Real estate historians will long remember 2003 for providing a lot of grist for the writing mill. Not only did CB Richard Ellis (CBRE) seize the dominant position among brokerages by merging with last year's survey front-runner Insignia/ESG, but it also was a record year for investment sales. Leasing activity mirrored the jobless recovery, but did show signs of improvement in the third and fourth quarters.
Clash of the Titans
The numbers reveal just how gargantuan CBRE has become in the brokerage arena following the merger. In last year's survey conducted by NREI, Cushman & Wakefield, Insignia/ESG and CBRE each hovered near $40 billion in total investment sales and leasing transactions globally. But almost overnight, CBRE doubled in size, recording $83 billion in total dollar value for investment sales and leasing transactions combined in 2003.
Greg Vorwaller, president of investment properties at the No. 1 ranked firm, boasts that his company's investment sales increased 40% from the previous year even without adding Insignia's business.
Cushman & Wakefield, which finished at No. 2 on this year's survey, posted impressive gains year over year, but its growth was overshadowed by the merger. In fact, Cushman & Wakefield recorded its second-highest grossing revenue year ever, says Bruce Mosler, president of the company's U.S. operations. Cushman's combined dollar value from leasing and investment sales rose from $37.8 billion in 2002 to $40.2 billion in 2003.
Interestingly enough, the top two brokerages each played a role in the year's largest lease. When News Corp., a client of CBRE, took 794,000 sq. ft. at 1211 Avenue of the Americas in New York, Cushman & Wakefield represented the owner, according to CoStar Group.
CBRE also represented the landlord in the No. 2 and No. 3 office leasing deals, when Duke Energy Corp. leased 614,397 sq. ft. in Houston and the U.S. Defense Department took the 524,867 sq. ft. Zachary Taylor Building in Washington.
Eastdil Scores a Coup
The largest investment deal of the year was Macklowe Properties' $1.4 billion purchase of the 1.8 million sq. ft. General Motors Building in New York, reports Real Capital Analytics. Wayne Maggin of Eastdil Realty brokered the deal.
The total was the most ever paid for an office building in North America, but at $778 per sq. ft. fell short of the top spot on Real Capital Analytics' list of most expensive deals per square foot. That distinction is held by Wharton Realty Group's $140 million purchase of the 156,700 sq. ft. 609 Fifth Avenue in New York, at $893 per sq. ft.
Office investment sales for properties valued at $5 million or more totaled $45.4 billion in 2003, with 1,650 properties sold, according to Real Capital Analytics. The $15 billion in trades in the fourth quarter broke the previous record of $14.2 billion set in the fourth quarter of 2000.
Suburban sales totaled $8.1 billion in the fourth quarter, 15% higher than any quarter on record. “For the first time, I think the investment brokers made more money than the leasing brokers,” says Bob White, president of Real Capital Analytics. Record investment sales helped major brokerages offset a weak start in leasing. Interest rates at 40-year lows and plentiful debt capital gave entrepreneurs leverage to compete against REITs and institutional investors, while exchange rates renewed foreign interest in U.S. properties. “Every time I turn around, there's a new investment fund forming with $50 million or $100 million to invest,” White says.
Mosler says that office building sales in 2003 generally involved well-located, well-leased buildings with long-term leases in place. According to Vorwaller, Southern California, South Florida, New York and Washington, D.C., offered some of the best opportunities for underwriters in 2003.
Leasing Activity Accelerates
Mitch Rudin, CBRE's president of leasing, says most markets lagged expectations by three to five months, but nearly all markets showed improved occupancy by year's end.
Mosler says the perceived bottom of the market cycle spurred office tenants to absorb a substantial amount of high-quality subleases last year, and the same perception will drive tenants to lock in direct deals this year at current rates. The national vacancy rate for CBDs increased slightly from 14.8% at year-end 2002 to 15.2% at year-end 2003. Cushman & Wakefield reports that the vacancy rate in the suburbs rose from 20.5% to 20.8% in the same time period.
TOP 3 LEASING DEALS OF 2003
| Rank | Building | Region | Size of Lease | Tenant Name | Tenant Rep |
|---|---|---|---|---|---|
| 1 | 1211 Avenue of the Americas | New York City | 794,000 sq. ft. | News Corp. | CB Richard Ellis |
| 2 | Duke Energy — 5400 Westheimer Court | Houston | 614,397 sq. ft. | Duke Energy Corp. | direct deal |
| 3 | Zachary Taylor Building — 2531 Jefferson Davis Highway | Washington, D.C. | 524,867 sq. ft. | Department of Defense | Spalding & Slye Colliers |
| Source: CoStar Group Inc. | |||||
TOP 25 BROKERAGES
The Top 25 Brokerages listing is based on responses to NREI's Top Brokerage survey, which was conducted via e-mail in February and March 2004. Brokers were asked to provide the total dollar value of leasing transactions and investment sales during 2003. The totals were combined to determine the company's ranking. While NREI made every attempt to ensure the final survey was comprehensive, some companies chose not to participate.
