CB raids Cushman's office in Philadelphia

Real Estate Alert, Feb 25, 2004

Four veteran brokers at Cushman & Wakefield's Philadelphia office are jumping ship to rival CB Richard Ellis, strongly bolstering CB's operation in the city.

Senior Cushman brokers Robert Fahey and Michael Hines, along with associates Lizann McGowan and Michael Blunt, gave notice Monday and will start at CB March 1. Fahey and Hines will take the reins at CB's Philadelphia office, which has lagged far behind market-leader Cushman for the past two years. CB lured the quartet with significant signing bonuses.

Staying behind at Cushman is Jim Vesey, who has shared the title of senior director with Fahey and Hines. Vesey will now seek to recruit brokers in order to rebuild Cushman's team. Vesey said that while he was sorry to see the team break up, there is upside in taking over and building anew. "We are still going to compete for business," he said. "While the guys that left were friends, it's business. This is clearly an opportunity for me."

It's unclear how the arrival of four brokers will affect CB'S existing five-member team. CB originally had two brokers in the office: Brian Campbell and Doug Joseph. Last summer, the group expanded by three when CB acquired Insignia/ESG. The co-heads of Insignia's Philadelphia office--Michael Margolis and James Sheehan--and South Jersey specialist Joseph Verdejo moved over to CB. All five are first vice presidents, reporting to Robert Waiters, a senior managing director and regional head.

Market players are betting that at least some of CB's brokers will now leave--possibly to join Cushman. "The reality is, some of those people will probably be over at Cushman by the end of the week," said one person familiar with the situation.

Others speculate that shops looking to increase local market share may make a play for CB's team as well. One possibility is Studley, which is looking to build an investment-sales team in markets nationwide. Veteran broker Woody Heller, who was named head of Studley's capital-markets group in September, focused in part on the Philadelphia market while at Jones Lang LaSalle and Insignia.

The five CB brokers either declined to comment or could not be reached.

CB's Philadelphia office has suffered through a long dry spell. The office has not won a $20 million-plus listing since mid-2002. However, Margolis, Sheehan and Verdejo had been productive at Insignia, maintaining a respectable market share in a city that's generally a second-tier office market with occasional spurts of high volume.

Meanwhile, Cushman has dominated the listings awarded to local brokers. It handled six large transactions totaling $394 million in 2002--or a market-leading 34% of total brokered deals. Last year, when it handled two large transactions totaling $93 million, its market share slipped to 17%.

CB named Fahey and Hines as executive vice presidents, while McGowan and Blunt are first vice presidents. Fahey and Hines both worked at Cushman for 18 years. McGowan spent 10 years there, while Blunt was a nine-year veteran. They will continue to work on four pending listings awarded to Cushman.