One year after merger, CBRE at 'center of the world'.

A year after real estate giants Insignia/ESG and CB Richard Ellis joined forces, the world's largest commercial real estate force seems to be doing great.

According to Mary Ann Tighe, chief executive officer for the New York tri-state region, the firm's management couldn't have wished for a smoother transition or a better working environment.

Before the two firms came together, CB Richard Ellis and Insignia/ESG had vastly different areas of expertise and operating strategies.

CB Richard Ellis was a global powerhouse, with particular strength in investment sales and corporate services. Insignia/ ESG was best known as New York's number one commercial leasing firm. In addition, CB Richard Ellis brokers were used to being cloistered within their teams, while Insignia/ESG pioneered the "managed brokerage" information sharing model where everyone at the firm could gain access to information on a particular building or tenant. When CB Richard Ellis' plan to acquire Insignia was announced, people in the industry expected the merger to create personnel problems and an almost insurmountable amount of debt. Fortunately, this has not been the case, says John Powers, president for the firm's New York tri-state region.

"Last year, of course, we had the big personnel challenge--most people are not happy with change, so we had to convince people in the tri-state area to give us a little time," he said.

"We see all that is behind us. We are certainly well-positioned in terms of scale and we made a lot of progress with our brand name."

Though in the early days of the merger, CB Richard Ellis lost some top players--Woody Heller, Richard Baxter and Ron Cohen among them--Tighe says the retention numbers this year are better than average.

"The transition has gone exceptionally well--not just because we have a positive feeling about it, but because the data proves it," she said.

"We've retained 89% of the personnel from our combined firms. One of the things that really pleases me is that people can't tell any more who came from where. In a normal year, our retention figures are in the 84% to 85% range, so we're really very close to our regular turnover."

As to the debt--CB Richard Ellis paid approximately $256 million for Insignia/ESG--the firm's decision to go public earlier this summer has helped eliminate most of it.

"In the day-to-day life of our New York division, going public was a non-event," Tighe said. "But our notion was two-fold: we wanted to de-leverage the company and pay a significant amount of debt and then, those of us who are stock-holders wanted to place a valuation on the stock we hold. Personally, I didn't sell a single share."

At the current moment, the firm's New York division is working on several new accounts--in the last year, CB Richard Ellis has picked up contracts with General Electric and Citigroup--and it will announce three significant new agencies in the weeks to come. One involves a large downtown landlord and two would be for buildings in the midtown area.

Tighe says that the firm's new technology platform has been extremely helpful in generating new business. Last year, one of the challenges facing the New York regional management had been combining CB Richard Ellis' and Insignia's technology infrastructures. But the effort turned out to be a blessing in disguise.

"It has been fantastic--there is so much information I feel like I'm in the center of the real estate world," Tighe said. "Now all I have to do is go to my computer and everything we have, all the information from our brokers and researchers is placed in our [database].

"There is just nothing that I cannot access--[taxes on a building, available spaces, what prospective tenants have looked at it.] Our database is just a phenomenal shared file cabinet--it increases the productivity and the mastery of our brokers."

"We have e-flyers now with cookies embedded in them--they signal to us that a client opened the email or downloaded it," she noted. "We know how many times a prospective client visited our website--if someone looks at one building online more than 90 times, we know they are serious about it."

As to the company's long-term plans, further expansion might be in CB Richard Ellis' future.

"It's very difficult for us to expand overall because we are the largest firm in the market right now and we have the largest market share," Powers said.

"Our first goal would be to keep our market dominance. And there are obviously certain parts of the market where we think we can improve and do better--sometimes it's an industry and sometimes a particular line of business."

"One of the things we are contemplating is that there are pockets of business in the New York region that are not in our core services, but present opportunity," Tighe noted.

"For example, we don't do a lot of industrial work in the boroughs and we don't do neighborhood retail, the Mom and Pop shops, just major retail.

"That's a great opportunity. So we are asking ourselves if we want to be in that business and manage it from 200 Park Ave. or just form an alliance with someone who does."

Tighe cautioned, however, that those plans are still far in the future.

"We'll have nothing to report until, at the earliest, the fourth quarter of 2004," she said.