1. CB Richard Ellis Inc.
865 South Figueroa St., 34th Floor
Los Angeles, CA 90017
Phone: (213) 438-4880
E-mail: [email protected]
Web site: www.cbre.com
Ray Wirta, CEO; Brett White, President
Total Amount of Investment Sales & Leasing Transactions: $83 billion
2. Cushman & Wakefield Inc.
51 West 52nd St.
New York, NY 10019
Phone: (212) 841-7500
Web site: www.cushmanwakefield.com
Arthur J. Mirante, President/CEO; Bruce Mosler, President, U.S. Operations
Total Amount of Investment Sales & Leasing Transactions: $40.2 billion
3. Colliers International
50 Milk St.
Boston, MA 02109
Phone: (617) 722-0221
E-mail: [email protected]
Web site: www.colliers.com
Margaret Wigglesworth, President/CEO; David Kahnweiler, Chairman; Richard Kimball, SVP
Total Amount of Investment Sales & Leasing Transactions: $27.7 billion
4. NAI
572 Route 130
Hightstown, NJ 08520
Phone: (609) 448-4700
E-mail: [email protected]
Web site: www.naidirect.com
Gerald Finn, Chairman/CEO; Jeffrey Finn, President/COO; David Blanchard, EVP
Total Amount of Investment Sales & Leasing Transactions: $27 billion
5. Grubb & Ellis Co.
2215 Sanders Rd., Suite 400
Northbrook, IL 60062
Phone: (847) 753-7500
E-mail: [email protected]
Web site: www.grubb-ellis.com
Maureen Ehrenberg, President, Global Client Services; Robert Osbrink, President, Transaction Services; Brian Parker, EVP/CFO
Total Amount of Investment Sales & Leasing Transactions: $25.6 billion
6. The CORE Network
15150 Preston Rd., Suite 300
Dallas, TX 75248
Phone: (972) 980-3992
E-mail: [email protected]
Web site: www.corenetwork.org
Harry M. Lynch, Chairman of the Board; Edward A. Cross II, Vice Chairman; Perry S. Morita, Executive Director
Total Amount of Investment Sales & Leasing Transactions: $20.8 billion
7. Jones Lang LaSalle
200 East Randolph Dr.
Chicago, IL 60601
Phone: (312) 782-5800
E-mail: [email protected]
Web site: www.joneslanglasalle.com
Stuart Scott, Chairman/Interim CEO; Lauralee Martin, EVP/CFO; Peter Roberts, EVP/CEO, Americas
Total Amount of Investment Sales & Leasing Transactions: $16.6 billion
8. The Staubach Co.
15601 Dallas Pkwy., Suite 400
Addison, TX 75001
Phone: (972) 361-5000
Web site: www.staubach.com
Roger Staubach, Chairman/CEO; Elysia Ragusa, President/COO; Ka Cotter, Vice Chairman
Total Amount of Investment Sales & Leasing Transactions: $14.6 billion
9. GVA Worldwide
1569 Sherman Ave., Suite 201C
Evanston, IL 60201
Phone: (847) 733-0883
E-mail: [email protected]
Web site: www.gvaworldwide.com
Michael Corbett, Chairman; Michael T. Cohen, Vice Chairman; Betsy Baer, COO
>Total Amount of Investment Sales & Leasing Transactions: $13.5 billion
10. TCN Worldwide
2419 Coit Rd., Suite A
Dallas, TX 75075
Phone: (972) 769-8701
E-mail: [email protected]
Web site: www.tcnworldwide.com
Ross Ford, President; Herbert Agin, Chairman; Neil Siderow, Vice Chairman
Total Amount of Investment Sales & Leasing Transactions: $11.1 billion
11. Trammell Crow Co.
2001 Ross Ave., Suite 3400
Dallas, TX 75201
Phone: (214) 863-3000
E-mail: [email protected]
Web site: www.trammellcrow.com
Robert E. Sulentic, Chairman/President/CEO; Michael J. Lafitte, President, Global Services; Robert K. Shibuya, Executive Director
Total Amount of Investment Sales & Leasing Transactions: $10.9 billion
12. Marcus & Millichap
16830 Ventura Blvd., Suite 352
Encino, CA 91436
Phone: (818) 907-0600
E-mail: [email protected]
Web site: www.marcusmillichap.com
George M. Marcus, Co-Chairman; William A. Millichap, Co-Chairman; Harvey E. Green, President/CEO
