Wall Street brokers in Studley/Saloman pact

Real Estate Weekly, May 5, 1993 by Therese Fitzgerald

The commercial brokerage firm of Julien J. Studley, Inc. and Salomon Brothers, Inc., the Wall Street-based investment bank, last week announced an affiliation designed to enhance their work with corporate users and owners of real estate.

The move is indicative of the changing face of real estate services. Corporate tenants are demanding greater financial sophistication from their brokers and Wall Street firms are being asked more and more to assist in the corporate real estate decisions of their clients.

Studley will be able to expand in the area of financial analysis and management without adding personnel and additional expense, said Julien J. Studley, chairman, Julien J. Studley, Inc., a 39-year-old firm that specializes in tenant representation.

"Everybody is so bottom-line conscious especially when you're dealing with public corporations," said Studley who noted that market conditions are leading many tenants to explore build-to-suit arrangements.

His firm, he said, will benefit from Salomon's knowledge of corporate deal structuring and access to global capital markets while giving them access to Salomon's client base.

In recent years Wall Street investment houses, including Salomon Brothers, Morgan Stanley, and Goldman Sachs, have increased their corporate real estate services both at the request of their tenants and as a result of a sluggish investment climate.

Barden N. Gale, a director for Salomon's Brothers Inc. responsible for the corporate effort within the Real Estate Group, said the alliance will enable his firm to benefit from New York-based Studley's market knowledge and contacts across the U.S. and overseas. Studley maintains offices in such major cities as Washington, D.C., Philadelphia, Chicago, Houston, Los Angeles and San Francisco. Studley/St. Quintin International operates throughout Europe.

"We could not recreate the infrastructure the brokerage community has created," Gale said.

Today, he said, corporations look for an overall rationale for their real estate decisions and, therefore, the responsibility of the real estate portfolio has moved into the hands of the chief financial officer or treasurer and out of the realm of the facilities manager.

"We're finding more opportunities where clients would like us to help with a relocation, but we're only part of the recipe," said Gale.

According to Studley, this is a strategic affiliation that does not involve a financial interest for either firm. They will be called in to assist on certain Salomon deals and vice versa. Some projects are already in progress.

Rick H. Singer, a managing director of Salomon Brothers Inc., heads the Real Estate Department worldwide.

For most real estate brokers, the Studley/Salomon alliance illustrates the growing need for the assistance they offer to combine in-depth financial planning with local knowledge.

"Most firms in the future will have to integrate those," said John Sheehan of Delmorst & Sheehan, a real estate advisory firm.

For others, the move reinforces the idea that while the Wall Street firms bring a high level of financial prowess to a real estate deal, there is no substitute for the street smart broker.

Robert L. Freedman, vice chairman of the board, Williams Real Estate, said the Studley/Salomon alliance could be viewed as "an acknowledgement by the investment banking community that they may not have all of the know-how and the craftmanship of the 'ear to the ground' real estate consultant."

Studley and Salomon first worked together on an important real estate deal four years ago when Studley served as consultant and tenant representative to the investment bank in negotiating its 1 million-square-foot lease at 7 World Trade Center.