The Imploding Commercial Real Estate Brokerage Industry in 2010

“Too big to fail!”  “Been around too long!”  “Too entrenched in the market!” Where have we heard these terms before?  The commercial real estate brokerage industry is in for a drastic change in 2010! 

Commercial real estate brokerage companies have been consolidating for years, at the upper size range, right on through to mid-level and small firms.  The last ten years have seen large national brokerage companies swallow-up established brands.  Some of those include  “include CBRE’s acquisitions of Insignia/ESG,  Trammell Crow, and others, and JLL’s acquisition of The Staubach Company and others.  One recent notable acquisition saw FirstService acquire certain GVA affiliated offices.  Others are in the making.

Despite those strategic acquisitions, the current economic crisis appears to be accelerating change in the commercial real estate brokerage industry. Some small and mid-sized companies are failing.  Some of them are closing their doors and others are being acquired, with their brokers moving to larger companies one way or the other.

The rumors have again begun to swirl about some of the largest commercial real estate brokerage companies in the nation being in irreparable financial distress.  Those companies that have been around forever, that until recently have been considered too big and too entrenched in the national market to fail may, in fact, close their doors and / or be absorbed into larger more stable motherships.

One of the largest and most prominent internationally known brokerage companies, one which once was the gold standard in commercial real estate brokerage, is rumored to be imploding from within.  It has been suggested that this particular company may have only months before its current life support systems are terminated.  Another equally well-known industry behemoth came close last year to defaulting on its debt, which ranged in the hundreds of millions of dollars.  There’s more to come!  2010 promises to be an interesting year in the commercial real estate brokerage business.

The world has changed.  It always does. Sometimes faster than others. And now, the commercial real estate brokerage industry, a business that has remained relatively static for many years, is changing, too.

Will this change be good for the commercial real estate industry?  How will this inevitable evolution affect commercial tenants, buyers, landlords, and investors?   Will it prove positive?  How will individual brokers and their companies (old and new) maintain continuity of service and properly protect their clients?  Some have suggested that the big commercial brokerage companies could become too big to be effective in serving all but the very largest of companies…will that be the case?  How will these changes affect those of us who will still be standing?

What do you think?

Copyright Real Estate Strategies Corporation 2009.  All Rights Reserved.

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10 Responses to “The Imploding Commercial Real Estate Brokerage Industry in 2010”


  1. 1 Dave Mayfield October 21, 2009 at 12:55 pm

    FirstService did not acquire GVA.

    • 2 realstrat October 21, 2009 at 4:48 pm

      Hello D:

      I stand corrected. FirstService did not acquire GVA. If my information is right, FirstService acquired certain offices that were affiliated with GVA. Is that correct? I hope to hear from you on this, so that I can accurately communicate the facts. Thanks for writing-in!

      Regards,

      Andy

  2. 5 Cindy Spivack October 21, 2009 at 2:00 pm

    Hi Andrew — An interesting perspective and unfortunately probably accurate. But with change comes opportunity. Opportunity for new companies to surface providing the types of services being required today to handle this newly changing economic environment. When one door closes another better door opens.

    I enjoy your blog, keep writing.

    • 6 realstrat October 21, 2009 at 4:42 pm

      Hi C:

      So nice to hear from you. Thank you so much for your ideas and your kind words. I completely agree with you. From the ashes, rise the Phoenix! Not sure if that quote is completely accurate, but you get the message! I do believe that change is good in the commercial real estate industry and elsewhere. As an industry participant, I welcome this change and eagerly anticipate how it may positively affect our business, and how it might elevate the service delivered to clients.

      Regards,

      Andy

  3. 7 Dee October 22, 2009 at 11:13 pm

    Who could it be? Any guesses?

    “One of the largest and most prominent internationally known brokerage companies, one which once was the gold standard in commercial real estate brokerage, is rumored to be imploding from within…”

  4. 9 Greg in Tampa October 26, 2009 at 2:25 pm

    A few factors to consider when trying guessing which major firm/firms will go down:

    1) Which firms only derive revenue from sales – which are off 93% since ’07? To not have leasing and/or management operations means you’ve got no other income coming in now and every dollar is critical.

    2) Which firms are privately held and therefore require their owners to keep writing huge checks in order to keep their doors open?

    3) Which firms are heavily invested in the worst markets in the country (like CA, FL, AZ and NV)? With CA in near insolvency, how can anyone look at the next few years there and choose to carry the expense associated with keeping those offices open?

    There’s a day of reckoning coming soon, and it will be very interesting to see how this shakes out -because there is no shortage of brilliant and politically connected people working on it 24/7.


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THIS WORK IS DESIGNED TO PROVIDE PRACTICAL AND USEFUL INFORMATION ON THE SUBJECT MATTER COVERED AND REPRESENTS THE OPINION OF THE AUTHOR. HOWEVER, IT IS PROVIDED WITH THE UNDERSTANDING THAT THE AUTHOR IS NOT ENGAGED IN RENDERING LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE TO THE READER. IF LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. THE AUTHOR SPECIFICALLY AND EXPRESSLY DISCLAIMS ANY LIABILITY THAT MAY BE INCURRED AS A RESULT OF THE USE OR APPLICATION OF THE INFORMATION THAT IS CONTAINED IN THIS WORK.

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