Keller Williams Takes on Bay Area Residential, Commercial Brokers
Submitted December 6, 2011, 1:41 PM
A Southern California businessman with ownership interests in six Los Angeles-area Keller Williams Realty offices is opening his first Northern California outlet in tony downtown Burlingame with plans for another half dozen or more.
The franchise will be distinguished from traditional residential brokerages by a companion emphasis on commercial property sales. Approximately one in five of the Northern California company’s agents are expected to specialize in commercial properties.
Cunningham already is the sole owner of Keller Williams offices in Santa Monica, Marina Del Rey and Westwood, according to his Web site. He is a co-founder and investor in offices in Brentwood, Pacific Palisades and Newport Beach. Cunningham’s expansion plans include the acquisition of existing Bay Area brokerages and offices.
“What has made me very successful is we focus on high-end residential and commercial and the synergies between the two,” Cunningham said. “We are really the only residential-commercial model that is working at a high level.”
Other Bay Area residential brokerages with a commercial arm, such as Alain Pinel Realtors’ APR Investment Group, might disagree.
The company is already eyeballing San Mateo for its second office but is basing its expansion on the willingness from agents, managers and other brokers to join the company, said Vache J. “V.J.” Darakdjian, executive operations manager for Cunningham’s KW Peninsula Estates.
Darakdjian, a commercial property specialist, is spearheading the company’s Northern California expansion and has moved from Los Angeles to the Bay Area in the last several months.
The company opened first in Burlingame because it was able to secure the most commitments from agents who wanted to work there, he said. It is opening initially in temporary Burlingame digs with about 25 agents. At the same time, principals are working to secure the necessary permits to build out what will be its permanent space in 6,000 square feet in the town’s new Safeway-anchored shopping center at Primrose Road and Howard Avenue.
Darakdjian hopes to have the permanent office open in the first quarter of next year with 50 agents on board. The ultimate goal will be to have more than 100 agents working out of the office. Robert Brisbane, a former senior manager on the Peninsula for McGuire Real Estate, has joined the company as the operating manager in Burlingame.
The company plans to open additional Bay Area offices on the Peninsula, in San Francisco and in select Santa Clara County locations such as Los Altos and Los Gatos every quarter or so and plans as many as 10 offices, Darakdjian said.
The company’s business model relies on referrals from residential agents focused on high-end sales who send their clients with available investment capital to their commercial agent peers, Cunningham said.
Initially in Southern California, the commercial agents sought to distance themselves from the residential side. They wanted separate entrances to their offices and “didn’t want to be anywhere near the residential agents,” he said. Attitudes have changed, however, as the commercial agents have seen the value from the referrals. They now want their offices next door to the residential offices.
Cunningham’s six Southern California offices have not quite 900 agents, of which well more than 10 percent specialize in commercial properties, Darakdjian said. Most commercial sales involve properties valued at $20 million or less. In 2011, the company expects not quite $1.3 billion in closed home and commercial property sales out of its Southern California offices.
Austin, Texas, -based Keller Williams Realty Inc. is a franchise company with 80,000 real estate agents in approximately 700 U.S. and Canadian offices. The company was founded in 1983 and launched its commercial division in 2008. It has 1,500 commercial agents and brokers nationwide, Darakdjian said.
According to REAL Trends, which tracks the residential brokerage industry closely, the company overtook rival Century 21 to become the second-largest real estate franchise in the country based on the total number of sales professionals.
Keller Williams touts its extensive training and generous commission splits with agents. Commission payments by agents are limited to $37,000 a year for residential specialists and $50,000 a year for commercial agents. The company also shares 48 percent of its annual profits with its agents.
“We elected to be up here because it gave us a massive contiguous area where we could bring some consistency. If it were only going to be the Burlingame office, we might not be interested. But we have found great economies of scale in Southern California and that also bleeds over to the commercial side,” Darakdjian said.
“As we gobble up market share and we will be buying everything we can find,” Cunningham said.
