Nor-Cal Brokerage Cornish & Carey Links with Global Partner
Submitted August 4, 2010, 11:12 PM
UPDATED August 8, 2010
The region’s largest privately held commercial real estate brokerage, Cornish & Carey Commercial, is merging its operations with Newmark Knight Frank, one of the largest independent real estate services firms in the world.
Under terms of the deal, current owners of Cornish’s Northern California operation will continue to own 100 percent of the company, and Newmark Knight Frank will close its Northern California offices to become part of Cornish, said Chuck Seufferlein, C&C’s president and chief executive officer. At the same time, the two companies have struck a joint-venture agreement to expand their footprint together in other California and Western U.S. markets.
“It is the beginning of a new chapter for Cornish & Carey,” Seufferlein said.
Cornish has relinquished its partnership with Oncor International, a network of more than 50 independent regional brokerages that work cooperatively to service clients with demands across multiple markets. It is a partnership that Cornish has had for two decades, Seufferlein said.
Headquartered in New York, Newmark Knight Frank and London-based partner Knight Frank have more than 200 offices on six continents, according to a news release announcing the new arrangements. The company’s 2009 revenue was more than $811 million.
Cornish has 13 offices in the Bay Area and more than 275 agents.
Erik Doyle, who leads Cornish’s Investment Services division, said the partnership is a game-changer for his business and clients. “They are so well-connected on the capital markets side in New York, Europe, Asia and the Middle East. There is no place in the world where I can’t get an investment sales offering in front an international pool of potential investors,” he said. “There is no question that global capital has recently invested in and will continue to invest in our market in this next cycle.”
Newmark Knight Frank is already pulling Bay Area Business its way. Last fall, Santa Clara-based McAfee Inc. retained the company’s Global Corporate Services division to provide a management program for two million square feet. A part of the assignment includes helping the technology company identify optimal labor forces and locations globally as it looks to hire 1,200 new workers, mostly sales people and engineers. Newmark Knight Frank proprietary research includes 20-year projections identifying trends in job growth and emerging industries worldwide, Doyle said.
The Global Corporate Services division has recently landed another assignment for a portfolio of more than a million square feet, some of it in the Bay Area, Doyle said. He expects a public announcement about the agreement shortly.
Cornish has rejected overtures from other large commercial real estate companies looking to buy in the past, Seufferlein said. But as time has gone on, especially in a market like Silicon Valley and the San Francisco Bay Area, which are characterized by some of the largest technology firms in the world, the brokerage has lost business to bigger rivals when local client companies expanded to other continents and wanted real estate service providers who could march along with them.
Historically, local companies represented 80 percent of the revenue earned by commercial real estate brokers and service providers, Seufferlein said. But as commerce has become more international, revenues from multinationals have grown to account for as much as 40 percent of the overall pie.
“This merger and joint venture afford us the ability to maintain our interests here but locks us into a global company. The world has changed in the last 10 years. Everyone is global,” he said.
Negotiations with Newmark Knight Frank have been ongoing for the last nine months, Seufferlein said, though he has worked for the last three or four years to chart a new course for the company. Newmark and Cornish have already secured several pieces of business together, he said.
Besides leasing, financial services and investment sales, Newmark Knight Frank offers project and development management, global management services, residential construction services and industry practice groups including law firm, nonprofit and government advisory services. Its technology group provides counsel on finding and developing data centers, co-location sites and hosting facilities.
Besides landlord and tenant representation, Cornish offers property management, marketing services, financing and client solutions including project and facilities management, energy audits and property-tax consulting.
The commercial brokerage industry has seen tectonic shifts in the last several years. Newmark Knight Frank is itself the product of the industry’s consolidation. Newmark joined with Knight Frank in 2006. In June 2008, Jones Lang LaSalle Inc. bought The Staubach Co., a Dallas-based tenant representation firm. In January, FirstService Real Estate Advisors, a subsidiary of publicly traded FirstService Corp., expanded its control of real estate services company Colliers International to about 70 percent of the global business. The San Francisco Colliers office became FirstService owned. The San Jose office remained independent. The same month, eight brokerages nationwide, including two in the Bay Area, joined to become a new privately held national firm, Cassidy Turley/Commercial Real Estate Services. The former NAI BT Commercial, a Northern California brokerage, and CPS Corfac International, a boutique brokerage with offices in Santa Clara, were two of the company’s founding members.
“Merging our San Francisco operations, including Silicon Valley, significantly strengthens our capabilities in the financial and technology sectors for our global clients, ” Newmark Knight Frank President James D. Kuhn said in a prepared statement. Kuhn also noted “the synergistic nature of markets like New York, San Francisco, Hong Kong and London.”
“The distressed markets necessitate national coverage, and as we see the ownership of the special servicers change, it is absolutely essential to have strong investment sales presence on both coasts,” he added.
