling nearly 11 million square feet here. In August, it announced plans to spend $35 billion over the next five years on U.S. investments, with a good chunk of that likely to be in real estate. I wouldn’t be surprised if this new drama back home sees QIA increase that commitment and speed up that timeline.
Barnett’s big week: Not even Shavuot can stop Gary Barnett from making headlines.
First, TRD reported that Extell is in contract for a major piece of the $100 million jigsaw puzzle it’s assembling on the Upper West Side. The assemblage, when complete, would allow the firm to build a project of at least 200,000 square feet at the corner of West 96th Street and Broadway.
Then, we reported that the AG gave the thumbs-up to Central Park Tower at 217 West 57th Street, which means New York City officially has its first $4 billion condo project. Barnett is still scrambling to find financing for the project; it’s been over a year since he’s been on the hunt for a $900 million construction loan (here’s an epic piece on his quest). But if it does come together, here’s what to expect: A 1,550-foot-tall glassy skyscraper, with 179 units that will, like One57, push the boundaries of extravagance.
(Paydirt is a weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick. Read more from Paydirt here.)