Marcus & Millichap Reports Record Quarterly Earnings

Marcus & Millichap made a V-shaped recovery a reality in the second quarter.

The commercial brokerage giant achieved the highest quarterly revenue and earnings in the company’s 50 year history, president and CEO Hessam Nadji told analysts during a second-quarter earnings call Friday.

The firm closed nearly 3,300 transactions in the recent quarter, more than doubling the transactions closed in the same period last year, and up nearly 30 percent from the second quarter of 2019, Nadji said.

“We take great pride in these results, especially relative to the pre-pandemic market environment,” he said.

Revenue from real estate brokerage commissions — the vast majority of the firm’s revenues — was $253 million, more than twice the amount recorded in the same period last year, and up 34 percent from the second quarter of 2019. Total revenues were $285 million, with a net income of $31.5 million, which is up 143 percent year-over-year and up 48 percent from 2019.

The recovery was aided by the revival of transactions and listings that were canceled or delayed during the pandemic. As the economy reopened in recent months, those deals were resurrected and came to fruition in the second quarter, Nadji said

“Perhaps the most important internal factor is the productivity and client relationships of our tenured agents and loan originators,” he said. “The focus on long-term relationships has always driven our business, but clearly stood out over the past year.”

The company’s strategic acquisitions and talent recruitment also contributed to the results, Nadji added. Last fall, Marcus & Millichap acquired New York-based debt and equity brokerage Mission Capital Advisors.

Overall market conditions, such as low interest rates, as well as a widely held view that real estate can act as an inflation hedge, also helped fuel capital market activities, according to chief financial officer Steve DeGennaro.

“In recent months, more investors have cited uncertainty related to future tax law changes as one of the motivations to trade, which has added some incremental urgency into the marketplace,” he said.

In New York City alone, some 454 investment sales transactions were completed from April to June, adding up to $5.3 billion. The dollar volume nearly tripled the first-quarter total, according to Ariel Property Advisors’ quarterly investment sales report, though it still fell far short of the quarterly figures seen before the pandemic.