A long life in New York real estate doesn't come from standing still. That's why, as it marks 65 years in business, Newmark & Co. knows to keep moving.
The firm, once primarily an owner and manager of Garment District and other secondary buildings throughout Manhattan, has moved in the last decade to become one of New York City's top promotional brokerage firms. Allowing no time for stagnation, the company that keeps moving is moving again.
In large part to unify and properly arm itself in tackling the new challenges it faces in gaining a market share of corporate and institutional leasing and management advisory business, Newmark in December made a physical move as well. It consolidated its two Manhattan offices -- the long-time West Side owner/management location with the newer East Side leasing office -- into one company home at 125 Park Avenue.
The new corporate/institutional business development thrust and the coinciding Park Avenue office consolidation are only the latest in a series of evolutions for Newmark. The firm has gone from an oldline New York City real estate family firm to a top leasing and managing agent to what is now hoped will be a major regional/national player. Newmark plans to step up to a higher world-class clientele without sacrificing its invaluable roots in New York real estate ownership, the essential suitcase it carries every time it moves in a new direction.
Back in the 1930s, the company originated as Harris Newmark. Newmark later sold the firm to a group of brokers that included Aaron Gural, who for many years headed the company. In the 1970s, son Jeff Gural joined his father in the business, after working for a construction company, and Newmark & Co. continued handling a portfolio of mostly secondary, Garment District and other West Side properties. Jeff Gural said many of the projects, including loft buildings and J-51 renovations, were small and time-consuming and thus a decision was made to acquire some smaller real estate firms and bring new blood into the company. "Eventually, the younger members of the firm bought out the older partners," Gural said.
That brought on a round of changes that took the company through the late 1970s and 1980s. Jeff Gural, who is now the firm's president, and Barry Gosin, now vice chairman and chief executive officer, bought the firm in 1978, with a strategy of combining Aaron Gural's portfolio with their own, continuing acquisition activity and providing leasing and managing services for the firm's own account as well as outside parties. Gosin had previous New York experience in development, acquisition and brokerage.
But by 1986, it was obvious to Gural and Gosin that property ownership was going downhill, Gural said. "When the market started looking down, we no longer thought that acquisition was the way to go and, fortunately, we stopped buying properties a year or so sooner than many people," he said.
It was time to move again. "It was apparent that income from our acquisitions would be less than in the early 1980s," Gural said, "and that we would have to switch gears once again into feeding our acquired knowledge and skills into increasing our management portfolio as well as going into the tenant representation business."
That's when Gosin moved the leasing part of the business to an East Side office and began attacting some top brokers from other firms in the city, namely Arthur Lerner, Arthur Rosenbloom, Ronny Goldberger and Billy Cohen, among others, as the foundation for a leasing brokerage firm that knew how to solve other peoples' problems because it had so much experience solving its own.
Firm's foundation lies in ownership
"Much of our competition has its roots only in marketing and general brokerage, as opposed to our foudation in ownership, which puts real estate first," Gosin said.
"There is no better learning ground than when you are spending your own money on improving buildings and doing tenant fit-out work," Gosin remarked, "We like to have a cost-benefit relationship to investment in improving real estate.
"Representing a tenant with the ability to understand the inside guts of real estate, the people and their motivations makes it easier to negotiate from a position of knowledge," Gosin continues. "Combine that with the strength of a credit tenant, and it's a powerful combiantion."
Gosin developed a very strong niche with law firms, negotiating the relocation of many major firms throughout the city, as well as for a variety of other types of tenants.
Within two years the firm was established as "creative marketers of space," Gosin said, adding that Newmark knew the importance of having a good rapport with fellow New York brokers.
"Having the friendship and cooperation of the brokerage community served as an additional sales force," said Gosin.
Now employing approximately 90 brokers and a total staff of about 160, Newmark "is a melding of different cultures and brokers under one roof, in constant transition and evolution to become what the market demands," Gosin said.
Some of Newmark's major leasing campaigns have included 590 Fifth Avenue; Harry Macklowe's Metropolitan Tower; 125 W. 55th Street; Carnegie Hall Tower; 17 Battery and 55 Wall Street; and most recently the former Exxon Building at 1251 Avenue of the Americas. Now owned by Mitsui Fudosan, the 2.29 million sq. ft. building represents the largest piece of real estate that Newmark has handled for any client, according to Jimmy Kuhn, who, after working with Mendik Realty Co. for many years, joined Newmark as chief operating officer in 1992, sharing the title of president with Gural, and with the responsibility to develop institutional business.
"We have demonstrated our ability to market and lease space, add value and maximize the bottom line for these buildings while turning around a leasing campaign quickly and competently," Gosin said. "We have made a profit every year and have seen a steady rise in business since 1988 when we made a 100% commitment to third-party business."
Company thrives on challenging market
Much of the leasing success of which Gosin speaks occurred in the worst market to face New York in decades. Kuhn said that Newmark has a history of being hired by owners who have problems in their buildings or who had difficulties with previous leasing agents. He cited Carnegie Hall Tower as an example, where the firm rented up 88% of the space in the new office building in the midst of a recession.
