The mergers and acquisitions by top commercial real estate firms continue, but regional and boutique operations aren’t fazed by what seems like a drumbeat of consolidation by the top-tier firms.
In fact, some smaller operators see an opportunity to present themselves to customers in the Baltimore region as the local experts, and they also look to poach talent being pushed out the door by recent deals.
“I think there’s been a little transition here,” said Jim Lighthizer, principal at Chesapeake Real Estate Group LLC. “But I don’t think, by-and-large, it effects anything substantially. It doesn’t move the needle. I think things are going to continue as they’ve been. It’s not like there’s a change in the industry that is pushing larger companies. There’s not.”
Last week it was announced that commercial real estate behemoth JLL had acquired Colliers International Baltimore, giving the firm a stronger position in the Baltimore Washington corridor and dramatically expanding the property management side of the business in the area. Colliers International announced earlier this year that it was amicably severing ties with its affiliate and wanted to open a corporate-owned office in the area.
The announcement followed a string of shakeups in massive firms, such as Cushman & Wakefield completing its acquisition of DTZ in September and creating a firm with $5 billion in revenue and 43,000 employees. The company now has more than 4.3 billion square feet of space under management. In January, DTZ officially acquired Cassidy Turley, which created a firm with a combined $2.9 billion in annual revenues, more than 28,000 employees and 3.3 billion square feet under management globally.
In an interview last week discussing his firm’s acquisition of Colliers International Baltimore, Mark Levy, JLL’s market leader for Greater Baltimore, said the push toward firms getting bigger in the Baltimore area was the result of more institutional owners of Class A office space, industrial and multifamily. He said the institutional owners have a comfort level in dealing with top firms that is pushing many of the mergers and acquisitions.
To a certain extent, commercial real estate professionals agree that there may be greater comfort among institutional investors in dealing with the larger brokerages and property management firms. But they also believe there is still a place for smaller firms to thrive in a market like Baltimore.
Owen Rouse, senior vice president at Manekin, said the merger and acquisition of commercial real estate firms is nothing new and has been a fairly standard trend for the past decade. He said that how some businesses in the commercial real estate industry scale is important to some firms and not that big of an issue for others.
“Part of this is real estate is a local business, and it can be efficiently accomplished by local players as well as these larger national and international brands. I would tell you that the scale, meaning sort of the global reach and that sort of thing, is probably more important in some bigger, what I would call gateway cities,” Rouse said.
Douglas Kington, who co-owns the Baltimore RE/MAX Commercial Logic franchise, said he wasn’t concerned about his small firm trying to compete in an environment with fewer — but bigger — fish at the top of the food chain. He said his firm specializes in properties that larger firms may not consider. In the past 45 days, he said, his company has closed deals on three downtown Baltimore properties.
“I’m not seeing much of an impact. What is interesting is that on the residential side of the world a lot of the residential firms are considering adding the commercial capacity,” Kington said. “I love competition, so jump on in.”