Newmark Plans Big Push in Industrial Sector
Aiming to replicate its rapid growth in other sectors, Newmark Grubb has launched an ambitious effort to create a national industrial investment-sales platform.
As its first foray into the booming warehouse arena, the firm has recruited veteran broker Bret Hardy from Colliers International, where he spent 16 years and was co-leader of the Western region investment-services group. Hardy joined Newmark this month as an executive managing director in Los Angeles.
Kevin Shannon, president of Newmark’s West Coast capital-markets team, helped enlist Hardy. Shannon said the firm is already in discussions with several other brokers. Its goal is to have a handful of sales teams in major industrial markets across the country within 12 months. Likely targets include Atlanta, Chicago and Dallas.
“You’ve seen what we’ve done to quickly grow in retail, office and multi-family investment sales,” said Shannon. “Industrial is a food group we are clearly going to go after hard, too, adding professionals that like our collaborative culture.”
The hiring campaign comes as the industrial sector has transformed from a niche to a major institutional asset class, driven in large part by the explosive growth of e-commerce. The last two years saw the highest-ever volume of warehouse sales. In a CBRE survey of nearly 1,000 investors released last week, industrial was identified as the most-attractive commercial property type for the year ahead.
Industrial properties are “in big demand from many of the large fund investors that are over-allocated in the other sectors,” said Newmark president Jimmy Kuhn.
Other brokerages have been beefing up their warehouse-sales teams. For example, Eastdil Secured picked off two senior industrial pros, Josh McArtor and Brian Budnick, late last year from CBRE, the sector’s top brokerage. That was notable not only because Eastdil was already a major force in industrial sales, but also because the firm typically nurtures talent from within and only occasionally hires high-level outsiders.
Newmark has nowhere to go but up in the industrial sector. While it has established brokers that lease industrial properties, it posted just $65.7 million of large investment sales last year, a tiny fraction of the sector’s $17.4 billion total. CBRE, Eastdil, Cushman & Wakefield, JLL and Colliers ranked in the top five, in that order.
Newmark is clearly seeking to match the quick growth in other sectors that enabled it to crack into the top five in Real Estate Alert’s annual overall broker ranking for 2016. Its most dramatic sales increases last year came in the office and retail categories. The firm posted $5.2 billion in office sales, up an eye-popping 231% from $1.6 billion the previous year. That jump came after the late-2015 hirings of the high-producing teams led by Shannon in Los Angeles and Robert Griffin in Boston. Newmark continues to recruit office brokers, for example bringing on vice chairman John Jugl in Denver in November.
On a percentage basis, Newmark’s growth in the retail sector was even more dramatic. In 2015, the firm brokered just $70.8 million of retail trades. But after a hiring binge, its sales volume soared to $979.2 million last year, and it rocketed from 23rd to fifth place in the ranking of retail brokers.
Executive managing directors Geoffrey Millerd and Pete Bethea defected from Cushman in 2015 to lead and help build out Newmark’s retail sales platform. Millerd is based in Boston and Bethea in the La Jolla office in Southern California. The firm has continued to hire retail teams, including one in San Francisco last year and another in Seattle this month.
Newmark is owned by BGC Partners, a New York financial brokerage. BGC began building a national capital-markets platform in 2011 when it purchased Newmark Knight Frank, then a boutique New York firm. Later that year, it bought Grubb & Ellis out of bankruptcy and the two firms merged.
The next big step was the 2014 acquisition of Apartment Realty Advisors. That instantly made Newmark a major player in the multi-family sector, and it has continued to add brokers and increase its sales. Last year, ARA Newmark’s volume grew by 29%, triple the pace of the overall apartment-sales market.
“ARA was a big turning point — it put us into the institutional market,” said Kuhn, adding that the later additions of Griffin and Shannon were also pivotal. Brokers now “see we are an alternative.”