"We never get the easy assignment, like the Park Avenue glitz building that is easy to rent," Kuhn said. "We've always made success in taking the tough projects. It's a reputation that our competitors try to use against us -- that Newmark doesn't run the best buildings. But we run the toughest buildings in New York. Anyone can run the best." Kuhn added that the assignment for Mitsui Fudosan at 1251 Avenue of the Americas is providing proof that Newmark has reached a point of success where owners feel confident that it can also handle the best buildings.
Even though the New York leasing market has improved and the firm has garnered more attractive assignments, complacency has never had a home at Newmark.
"Now that there is a better market, the momentum is there, but we are careful not to get too comfortable," Gosin said. "It's a matter of being ahead of the freight train. We want to continue to grow prudently so as not to jeopardize the successful ways we have been doing business. We are continuing to attract talent from other firms to keep abreast in leading into the next millennium," Gosin said. "I think we're worth betting on."
What the firm is betting on is that it has finally succeeded in being what Gosin calls "a safe choice," a firm whose talents and results have been adequately demonstrated to developers and the New York real estate community. The next step is to become that same safe choice for corporations and institutions, not just entrepreneurs.
"Our scrappy work ethic won't be sacrificed, but an increased diligence is what corporations will look for in the servicer of their leasing and building management needs," Gosin said. The company now has to be more seamless, more "buttoned up," he said. As real estate institutionalizes, so will Newmark.
That's why Kuhn came on board.
Gosin mentioned that different business mentalities, reporting systems and controls are necessary to serve institutional clients and that they are often in contrast with what those at Newmark were used to offering to developers.
So Kuhn spearheaded a two-year business development plan that has re-engineered the company and added a new core of professionals in an entity known as Newmark Institutional Management and Advisory Group.
"Our relationship with Jimmy Kuhn has worked beautifully, and we think it will yield great things for us," Gosin said.
Kuhn said he has brought in 9 million sq. ft. of institutional business in the last 18 months. Also, since his arrival, the firm has reopened a New Jersey office, headed by Seena Stein, which has brought in 1.5 million sq. ft. of space under management there in the last 10 months, and opened a Westchester, N.Y./Connecticut office, headed by John Goodkind, which is responsible for 2 million sq. ft. of commercial space under management in that area, according to Kuhn.
"One reason for our success is that new owners coming into the market in the greater New York area need help in the acquisition and due diligence part of the equation. Because of Newmark's long-time ownership position, these new owners believe that the continuity of bringing in someone who has owned property helps them get through the process," Kuhn said.
Besides the Mitsui Fudosan assignment, Newmark is also managing buildings in the New York area for such institutional clients as General Electric Credit Corp.; a joint venture of Goldman Sachs and J.E. Roberts; Mutual Benefit Life Insurance Co.; and Equitable Life, who in March of 1994 appointed Newmark coadvisor, along with Equitable Real Estate, for the 500,000 sq. ft. corporate relocation of Equitable Life, Kuhn reported.
The Equitable assignment is key in the move Newmark is making to attract more corporate and national accounts. "As we continue to do management, leasing and sales for institutions, we are examining a strategy to selectively become more regional or national," Kuhn said. "We have brought in key executives with experience in the corporate advisory area to head up the national accounts business and have upgraded our research and financial analysis group."
Kuhn said Newmark's philosophy is different from that of other regional firms in that it is looking to combine the corporate real estate executive mentality with the market savvy of the entrepreneurial real estate professionals already on board at the firm to create a winning dynamic.
Gosin agreed, saying, "Brokers alone can't manage national corporate accounts.
"If we continue with the same basic premise of quality service and long-term relationships and develop a more sophisticated and analytical point of view that considers shareholder value, return on net assets and other such elements, then we think we are in the running," Gosin said.
Networking proves beneficial
In terms of national accounts, Newmark benefits from being an affiliate of Hightstown, N.J.-based New America Network. Gosin said he sees the firm using that connection as a means to be more of a national powerhouse. Within the network, a group of 20 firms have formed NANCORP (New America Network Corporate Services), which meets on a regular basis and sets standards, Gosin said, adding that the group is more than just a referral network -- it is a resource Newmark can draw on by exchanging expertise with affiliates in other markets across the United States to better service national accounts.
Gosin also said the firm's position in New York allows it to attract many of the Fortune 500 companies located on the East Coast and, as corporations downsize and outsource more real estate-related tasks, Newmark can meet the corporate need.
"We can provide general common sense, intelligence with respect to doing transactions, reducing occupancy costs by communicating with a local affiliate and then providing managing and reporting systems coordinated through the national network. We then bring it to a central point, translate it into the vernacular corporations want and deliver to them a detailed, analytical plan to tackle their real estate nationwide," Gosin said.
But, the principals indicate, no matter how institutionalized or nationalized Newmark may become in the 21st century, the old-time family firm will always have its roots in New York real estate, where it continues to practice hands-on management and personal service.