As margins shrink, bigger firms are getting more aggressive in trying to scoop up niche NYC brokerages
(Illustration by Adrias Fruitos)
Dexter Guerrieri co-founded Vandenberg, a boutique brokerage specializing in the venerated Manhattan townhouse market, back in 1990.
Over the years, he turned away suitors trying to get him to sell the small, independent shop. But two years ago, with the market taking a turn for the worse and competition intensifying, Guerrieri and co-founder Jane van den Berg Ordway, his wife, went hunting for a buyer.
Then this past August, Douglas Elliman, the city’s largest residential brokerage, announced that it was acquiring Vandenberg for an undisclosed amount.
“We were looking for a long-term relationship and the ability to grow in a different kind of way than we could grow organically,” Guerrieri said. “We wanted to take the next step.”
The deal brought something crucial to both brokerages at a time when running a firm is becoming more financially hazardous by the day: It gave Elliman a stronger foothold in the specialized (and lucrative) townhouse business and provided Vandenberg, which will continue to operate as a team under the same name, with more resources and less overhead.
And the Vandenberg deal — Guerrieri said he negotiated with Elliman Chairman Howard Lorber on and off over a 10-month stretch during meetings in both of their offices — is not an outlier.
Mergers and acquisitions among residential firms are skyrocketing, hitting a record $524.7 billion nationally last year, according to figures from Thomson Reuters. It’s a trend that The Real Deal has been exhaustively chronicling: Back in September, TRD wrote about how smaller firms operating in the less-sexy corners of the market were quietly joining forces — allowing them to remain independent and autonomous while also consolidating operations and cutting costs.
But there’s also another trend playing out across New York City’s residential world (and throughout the country): Big companies are getting more aggressive about scooping up (or trying to scoop up) smaller competitors. And the firms with the biggest targets on their backs are the ones with niches that can offer megafirms a foothold in a new market — whether that’s in a geographic location like an outer borough or in a sector like the townhouse world, where they may be leaving deals on the table.
Vandenberg is, indeed, among several under-the-radar boutique firms in the city that have been bought up by large rivals in the last two years. Others include Laurance Kaiser’s high-end Upper East Side firm, Key-Ventures, which was absorbed by Berkshire Hathaway last year; R.P. Miller, Reba Miller’s six-person shop, which was bought by Berkshire in February; and Space Marketing Shop, which was bought by Elliman in May.
But that small batch doesn’t tell the full story.
Behind the scenes, boutique brokerage chiefs say, they are getting regular phone calls and solicitations. While not all of them are interested in selling, almost all of them are being approached.
Robert Dankner, managing director at Prime Manhattan Realty, said he’s been contacted by two firms interested in striking a deal. He said that while he hasn’t really entertained selling, he understands that for some firms it’s a matter of survival. “Fortunately, that’s not our situation,” he said.
“If my interest was in exiting my business, then that would be something to discuss,” said Dankner, whose firm has 13 agents.
On the national front, Compass, which is backed by $450 million from SoftBank, has made headlines for picking up 11 brokerages in the first eight months of the year, including the San Francisco-based Pacific Union International Realty, which had $14 billion in sales last y上海夜网