CB Richard Ellis Group Inc.'s $2.2 billion acquisition of Trammell Crow Co. in December has shaken up the local brokerage industry, with about three quarters of Trammell Crow's Southern California brokers leaving the company.
As with any significant merger there is attrition, but because of specific redundancies between the two companies and the competitive nature of the business, only about 15 or 20 of Trammell Crow's 60 local brokers have stayed, according to executives familiar with the fallout.
"There were several outstanding senior agents at Trammell Crow who simply weren't going to be the go-to people at CB Richard Ellis," said Bill Boyd, executive vice president at competitor Grubb & Ellis Co. and managing director of the firm's Los Angeles metropolitan region. "There are only so many deals in the marketplace and only so many senior agents that can go after the deals."
The acquisition of Dallas-based Trammell Crow was first announced a year ago this month and finalized on Dec. 20. The acquisition was widely seen as an effort by the Los Angeles company to become more nimble on the corporate services side of the business, which involves handling issues such as construction, relocation and facilities management.
However, CB Richard Ellis is the biggest real estate services company in the world and is well staffed in virtually all other aspects of commercial real estate.
Lew Horne, executive managing director of CB Richard Ellis' greater Los Angeles region, declined to discuss the exact number of area Trammell Crow brokers that stayed on with the company but acknowledged there were departures.
"If the brokers were not aligned with a corporate account or an institutional account or didn't feel they had a place within CB, they were more apt to talk to competitive firms," said Horne, adding that the integration of Trammell Crow is complete.
In the aftermath of the merger announcement, Trammell Crow brokers and a few managers left to take jobs at the local offices of other commercial real estate firms, including Grubb & Ellis and Cushman & Wakefield Inc.
A group of 50 brokers hitting the market over a period of months is no small number. By way of comparison, Cushman & Wakefield has about 150 brokers in seven offices in Southern California.
Several former Trammell Crow brokers telephoned for comment did not return calls. However, Joe Vargas, executive managing director at Cushman & Wakefield and regional manager for Southern California, said that about 15 Trammell Crow brokers have joined his company since the acquisition.
"Any time there is the opportunity to pick up great professionals one should consider (himself) fortunate. Brokers don't switch companies for the fun of it. These were highly successful professionals and when the acquisition was taking place it gave them the opportunity to look at the platform that would best suit their practice and enhance their careers," said Vargas, who added that it is nonetheless a difficult choice to leave a firm.
"There are new surroundings and new people and it takes getting comfortable in a new work environment and the policies and the procedures of a new company and really the fear of the unknown," he said. "Brokers often ask themselves, 'What will my client think of this move?'"
Indeed, a group of Trammell Crow professionals did stay on board. Brad Cox, a managing director at Trammell Crow, said those who fit in really had no reason to go.
"CB Richard Ellis was already a brokerage powerhouse," Cox said. "They were able to retain the top power in the organization and kept the key top performers (from Trammell Crow) in a lot of the markets."
And those who stayed say that the global reach and resources of their new firm has expanded their business horizons.
"It enables us to leverage what we do over here," said former Trammell Crow broker Jeff Lasky, now a senior vice president with CB Richard Ellis who handles project leasing for large Westside office developments. "Within our group many stayed. It has been pretty seamless."
But Lasky acknowledged that "street brokers" with less experience might have a different perspective on the merger because "all of the sudden they have different competition so they are looking for another opportunity."
There is also the issue of job titles.
Jason Warner, a former Trammell Crow broker, said he was an executive vice president at Trammell Crow; he now holds a title senior vice president that is one rung below that perch.
"It was one of the challenging things," Warner said. "I wasn't at their criteria (to be an executive vice president), though I was at Trammell Crow."
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