Total Amount of Investment Sales & Leasing Transactions: $10.3 billion
13. Newmark & Co. Real Estate Inc.
125 Park Ave.
New York, NY 10017
Phone: (212) 372-2000
E-mail: [email protected]
Web site: www.newmarkre.com
Jeffrey Gural, Chairman; Barry M. Gosin, Vice Chairman/CEO; James D. Kuhn, President
Total Amount of Investment Sales & Leasing Transactions: $6.5 billion
14. Burnham Real Estate
4435 Eastgate Mall, Suite 200
San Diego, CA 92121
Phone: (858) 452-6500
E-mail: [email protected]
Web site: www.burnhamrealestate.com
Stath Karras, President/CEO; Kit Sparks, CFO; Jim Munson, Managing Director, Brokerage
Total Amount of Investment Sales & Leasing Transactions: $5.9 billion
15. Transwestern Commercial Services
1900 West Loop South, Suite 1300
Houston, TX 77027
Phone: (713) 270-7700
E-mail: [email protected]
Web site: www.transwestern.net
Robert Duncan, Chairman; Larry P. Heard, CEO; Mark Doran, COO
Total Amount of Investment Sales & Leasing Transactions: $4.2 billion
16. Lee & Associates Commercial Real Estate
3991 MacArthur Blvd., Suite 100
Newport Beach, CA 92660
Phone: (909) 241-7904
E-mail: [email protected]
Web site: www.lee-associates.com
Steve Jehorek, President; Ed Indvik, President; Chuck Noble, President
Total Amount of Investment Sales & Leasing Transactions: $4.1 billion
16. Sperry Van Ness
18881 Von Karman, Suite 800
Irvine, CA 92612
Phone: (949) 250-4100
Web site: www.svn.com
Mark Van Ness, CEO; Rand Sperry, CEO, SVN Equities; David Frosh, President
Total Amount of Investment Sales & Leasing Transactions: $4.1 billion
18. CORFAC International — Corporate Facility Advisors
2000 N. 15th St., Suite 101
Arlington, VA 22201
Phone: (703) 528-3500
E-mail: [email protected]
Web site: www.corfac.com
John Owen, President; Todd Payne, Vice President; Thomas P. Bennett, Executive Director
Total Amount of Investment Sales & Leasing Transactions: $4 billion
18. HFF — Holliday Fenoglio Fowler
2000 Post Oak Blvd., Suite 2000
Houston, TX 77056
Phone: (713) 852-3500
E-mail: [email protected]
Web site: www.hfflp.com
John Pelusi, Executive Managing Director; Mark Gibson, Executive Managing Director; Jody Thornton Executive Managing Director
Total Amount of Investment Sales & Leasing Transactions: $4 billion
20. CRESA Partners LLC
100 Park Ave., 24th Floor
New York, NY 10017
Phone: (212) 758-3131
E-mail: [email protected]
Web site: www.cresapartners.com
Michael Dow, President/CEO; Bill Goade, Chairman; Gerald Porter, Vice Chairman
Total Amount of Investment Sales & Leasing Transactions: $3.9 billion
21. Century 21 Real Estate Corp.
1 Campus Dr.
Parsippany, NJ 07054
Phone: (973) 496-7433
Web site: www.century21.com/commercial
Van Davis, President/CEO; Jacob Stepan, COO; John Greenleaf, SVP, Marketing
Total Amount of Investment Sales & Leasing Transactions: $2.6 billion
22. Richards Barry Joyce & Partners
53 State St.
Boston, MA 02109
Phone: (617) 439-6000
E-mail: [email protected]
Web site: www.rbjrealestate.com
Robert Richards, President; Michael Joyce, Partner; John Barry, Partner
Total Amount of Investment Sales & Leasing Transactions: $1.1 billion
22. Duke Realty Corp.
600 East 96th St., Suite 100
Indianapolis, IN 46240
Phone: (317) 808-6000
E-mail: [email protected]
Web site: www.dukerealty.com
Thomas L. Hefner, Chairman; Dennis D. Oklak, President/COO; Robert M. Chapman, SEVP/Head of Real Estate Operations
Total Amount of Investment Sales & Leasing Transactions: $1.1 billion
24. Molinaro Koger
1676 International Dr., Suite 575
McLean, VA 22102
Phone: (703) 760-9600
E-mail: [email protected]
Web site: www.molinarokoger.com
Robert Koger, President; Eric Kudlak, Managing Director, Europe; Mark Morris, SVP
Total Amount of Investment Sales & Leasing Transactions: $825 million
25. Mid-America Real Estate Corp.
Two Mid-America Plaza, Third Floor
Oakbrook Terrace, IL 60181
Phone: (630) 954-7800
Web site: www.midamericagrp.com
Michael D. George, Principal; Stanley Nitzberg, Principal; Richard Drogosz, Principal
Total Amount of Investment Sales & Leasing Transactions: $804.6 million