Class A brokers are turning old school on its head

Real Estate Weekly, March 2, 2005 by Daniel Geiger

When the American Cancer Society recently leased 77K s/f of space for its new headquarters at 125 West 31st Street, a 58-story mixed-use commercial and residential tower soon to be developed by The Durst Organization, it seemed just like any other mid-sized corporate real estate deal in Manhattan.

In many ways it was, but because the Cancer Society is a not-for-profit organization, there was the added complexity of tax and accounting issues that were integral to the deal's structuring. Furthermore, stringent financial analysis was conducted to provide the ACS with its best real estate option. The deal even required the consent of The Vatican because the development site where the new Durst tower is to be erected currently is home to five small buildings belonging to the Franciscan Friars.

While these factors made the American Cancer Society's headquarters deal somewhat unique, its level of complexity and the seamless fusion of consulting, financial, brokering and even appraising services deployed by the real estate services firm handling the transaction -in this case Cushman & Wakefield -have become standard in varying degrees to nearly all corporate real estate deals of any magnitude.

"There really is no such thing as the plain vanilla transaction anymore," said Frank Liantonio, executive vice president and co-head of the capital markets group at C&W, who was the chief manager and architect of the ACS's leasing deal. "The business has evolved in the direction of consulting and multi-service lines that can address all of a client's real estate needs in one package."

The trend of increased sophistication at real estate service firms, wherein professionals versed in many disciplines including finance, construction and architecture, tax and accounting, marketing and advertising, building maintenance and inspection, and appraisal services, work together to handle the many aspects of a complex deal, hasn't diminished the key role of the broker however.

In the case of C&W's recent deal with the ACS, it was broker, John Isaacs, who, along with Liantonio, orchestrated and allocated the firm's many resources needed on the transaction.

"Despite all the resources that we have, we still need to have an executable strategy," said Liantonio. "The broker designs that and is still in the position of making sure that the client gets what's in their best interest. The broker is in charge, it's he or she that is the one quarterbacking the deal."

The wide array of services offered by real estate firms such CB Richard Ellis, Cushman & Wakefield, Jones Lang LaSalle, and Newmark has empowered the broker, yet has also required more from the position.

Twenty years ago, a desk and a phone were the only essential tools of the trade for brokering big deals and the success a real estate professional had at winning business might have rested solely on relationships. Now a broker has to have more than just sales and relationship skills, but knowledge of all the aspects of the business and the services that broker's real estate firm offers.

"A broker still has to have that entrepreneurial spirit, that high level of street smarts and ability to think on their feet, but the broker also now needs to be incredibly educated," said Kenneth Krasnow, an executive managing director and New York area leader at C&W. "Many have either one of those criteria but to find an individual with both is rare. It's more than just relationship and technical skills now, but also things like writing and presentation skills have become integral. It's the whole package. To be successful, a broker has to have a very large skill set."

In the past those skill sets, now essential, were hard to gain. "When I started in the biz over 20 years ago, someone gave you a list of buildings and told you to dig up some business," said Peter Riguardi, president of Jones Lang LaSalle's New York office. "I have an 18-year-old son and that's not how I would want him to enter the business. I would want him to be schooled in its many facets, I'd want him to learn the financial side or management side or research side or the development side and start to develop a knowledge base around real estate and develop contacts."

The firms, including Riguardi's own, have responded to the level of complexity now integral to brokering and have developed effective training programs for fledgling brokers who are just breaking into the competitive world of New York City real estate. CBRE's recently instituted Wheel program for instance--named for its method of rotating participants through the firm's many different departments--promises to educate its young brokers in the many different services the firm offers, from appraising, to consulting, to finance. This method of training shows the firm's commitment to honing and strengthening its multi-service business model and better training its brokers to effectively employ all the resources that model provides.

"Most of the participants want to be brokers, but we want to expose them to all aspects of our business," said Suzy Reingold, a senior managing director at CBRE who is one of the key people in charge of running the Wheel program. "It's a real nuts and bolts program that's aimed at producing the best professionals that we can. We don't want one dimensional people and this program addresses that by educating the participants in almost everything we do."