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Full Service Versus Specialist, Newmark-Eastdil Rivalry Tests Brokerage Models

As Newmark Gobbles up Competitors and Recruits from Rivals, Eastdil Stays True to Roots, Grows From Within
June 12, 2018
Sales team that arranged several high-profile hotel sales, including the Four Seasons Miami, recently joined Newmark Knight Frank.


When Newmark Knight Frank announced it had hired away a seven-broker East Coast hotel sales team from Eastdil Secured two weeks ago, it was seen as another recruiting coup for Newmark, which has made a dizzying series of hires and brokerage acquisitions in recent years to build out its national platform.

Eastdil, part of Wells Fargo Bank, has long been considered to be the gold-standard of capital markets brokerages. The firm has handled many of the largest commercial property sales and loan assignments in the U.S. and boasts an enviable roster of some of the biggest institutional investors as clients.

Before decamping to Newmark, the New York and Washington-based hotel investment sales team led by Adam Etra, Mark Schoenholtz, Miles Spencer and Lawrence Wolfe, had ranked among the top hotel sales teams in the country and was among Eastdil’s most productive units.

Typically in such a situation, a brokerage in Eastdil's position would be on the hunt for a replacement team, looking to raid top talent from its rivals to make up for the loss. However, that has never been Eastdil's style.

"We have a history of growing super talent in our firm, so we do not have plans to hire outside," said Michael Van Konynenburg, president of Eastdil. "We have Scott Ellman and Dan O’Brien in our New York hotel group, who have each been with the firm for over 10 years and are veterans in this important market. Our hospitality pipeline is as big as it has ever been."

That, say market pros, is the Eastdil way. Next man up.

The firm, owned by Well Fargo since 1999, hires 30 to 40 junior-level analysts every year, most right out of graduate school, or short apprenticeships in real estate or banking. Like the Wall Street brokerage firms that are one of its forerunners, Eastdil Realty spun out of Eastman Dillon Union Securities, it seeks to ingrain the new hires in the Eastdil culture, which is styled more on an investment bank's than a sales brokerage. Eastdil brings new employees up slowly, like a new pitcher in the minor leagues. Some leave after a couple years, and the rest progress if they get with the program.

Unlike other real estate brokerage firms that have sought to position themselves as 'full service' providers, Eastdil eschews diversification. The firm doesn’t do leasing, property management or valuation assignments. It focuses strictly on the real estate capital markets -- arranging property sales and financing working with foreign capital and the biggest U.S. players. The firm rarely bothers with deals under $100 million.

And usually, the brokers that make it at Eastdil don’t leave.

The best Eastdil brokers have golf dates with Blackstone acquisition executives, and the telephone numbers for Japanese and Norwegian institutional investors on speed-dial. They can recommend a good restaurant in Dubai. For their clients, Eastdil brokers are a calming, knowledgeable guide through a sale of a big asset, and you are the center of their attention.

In today’s capital markets brokerage world, that approach is almost singular in a world where full-service is the mantra of the growing national brokerage firms. Newmark, which began a remarkable growth campaign six years ago, is the perfect example.

"We have the capabilities of a pure play cap market platform like an Eastdil, plus the expertise in agency leasing, appraisal, debt placement, tenant rep, project management and more. These services give us a much more complete picture of the assets," said Barry Gosin, Newmark’s CEO, in an email. "Having leasing, appraisal, loan underwriting, property management, is a real benefit for people who are valuing assets."

Observers credit the firm for building out such a platform in such a short amount of time.

Before 2011, Newmark Knight Frank was a super boutique, dominated by its offices in New York and London, with outposts and major affiliates in a few select markets, such as San Francisco and the Silicon Valley. That year, marked a change in the firm's fortunes as New York finance shop BGC Partners bought Newmark and plotted an expansion.

In 2012, BGC bought the remnants of national brokerage Grubb& Ellis out of that firm’s bankruptcy and the firm's growth began in earnest. It added sales and leasing talent from other firms, and swallowed up regional brokerages wholesale.

In 2014, Newmark acquired Apartment Realty Advisors, a multi-family super-boutique seen by many in the industry as a cash cow. That deal alone made Newmark an instant top-5 apartment broker nationwide. A year later, it lured high-profile Bostont office broker Rob Griffinn and his team away from Cushman, in part by paying millions in bonuses. Months later, leading West Coast office broker Kevin Shannon brought his team over from CBRE.

Along the way, Newmark added office, leasing and retail specialists and acquired retail sales brokerage RKF Holdings, just last month.

Gosin said clients these days expect brokerages to provide a wide range of services, including advisory work, valuation and more.

"Eastdil is a great company, " he concedes. "(But) the world changes. We’re a much bigger company, much bigger than Eastdil. And we have a lot of resources that come into play."

Eastdil veterans haven’t been immune to the allure of full service shops. In one of the biggest surprises in the brokerage world in recent years, marquee New York office brokers Doug Harmon, Adam Spies and their team left Eastdil after 20 years in 2016 to join Cushman & Wakefield. The hire was a big score for Cushman, which like Newmark, has been in growth mode this cycle, building out a full-service national platform via mergers.

At the time, the departure of Harmon and his team was seen as a huge loss for Eastdil. But once again, Eastdil filled the void from within. Brokers Jeff Scott and David Lazarus, who had both been with Eastdil for over a decade, took over the New York platform.

Eastdil’s bet is that clients will stick with the firm, not the individual brokers. Newmark, looking to grow in a hurry, thinks established talent brought into the Newmark fold is the way to go.

Mark Schoenholtz, one of the Eastdil hotel brokers who joined Newmark last month, said Newmark's full-service platform was definitely a draw, but it wasn't everything.

For many brokers the chance to get in on the ground-floor of a growing brokerage shop can be reason enough to jump ship, said Schoenholtz, who had been with Eastdil for 26 years before becoming co-head of Newmark's new hotel practice.

"What drove the decision ultimately was the ability to create a (hospitality) platform at another competitor that didn't previously have one," he said.

Market players expect competition for talent to increase again, as major property sales slow and veteran capital markets pro look around to consider their options.

John Doherty, Multifamily Reporter  CoStar Group   
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