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Cresa Continues Pursuing Growth Goals Despite Loss of Orange County Affiliate, Disruption in NJ Operations

First Year of CEO Jim Underhill's Tenure Brings Mix of Recruiting, Retention Wins Along with Some Setbacks
March 9, 2017
Cresa CEO James Underhill is implementing a major growth strategy at tenant representation firm.
Cresa CEO James Underhill is implementing a major growth strategy at tenant representation firm.
Tenant representation firm Cresa is regrouping and planning more changes after its affiliate in Orange County, CA and ownership interests in the New Jersey office were acquired by Savills Studley and Avison Young, respectively, in separate transactions.

Cresa CEO James M. Underhill said the moves were expected as the firm implements structural changes as part of its growth strategy, including the planned roll-up of more than a dozen individually owned offices under Cresa’s corporate parent, which will be called Cresa Global.

A year after taking over as head of the tenant representation firm, Underhill is confronting the realities of positioning his company's office and senior management structures to recruit and retain top broker talent, all of which is key to achieving Underhill's goal of doubling the company's workforce and revenue within five years.

Underhill, who was named Cresa's CEO in March 2016 after serving as a strategic advisor to the firm’s board for several months, plans to achieve the agressive but selective growth goals by expanding through acquisitions and new hires in both the U.S. and internationally.

"The most important lesson I learned from being with a larger firm is that bigger isn’t better," the former Cushman & Wakefield CEO said soon after taking over as Cresa CEO. "It's about finding the right size for what you do and for the clients that you’re pursuing."

Last month, Savills Studley acquired Cresa's Orange County operations and announced plans to merge the former Cresa office in Newport Beach, CA with its Irvine offices later this year, creating a single office with 56 professionals. The sale of the Orange County office was initiated by the former Cresa office owners who wanted to cash out their interests, Underhill said.

In New Jersey, Cresa's former principals Tom Giannone and Ron Ganter joined Avison Young when the Toronto-based CRE services firm acquired half of Cresa NJ-North/Central LLC. Cresa New Jersey is now headed by managing partners James Scancarella and Dennis Gralla, as well as principal Jonathan Marks.

"My partner and I have each been with Cresa more than 20 years," Gralla tells CoStar. "Cresa made sure to retain us and we chose to stay with the company and build this brand because I believe in it. They make it their business to retain people who are loyal to the company. We're not going anywhere."

In New York City, Mark Jaccom stepped down as president and managing principal of Cresa New York, titles he has held since 2012. Underhill said Cresa has put together a leadership team of three principals along with seven professionals who have taken on recruiting, training and other responsibilities. Underhill expects to formally announce the changes in the next couple of weeks.

"We were not going to build offices to our potential with the leadership we had in place in certain markets," the CEO said. "We believe strongly in a collaborative leadership approach. The kinds of people that thrive at Cresa are those that want to have a seat at the table and a voice in strategy and how we build this company together."

Cresa is countering with expansion plans of its own. In coming days, Cresa will be announcing the acquisition of a company in North Carolina, followed by another acquisition in Denver to be announced soon after that, Underhill said. Last month, Cresa subleased 14,242 square feet at 1001 17th St. as part of its plan to expand its downtown footprint in the Mile High City.

Also last month, Cresa announced the opening of a new office in Tysons Corner, VA, its third office in the Washington, D.C. market. The new location, an expansion of Cresa’s office in McLean, VA, joins longstanding local Cresa offices in D.C., Bethesda, as well as an office in Baltimore. Internationally, the company expanded into India and Germany during 2016.
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Cresa leadership gathered at Park City, UT last month for the tenant rep firm's winter board meeting. From left: Matthew Miller, James Underhill, Matthew Feeney, Rich Rhodes.

Rich Rhodes, a managing principal of Cresa DC and former CEO of Cresa LLC, will work out of the new office after being based across the Potomac River in Bethesda, MD, for 33 years and expects to fill the 18-seat office to capacity within the year. Rhodes said the expansion will help Cresa capitalize on what he describes as "considerable unmet demand for our services in this area," as well as helping with the recruitment of top local talent in Northern Virginia.

In addition to the New Jersey office schism and Southern California sale, Cresa has also lost a number of high-level personnel in recent months. After working for Cresa since 1997, D.C. principal Jon Olmstead joined Cushman & Wakefield's tenant rep team last month as executive managing director.

In December, Justin Halpern and Ed Wartels, longtime principals in Cresa New York, left the firm to serve as senior directors at Cushman's Avenue of the Americas offices, while Cresa vice chair of brokerage services Marcus Rayner departed for Colliers International last fall.

Cresa said it is responding by ramping up its recruiting in New York, New Jersey and other markets across the country. Underhill also confirmed that the company, which traditionally has operated as independently owned offices with shared ownership in the parent company, Cresa LLC, has been pursuing a roll-up process of more than a dozen offices into a new entity, Cresa Global. Underhill declined to comment on financial or other details of the transactions.

"We're making some changes and we're better off as a result," Underhill said. "They might result in the loss of a bit of some production in the near term, but we'll have a much better organization and positioned for growth in the long term."

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