Dahlstrom’s Exit Complicates Colliers’ Push
Until last month, the main challenge that Colliers International faced in building a national capital-markets platform was coordinating regional offices that in the past were only loosely affiliated and rarely collaborated.
Now the brokerage has a more-immediate problem: replacing the executive who had been overseeing the effort.
Colliers last month parted ways with Warren Dahlstrom, who had joined two years ago with the mandate to build out the capital-markets operation. Colliers and Dahlstrom were mum about the reason for his exit, but it clearly throws a wrench into implementation of the ambitious strategy.
Colliers is one of four upstart commercial real estate brokerages seeking to set up nationwide networks of offices to sell properties and arrange mortgages. This article is the last of a five-part series exploring the strategies and progress of the group, which also includes Avison Young, Cassidy Turley and Newmark Grubb.
While the Colliers brand dates back to the mid-1970s, the operation long consisted of independent businesses that were loosely affiliated. That changed in January 2010, when Colliers was acquired by FirstService, a Toronto real estate-services company.
FirstService’s aim was to use Colliers as the springboard to becoming one of the top commercial real estate brokerages, operating on an integrated basis nationwide and providing services ranging from leasing to property management to investment sales.
Colliers was merged with FirstService’s relatively small U.S. platform, and the consolidated operation retained the Colliers name. The acquisition gave FirstService majority ownership of the regional Colliers offices, but left local managers with equity stakes.
With the purchase, FirstService gained a presence in many U.S. markets — but Colliers affiliates in Washington, New York, St. Louis, Baltimore and Teaneck, N.J., opted out of the deal and linked up with three regional brokerages to form Cassidy Turley. That left additional gaps that FirstService had to fill.
In the capital-markets area, Colliers traditionally focused on brokering relatively small commercial properties and mortgages. FirstService decided to increase the emphasis on the institutional market and pursue business throughout the nation. In February 2011, it hired Dahlstrom, a former Cushman & Wakefield executive, to head the capital-markets effort, naming him president of investment services.
When Dahlstrom came on board, Colliers had 42 brokers focusing on institutional property sales and mortgage brokerage. That number has since increased by 30, consisting of both new recruits and reassigned staffers. The recruits included former Cushman brokers Rick Putnam in Irvine, Calif., and Steve Algermissen in Los Angeles, as well as one-time Marcus & Millichap and CBRE broker Jeffrey Oram in Parsippany, N.J. Overall, Colliers has 253 capital-markets brokers among its approximately 3,700 U.S. employees in 147 offices.
The brokerage plans to make some additional strategic hires in key markets, such as New York and Washington. But the capital-markets staffing is now largely in place, and the focus going forward will be on stepping up productivity, expanding coverage across property types and, most importantly, coaching brokers to work as a cohesive team by collaborating across markets.
Dahlstrom’s abrupt ouster prompted speculation that Colliers had concluded his background as a sales specialist wasn’t the right fit for the next stage of the capital-markets expansion. At Cushman, where he spent 13 years, Dahlstrom led the investment-sales team in Washington. He previously led sales teams at Carey Winston and Grubb & Ellis.
The buzz is that Colliers bought out Dahlstrom’s contract and is now hunting for an executive with experience at overseeing and expanding a national operation. Colliers declined to comment on its plans other than to say it “is committed to continuing our investment in growing this business.” But members of the capital-markets group have been told that candidates are being interviewed to fill Dahlstrom’s position. The recruiting effort is being led by Dwight Hotchkiss, president of brokerage services.
A key goal for Colliers is to coax brokers who are used to working alone into pursuing institutional assignments on a coordinated basis. Other brokerages have found it isn’t easy to effect that kind of change in corporate culture. Colliers traditionally was what is called a “silo” operation, with offices acting independently. Now, brokers across markets have to be persuaded to share information and clients, possibly resulting in reduced commissions in the near term in the hope of a larger payback down the road when the overall business grows.
That effort in the Western region is being overseen by Putnam, who joined Colliers almost a year ago as a managing director. “What we are trying to do in the West is stretch an institutional fabric over all of the offices,” said Putnam, who is courting institutional clients and coordinating activities among the 47 Western offices. Putnam, who is also filling in as national capital-markets chief until a replacement is named, previously was an acquisitions specialist at RREEF and before that worked as a broker for almost 20 years at Cushman and Trammell Crow.
While Colliers has a well-established track record of handling relatively small commercial assignments, it has made limited progress so far at attracting institutional listings. Last year, it ranked 13th in national sales of large office properties with a 0.6% market share, fifth in industrial sales with a 7.7% market share, 11th in multi-family sales with a 1.2% market share and 10th in retail sales with a 1.6% market share, according to Real Estate Alert’s Deal Database, which tracks transactions of at least $25 million or more (see industrial and multi-family rankings on Pages 8 and 10).
Capital-markets services currently contribute roughly 10% of Colliers’ total U.S. revenues. That’s comparable to the level at Jones Lang LaSalle, for example, but well below the 23% share at CBRE’s Americas Division.