By Keeping Rainmakers, Cassidy Gains Leeway
In seeking to set up a national capital-markets platform, Cassidy Turley’s best offense has been a good defense.
While the brokerage has made a number of key hires over the past two years, its most important move so far came last month, when it fended off Jones Lang LaSalle’s bid to lure away top rainmakers Bill and Paul Collins.
By signing the Collins brothers’ Washington investment-sales team to new five-year contracts, Cassidy dodged a bullet, gaining breathing room to build out its capital-markets operation. But the scare underscored the brokerage’s need to diversify its sources of investment-sales revenues, because the Washington team has accounted for a disproportionate amount of the large properties that Cassidy has brokered since being launched in March 2010.
Cassidy is one of four upstart commercial real estate brokerages seeking to set up nationwide networks of offices to broker properties and mortgages. This article is the third of a five-part series exploring their strategies and progress.
Thanks largely to its Washington team, Cassidy has brokered more large properties so far than the other three upstarts — Avison Young, Colliers International and Newmark Grubb. In 2011, Cassidy soared to fifth place in Real Estate Alert’s ranking of U.S. office brokers, with a 7.4% market share. But last year, its share dipped to 2.8%, versus 2.1% for Newmark, 0.6% for Colliers and 0.2% for Avison. (The ranking, based on sales of $25 million or more, is on Page 8.)
Cassidy’s strategy leaves it competing for capital-markets business not only with the other emerging firms, but also with the handful of brokerages that have already established national reach.
“We’re new, and we’re a challenger brand,” said Noble Carpenter, the chief of capital markets. “We’re not the only ones with this idea, but we have a tremendous head start with the national investment-sales and debt platform we’ve built over the past two years that operates within a consistent corporate culture. A lot of our peers don’t have that.”
Cassidy now has 50 brokers dedicated to institutional investment-sales and loan brokerage in 14 markets nationwide, up from 30 at its inception, and 117 brokers overall who work on capital-markets transactions. New offices in New York and San Francisco are now fully staffed with property and loan brokers. The company has also made hires in Boston, Dallas and New Jersey. And it plans to staff outposts in Los Angeles and Chicago.
“We built momentum with our 2011 hires and made more progress last year,” said Carpenter. “Given the nature of the business, it’s going to take 24 months for the results to show up in the numbers and transactions.”
Cassidy has acknowledged it is looking for ways to finance its growth. The company has held discussions with Australian conglomerate UGL about a takeover or some kind of strategic alliance. Cassidy declined to comment on those talks, but insiders have downplayed their significance.
The company’s formation was an outgrowth of the 2010 acquisition of Colliers by FirstService Real Estate Advisors of Seattle. Five Colliers affiliates opted out of that deal — Cassidy & Pinkard/Colliers of Washington, Colliers ABR of New York, Colliers Turley Martin Tucker of St. Louis, Colliers Pinkard of Baltimore and Colliers Houston & Co. of Teaneck, N.J. Those operations joined up with three other regional brokerages — BRE Commercial San Diego, BRE Phoenix and BT Commercial in San Francisco — to create Cassidy Turley.
Cassidy not only brokers properties and loans, but offers a full menu of real estate services, including property management, tenant representation and financial advisory services. The company now has 3,800 employees in 60 offices in 27 markets.
Cassidy declined to specify how much of its income is generated by capital-markets activities, but it said 55% of all revenues are generated from transaction fees and commissions, mainly from property brokerage and leasing. The other revenues are supplied by recurring fees from property management, corporate services and project and development services.
The expansion of the capital-markets platform began in earnest with Carpenter’s hiring. He and another veteran broker, Bart Steinfeld, joined in January 2011 from Jones Lang LaSalle, where they had each spent more than two decades. As capital-markets chief, Carpenter has spearheaded the push to hire investment-sales and debt brokers around the country. Also, he and Steinfeld have set up a team in New York, where they are based.
While Cassidy was seeking to recruit brokers, other firms were trying to lure away its staffers. Indeed, Jones Lang’s hard run at Cassidy’s Washington team was a major distraction that threatened to upend Cassidy’s plans. Jones Lang’s overtures began in 2011 and dragged into 2012, and at points along the way industry pros were buzzing that the Collins brothers and their colleagues were on the verge of defecting.
The Washington team has generated almost three-quarters of Cassidy’s total sales of large properties. Cassidy was the most-active broker of large office properties in Washington and its suburbs in 2011, with a 35% market share. But its share plunged to 15% last year, as uncertainty over the team’s future evidently took a toll.
Jones Lang’s attempted raid highlighted Cassidy’s vulnerability. Carpenter acknowledged that “D.C. is our juggernaut,” but said the company is making progress at diversifying its revenues. In addition to seeking to replicate the Washington platform in a handful of other major markets, the firm has also designated national specialists in each property sector who can parachute in to work with local brokers.
Cassidy made one of its biggest recruiting moves in September 2011 when it lured veteran San Francisco brokers Bob Gilley and Steve Hermann from CBRE, which captured a 10.7% share of large San Francisco office sales that year. Carpenter expects that Cassidy’s numbers in that city to grow as the duo gets settled. “You’ll see it this year,” he said.
Cassidy also recruited veteran broker Jose Alvarez late last year to spearhead a new institutional hotel-sales and financing group.