Quartet of Colliers Firms to Merge, Los Angeles to Streamline
Colliers International’s U.S. operations have sure been on their toes the past few days. The brokerage network has announced a major consolidation of four of its Eastern-region firms and a streamlining of its Greater Los Angeles operations, both aimed at creating operating efficiencies and better client service. Although these strategies are unrelated, Doug Frye (pictured), chairman of Colliers International-Global, told CPN that they are indicative of the overall commercial real estate industry. “There has been consolidation for a while,” he said, “and a downturn in the market just accelerates that process.” In the Eastern region, St. Louis-based Colliers Turley Martin Tucker, Baltimore-based Colliers Pinkard and Washington, D.C.-based Cassidy & Pinkard Colliers announced that the three companies are consolidating their ownership structures into one holding company. Following the closing of this transaction, the new holding company will expand to include Colliers ABR in New York, forming one of the largest real estate service firms in the U.S., significantly strengthening its resources and reach to clients.“All of the firms have known each other for 25 years and have done a lot of business with each other,” Mark Burkhart, president & CEO of Colliers Turley Martin Tucker, told CPN. “There has been significant intertwining, especially in the past two years, so this is a natural evolution.” He noted that there is still room in the market for a large, private player to operate, and that the firms will continue to grow their existing platforms and bring together their real estate management, corporate services and capital markets operations. “This won’t change the brands in our market, our decision making or our leadership,” added Joseph Stettinius Jr., CEO of Cassidy & Pinkard Colliers. “It’s just going to give a more transparent view of our partnerships.” Colliers Turley Martin Tucker and Colliers Pinkard already has a major interest in Cassidy & Pinkard Colliers; in October 2006, the firms took a 40 percent stake in operations as investors and partners. Walter Pinkard Jr., chairman & CEO of Colliers Pinkard, explained that the purpose of the investor-partnership was to help build Cassidy & Pinkard Colliers beyond its burgeoning capital markets business, and it essentially helped catapult this consolidation idea forward. “When we were sitting on the board in Washington, D.C., some gaps (in service lines) were evident,” he said. “The investment capital to build resources you don’t have is significant.” Thus, the partnership between the four firms will expand the resources available for each, help in attracting talent and increase opportunities for existing employees, the executives noted. The consolidation will also enhance the firms’ positions to compete against the larger, full-service firms, Burkhart added, especially with the mega-mergers that have happened over the past two years, including CB Richard Ellis Inc. and Trammell Crow Co., and most recently, Jones Lang LaSalle Inc. and Staubach Co. But Stettinius added that the firms already see themselves as very successful competitors with the big players, and that the consolidation is about how they service their clients, not beat the competition. The partnership with Colliers ABR, for instance, will bring the opportunity for the entire service company to have a presence in the New York-Washington, D.C. crescent, where many of its clients already reside. Together, the consolidated firms have a property management portfolio of approximately 210 million square feet, including 20,000 locations for Fortune 1000 companies. Colliers International has been no stranger to collaboration between firms, Frye noted, pointing out its 100 specialist teams that cross 30 or 40 different markets. The three firms are still working on finishing the consolidation, and hope to close with Colliers ABR by the end of the month, Burkhart said. Upon the consolidation, the firms will continue to operate under their respective names and leadership. The executives will also be taking on leadership roles in the holding company: Burkhart will be CEO; Pinkard will be chairman, Stettinius will be president; and John Fleury, president & COO of Cassidy & Pinkard Colliers, will be COO. Other roles within the holding company have not been defined yet, but Stettinius assured that Colliers ABR will have a significant voice in the operation going forward. But an industry source familiar with the company seems to think there may be another side to this strategy. “The general sense is that it appears to be a smart move,” the source said. “But here’s the real question: is it just a continuation of the civil warfare within ownership, or is just part of a larger strategic move that will allow other moves to follow?” He noted that there has been ownership trying to assert dominance over one another, but eventually, “They were all singing ‘Kumbaya.’ If they’re still singing together, one will expect more consolidations to follow. But if they’re not singing together, is this (dominance) simply rearing its ugly head again?” The source pointed to a rumored merger between largest Colliers member firm Colliers Macaulay Nicolls and New York-based GVA Williams, in which the Colliers firm was trying to make a grab at the New York market. “Now there’s this ABR linking with no mention of Macaulay Nicholls. This may be another example of personalities trying to assert control over Colliers U.S.A.” But another industry watcher said this may actually help define what Colliers International really is. “There always seemed to be a difference between Colliers International and its entities as to what the ultimate game plan is—whether it would be an owner’s platform or a best-of-class platform,” the source noted. “Will the Colliers brand every come together logically under multiple ownerships? These are good companies, and I bet this alignment will be a watershed moment as to whether Colliers is a global organization or a collection of states. … This could be a very smart move in terms of resolving this question.” Colliers Macaulay Nicolls, in the meantime, has been busy in its own neck of the woods, announcing its decision to consolidate operations in the Greater Los Angeles region. It currently operates 10 local offices in Downtown Los Angeles, Commerce, Inland Empire, Orange County, San Fernando Valley, San Gabriel Valley, South Bay, Valencia, Victorville and Century City. Under the consolidation plan, it will transition the San Gabriel office into the Inland Empire office and the Century City office into the Downtown Los Angeles office. The move is part of a rightsizing effort aimed at increasing operational efficiency and eliminating redundancies to help meet the demands of the market. Rick Chichester, president of U.S. operations for Colliers International, noted in a release that clients of Colliers Macaulay Nicholls will now see a greater focus and specialization on their specific business, property and market needs through and enhancement of the firm’s services delivery. “After Macaulay Nicolls acquired Colliers Seeley in 2005, it struggled with financial performance,” said the first industry source. “This is a strong, positive move that could have been made some time ago.” The source also mentioned that Martin Pupil, who moved to California last year from managing director in Montreal, is slated to assume leadership of the Greater Los Angeles operations, but a spokesperson for Colliers Macaulay Nicolls said that the company does not speculate on market rumors. Overall, the consolidations are reflective the real estate environment as a whole, added Ross Moore, an executive vice president for Colliers International. “There’s been a lot more cross-boundary business,” he said. “Ten years ago, you worked with local tenants and local businesses, but now it crosses cities and regions and is no longer a local game. It’s the new reality.” Frye did not divulge anymore immediate consolidations within the company, but s
aid the company intends to execute this strategy where needed, bring its local expertise to a more global platform. On CPN’s Most Powerful Brokerage Firms list, which was published in June, Colliers Macaulay Nicolls ranked number 7 with a 2007 transaction volume of $37 billion; Colliers Turley Martin Tucker ranked number 19 with a 2007 transaction volume of $5 billion; and Cassidy & Pinkard Colliers ranked number 20, with a 2007 transaction volume of $4.2 billion. Colliers International, as a whole, was ranked the top brokerage network in a separate list, with a 2007 transaction volume of $73 billion.