Splurge to Merge or Purge – Chicago Real Estate Brokerage Buying Spree
The dust is settling in the Chicago real estate market. Or is it just starting to rise?
For those who subscribe to Crains Chicago Business or subscribe to either of the once-proud Chicago daily newspapers and leaf through to the business pages you may have noticed that some names have changed as several Chicago real estate brokerages have been bought out.
Last year a couple of heavy hitters from Koenig and Strey took over Jameson. Then Sussex and Reilly (which had been affiliated with Century 21) was purchased for pennies on the dollar by Sudler in February. Two weeks or so back a unit affiliated with Warren Buffett bought Koenig and Strey. And last week came word that Prudential Preferred purchased Rubloff.
Aside from confusion what we see amid the current hubbub are precipitously falling numbers. Excepting, of course, current company. As it stands right now Chicago’s top brokerage with more than 12% of the Chicago real estate market is my brokerage, @properties. September is shaping up to be a gain on September 2008 just as August achieved the same gain from a year earlier.And as has been the case for the past handful of quarters our primary competitor for the overall lead in the the Chicago real estate market is Coldwell Banker which owns a sliver more than 11%. Where it gets interesting, though, is what’s going on at the back of the pack.
Sudler’s aggressive move seven months back in my mind is imbued with the scent of the notion “be careful what you pray for.” The two firms were roughly equal with some $600m in sales the previous year. Simple math would suggest that conjoining these two smaller entities would constitute a middle sized entity.
But in a world rife with personalities, mistakes and egos, the simple path would be the road less traveled. Whereas Sussex previously had been a juggernaut riding the meteoric rise of the residential market in Lincoln Park, Roscoe Village and Lakeview, seven to 10 years ago, its numbers had plummeted by some 40% in the recent tumult. And then you had a wholesale diaspora of talent that occurred after the ham-handed take over by Sergio Martinucci of Sudler as his actions chased off major players like Jeff Lowe, Rich Kasper and Tim Sheahan.
Add to this that Sudler didn’t even acquire Sussex real estate and the move takes on the aura of errant at best and self-destructive at worst.
Over at Koenig and Strey the brokerage’s new owners say it will be business as usual. But having dropped 27% of business in 2008 and a 50% plunge since 2006, the question is whether the firm can withstand more of the same. And while a handful of talented brokers remain, industry observers say the firm has lost many talented agents in the past few years.
Meanwhile, many eyes are trained on the most recent marketplace marriage as Prudential Preferred bought the respected Chicago real estate brokerage Rubloff and created Prudential Rubloff.
In the rosiest prognostication the move will meld Prudential’s role in Chicago’s North Shore with Rubloff’s presence in the Chicago real estate market. On a simply numeric basis the acquisition creates a $2B player in the Chicago market. But a closer look reveals a recent slippage of approximately 30% by Rubloff. Plus what is unclear is how previously independent Rubloff will respond to Prudential’s 6% franchise fee. And then there’s the displacement associated with closed offices.
At the end of the day the most recent move seems to make the most sense. But the test of time remains to see if these different cultures will merge in a healthy and productive manner. Recent history points out that Prudential’s capacity to attract talented agents is outpaced only by @properties. But what remains to be seen is whether initial attraction will translate into market strength.
As I said above, the strongest player in the current Chicago real estate market is @properties. This ascent to the top with a smaller work force happened not by accident but through a series of conscious and smart choices. And so we recognized what tools work, we made these tools accessible and we consistently use (and refine) these tools toward the simple goal of ensuring that our clients are thrilled by us.
The fact that we are the top Chicago real estate brokerage seems to be proof that what we are doing works.
To find out more about the @properties’ advantage and The Real Estate Lounge with @properties, give me a call at your convenience at 773.848.9241.
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