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CB, Insignia merger a done deal.

Last week CBRE signs went up at the offices of 200 Park Ave., marking the completion of the company's acquisition of Insignia Financial Group and a new era in the global real estate service industry.

CB Richard Ellis Inc. now tops its competitors and is the world's largest real estate services company with a total workforce of more than 14,000 employees, revenues of more than $1.7 billion, and more than 250 offices in 48 countries, which will help to provide customized solutions to its vast client base, say CBRE top executives.

"We start out today as the leader in virtually every discipline and major market, and we are committed to expanding our market position and presence," said Stephen B. Siegel, chairman of Global Brokerage, formerly chairman and CEO of Insignia/ESG's commercial real estate operations. "For my Insignia colleagues, this is an exciting moment as we now have at our disposal all the resources to serve our clients more thoroughly and more completely than ever before."

CBRE now has dominance in several disciplines, said New York executives in interviews last week.

"CB's product lines are much more extensive then our product lines are--more asset management, more appraisal, facilities management and other business groups that we really didn't have," said John Powers, former vice-chairman of Insignia/ESG now CBRE's New York metro region president.

"Insignia was very strong in leasing and CB much stronger in investment sales and asset management. So, it was a good fit all around."

CBRE is now in a better position to control the market in several major cities in the United States, Powers said.

"We have a good fit geographically," he said. "We were very dominant on the East Coast and very dominant in the urban areas. Outside of California, CB was primarily suburban. Now we have a dominance of both suburban and urban markets and generally all the major metropolitan areas of the U.S. So it has meshed very nicely together."

Three top executives were chosen to lead the New York metro area transition--Powers; Robert J. Alexander, former Insignia/ESG president and current CBRE chairman of the New York tri-state region; and Mary Ann Tighe, a former vice-chairman of Insignia/ESG now CBRE CEO.

Tighe, who has more nearly 20 years in the real estate industry, said Manhattan and the surrounding communities would remain a prime focus of the company.

"No New York company has ever offered such a powerful mix of premier leasing and brokerage expertise and comprehensive array of services that addresses virtually every real estate need," said Tighe. "In the process of serving our clients, we will raise the standard of performance in our industry."

Ironing out the smallest of details of the acquisition has been accomplished, which for some staffers that were with ESG when Insignia acquired it in 1996 was nothing new.

"There's a lot of logistics that we've had to deal with in terms of moving into this space, moving out of that space, restocking this office, and dealing with the business cards and the new technology platform," Powers said. "So there's a lot of logistical issues, but the business values and structure and philosophy haven't really changed for those of us that have been here for a very long time with ESG and Insignia ESG."

Published reports of a mass broker exodus were greatly exaggerated, said Alexander.

"Our retention has been over 95%," Alexander said. "Well over 95% on the brokers or the revenue they bring in, anyway you want to measure it. I would say to you that it is wishful thinking by our competition."

But Powers did say its competitors jumped on a chance to lure personnel from the firm.

"We have had one of our competitors offering extremely let's say out-of-the-market financial incentives to a few mid-level people and they were very attracted to them," Powers said.

CBRE executives estimate that there will be a 3 to 4% personnel loss globally to either layoffs or contract expirations.

"We are a pretty large organization with over 1,000 people on the Insignia/ESG side," Powers said. "That's a significant number of people. With any large organization, as you know people will come and go."

As the company moves forward, plans are already in the making to advance its role as a global real estate conglomerate.

"Our goal is to continue our dominance in the market," Powers said. "Specifically, we are investing more heavily in technology, and we are going to make our managed brokerage culture, that is really unique, even more open and responsive to the brokers."

This will be accomplished by CBRE's proprietary research infrastructure. Its research includes nearly 300 local market research professionals, complemented by the macro-analytical and forecasting capabilities of its internationally recognized Torto-Wheaton Research unit.

"One of the key tools in our business is information, and how we track this," Powers s aid. "We've always been a leader in this market. What we intend to do is use this capability of compiling information together to be able to provide high quality information to our clients and to those directly serving our client. We have the best information in the industry. Now we are just trying to keep the edge."

In 2002, on a combined basis, CBRE and Insignia produced and/or directed:

* Sales and lease transactions with a total value in excess of $80 billion. According to Commercial Property News (June 1, 2003), this total is equal to the next six largest service companies combined;

* $9 billion in commercial financing;

* More than 700 million SF of property and corporate facilities under management;

* $14 billion in investment assets under management; and

* Nearly 41,000 appraisal/valuation and advisory assignments on properties with a total asset value of $414 billion.

CB Richard Ellis is majority owned by private equity firm Blum Capital Partners, which provided $120 million of equity capital to consummate the Insignia acquisition.
Revenues for Twelve Months Ending December 31, 2002
($ in millions)

CBRE/IESG $1,744.2
Cushman & Wakefield $884.1
JLL $840.4
Trammel Crow $736.0
Grubb & Ellis $300.3
Staubach $231.1
Newmark $147.1
Studley $136.7
GVA Williams $67.5

Source: CB Richard Ellis

Note: Table made from bar graph.
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Article Details
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Author:Nelson, Barbara
Publication:Real Estate Weekly
Article Type:Brief Article
Geographic Code:1USA
Date:Jul 30, 2003
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