Networks fill the void of the Vast Capital Markets Real Estate Middle
There appears to be a battle for the capital markets commercial real estate industry in the middle of the sales market ($4,000,000 to $30,000,000), and the service providers appear to be separated into three primary categories.
• National firms with multiple service lines and divisions
• Regional/local companies
• Specialty Firms (firms servicing a narrow sector student housing, self-storage, NNN assets of a single tenant such as Walgreens)
The successful service providers in all of these categories have a team approach. The team is led by two to three senior brokers, mid-level brokers, and support personnel. The national firms are looking to gain more market share in the middle market. Which is currently evident in the way DTZ is working to enhance its investment in Cushman & Wakefield, while Newmark Grubb Knight Frank is following up on its recent assemblage of strong local/regional companies by beefing up or adding service lines to compete for selective business. The regional/local firms are scaling up by having teams focused on a specific sector and geographic area. Specialty firms are trying to grab additional market share by dominating a specialty market. All of these firms need to stay efficient.
There’s a reason for this and to quote from Bill Gates: “The inefficient middleman is doomed.” That is why some partners and I, as well as founding firms, started the Capital Markets Real Estate Network this past summer. We are going to stay efficient and we see opportunity in serving the investment sales middle market. That’s not to say national firms aren’t capable or interested in serving this market, because they are on both counts. However, the difference in this market range is in the investors themselves. The investor profile on deals closed in this range is more often comprised of local and regional investors, particularly high net worth individuals and small limited partnerships, which is a group that is perfectly aligned with strong regional and specialty firms – especially networked firms. We started the Capital Markets Real Estate Network with four firms based in Pennsylvania and one in California, and are in talks with other candidate firms.
The founding CMREN firms and members are:
• Equity Retail Brokers (Philadelphia, PA) -- a retail focused brokerage firm; Edward Ginn, Ken McEvoy and Bart Delfiner
• Bennett Williams Commercial (York and Lancaster, PA – full service commercial brokerage, NNN Multi-Tenant Retail Sales specialists); Chad Stine and Brad Rohrbaugh
• The Flynn Company (Philadelphia, PA – full service commercial brokerage and office/industrial specialists); Colin A. Flynn
• Duquesne Commercial Funding (Philadelphia, PA – mortgage brokerage services); Gerard O’Malley and Tim McGinley
• May Realty Advisors (Los Angeles, CA – NNN Multi-Tenant Retail Sales specialists); Matthew May
The benefits of being part of a network, particularly a niche-oriented group, far outweigh sitting on the sidelines and staying 100 percent locally focused. They include: added gross revenue by making more money with less effort and less stress; fewer expenses, and better marketing budgets; plus the ability to attract the best and brightest team members. In short, networks work. The structure and fees to participate in networks varies substantially and interested firms should not only conduct a cost/benefits of networks that they may potentially join but also check out the people in them and how they are run. After all, one thing hasn’t changed about our business regardless of size and scale, and that is that commercial real estate services remain a relationships business so do business with people you like, respect and trust.
Edward Ginn is a principal with Conshohocken, PA-based Equity Retail Brokers. He is the co-founder of the Capital Markets Real Estate Network and is also a leading member of Retail Brokers Network.