And then there were the big four
Silicon Valley / San Jose Business Journal, 7/13/2012
The Silicon Valley brokerage scene bears little resemblance to what it used to be in the 1980s when the sector was populated with a slew of smaller firms all competing for the commercial real estate client.
Locally, firms with a strong local presence became attractive targets for larger brokerage houses. Others strengthened their footprint through acquisitions, while some simply closed their doors or went bankrupt.
The end result has meant clients have fewer choices but bigger firms to help them navigate the commercial real estate landscape.
Local real estate professionals said consolidation was inevitable. Brokers said being able to compete for the business of growing companies drove the trend of either partnering with or being acquired by larger, national firms.
Cornish & Carey Commercial Newmark Knight Frank’s managing director John Yandle, who serves as president of the Association of Silicon Valley Brokers, said that being a local player is very important but not enough in every instance.
“People have always felt that they need to be represented throughout the United States, if not globally, with research,” Yandle said. “Because we have headquarters here, if we’re really serving a client, we want to do all their real estate, not just the local work. Otherwise, we’d be at risk of someone else taking over the local, too.”
When it comes to the valley’s top brokerage firms, the top four are Cassidy Turley, Cornish & Carey Commercial Newmark Knight Frank, Colliers International and CBRE, according to the Business Journal’s list of top CRE firms based on the number of Silicon Valley agents. While all have been busy over the past 18 months, Cornish & Carey has emerged as one of the heavy hitters, probably best known for having represented several large landlords in blockbuster deals. In 2011 alone, Cornish Carey’s 13 Northern California offices closed more than 3,400 deals valued at nearly $5.7 billion with 124 agents working out of its Silicon Valley offices in Palo Alto and Santa Clara. While the firm had the greatest number of agents on the ground in Silicon Valley in 2011, it also just happened to help close a number of mega deals. For example, Cornish & Carey executive vice president Phil Mahoneyrepresented San Francisco-based Jay Paul Co. in huge leases to a number of tech firms including Google Inc.,Microsoft Corp., Hewlett-Packard Co. and Motorola Mobility. Also in 2011, a team of Cornish & Carey brokers represented Roche in its sale of a nearly 1 million-square-foot campus in Stanford Research Park to VMware Inc.Cornish & Carey’s Yandle said the firm’s long-standing relationships with local developers and tenants give the firm credibility. And while he says the firm’s affiliation with New York-based Newmark Knight Frank has been valuable, the firm’s knowledge and history of the area also gives it an edge.
“What we’ve found is that with not all clients but most, that local knowledge really dictates over dots on a map,” he said.
Boutique era over
Cassidy Turley, as it is known today, was formed in 2010 when CPS Corfac International and NAI BT Commercial merged into the newly created company. The company was originally founded in 1981 as Blickman Turkus Commercial Real Estate, serving the Bay Area from one office in San Jose. Colliers International Managing PartnerJeff Fredericks said when CPS officially folded into Cassidy Turley and “flipped off the switch at their one-and-only office in Santa Clara,” the lights “unofficially” went out on Silicon Valley’s boutique-brokerage era.
Prior to that, Seattle-based GVA Kidder Mathews acquired Silicon Valley boutique firm Wayne Mascia Associates, giving the brokerage its first South Bay office. Kidder Mathews first entered the Bay Area market in September 2006 with the purchase of an old-line San Francisco brokerage house. It later also opened an office in Redwood Shores.
With about 70 Bay Area agents – about 45 of which work out of Silicon Valley – Kidder Mathews ranks No. 7 on the Business Journal list of top CRE firms.
Reed Payne manages the brokerage group of Kidder Mathews’ Northern California operations. So while it is not a boutique firm, Payne describes Kidder Mathews as “small, entrepreneurial and a throwback to what companies were like in the 1970s and 1980s.”
Prior to that, after nearly 20 years in business, former boutique firm J.R. Parrish Inc. joined forces with Colliers International in the 1990s, becoming an independent owner and taking the name Colliers Parrish International.
On the flipside, earlier this year, brokerage firm Grubb & Ellis Co. filed for Chapter 11 bankruptcy protection and was acquired by New York-based BGC Partners Inc. Since then, former Grubb & Ellis agents have landed at various brokerage firms across the valley.
Others like Cornish & Carey Commercial began operations in Palo Alto in 1935, and in time became affiliated with Encore International. But it wasn’t until 2010 that the regional firm formed a full-fledged partnership with Newmark Knight Frank.
Erik Doyle, executive managing director for Cornish & Carey Commercial, said the move has worked out well for Cornish & Carey.
“It really gave us a very much stronger national and international presence and the ability to share strategic practices and leverage clients from the West Coast to the east,” he said.
For brokers like Fredericks, Colliers’ Silicon Valley office enjoys the best of both worlds.
“Technically we are an affiliated office, which means all the decision-making is controlled locally but being part of an international organization provides the framework and structure that we need to operate in,” Fredericks said.
For Payne, the acquisition of a boutique firm gave Kidder Mathews its entry into the lucrative Silicon Valley market. Since then, it has carved out a niche for itself with a large life sciences group.
“There are certain instances where a multinational company might want one vendor to handle all requirements across the globe,” he said. “We may not be the right company for that. But because we’re very lean at the top from a management perspective, we’re able to react very quickly compared to a larger organization.”