Competition in the $1.5-billion Cambridge real estate market is heating up as sale prices continue to soar. Recently, a few companies have opened new offices, poached some top agents and made it clear they’re targeting the high end of the market.
For more than a decade, two companies have dominated in Cambridge: Coldwell Banker and Hammond Residential Real Estate. Between 2005 and 2015, Coldwell Banker’s two offices averaged a 35 percent market share and Hammond averaged 16 percent, according to MLS data. Now, experienced newcomers like Gibson Sotheby’s International and Compass Real Estate are hoping to change that.
Gibson’s Cambridge office opened in the middle of 2015 and managed to capture 2.6 percent of the market share. Robert Paul opened two Cambridge offices at the end of 2014 and had 1.9 percent market share in 2015. Compass opened very late in 2015 and had no sales in that year.
Jeff Heighton, regional vice president at Compass Real Estate, opened the Cambridge office at 1 Mifflin Place at the beginning of this year with one of Hammond Real Estate’s former top-producing teams, John Petrowsky and Christian Jones. Recruiting top agents is a hallmark of the venture capital-backed, technology-based real estate platform.
“Compass’ value proposition resonated with them right out of the gate,” Heighton said. “We focus on recruiting the top 15 percent of agents and they are at the top of the list. Our view is if you hire the best agents, other agents of that caliber will be interested. I’d prefer to have a couple more like John and Christian than an office full of 30 or 40 people.”
Tod Beaty, owner of the Cambridge and Belmont Hammond offices, has lost a dozen agents so far to Compass and Gibson. He thinks those agents will find their work harder now, not easier.
“They may be paying the agents better, but they’re not serving them better,” Beaty said. “We’ll see how the business goes. There will be more change in the market. I don’t really think it will be about technology. Our business is a people business.”
Heighton is willing to bet the technology will change the residential real estate market and is determined to be at the crest of that wave.
“Hammond struggles with what does their future look like,” he said. “That’s a big part of what Compass is focused on; building the future of business. [Hammond] is still talking about their lineage and that doesn’t resonate with everyone.”
Beaty countered that area agents understand and appreciate his company’s brand and like working with his firm.
“I started from scratch with my partners, who were top agents at Hunneman,” Beaty said. “Anyone can put a price on a house, but we’re all about the client. Co-brokers know that too. They know we’re going to push the offer that’s best for the client. That’s the ethos here. In order to be around this long, you kind of have to think that way. I care about that.”
Building, Not Buying
Laurence Rideout, co-owner and CEO of Gibson Sotheby’s, said historically his growth strategy meant buying existing companies, but there were no opportunities for him in Cambridge, so he had to build one from scratch for the first time. He opened his 1008 Mass. Ave. office in May 2015 and recruited 20 agents from existing firms in seven months.
“Our philosophy is invitation-only. We don’t take on new agents,” Rideout said. “We picked up a few high-class individuals and it happened from there. We were pleasantly overwhelmed and it’s been quite a run since then.”
Rideout has also had success opening new offices in Boston in recent years. He credits that success to hiring top agents, providing them overwhelming support, strong marketing and the international presence that comes with being part of Sotheby’s International Realty.
“When you go into a marketplace, you provide another option for a potential seller,” he said. “When we go in front of a seller against two other agents, we get our share of listings. We’re going to continue to do what we’ve been doing and make sure Cambridge residents and agents know there’s another option.”
A third relative newcomer focused on the high-end of the Cambridge market is Robert Paul Properties. They opened offices at 19 Arrow St. in Harvard Square and 1693 Mass Ave. at the end of 2014. In 2015, they had 1.9 percent of the market and ranked sixth overall.
After eight years, Bri Grady left Coldwell Banker’s Huron Avenue office with several other agents to join Robert Paul at the end of 2014. She said Robert Paul’s entrepreneurial spirit fit her better and is a natural fit for the Cambridge market.
“So many of my clients have been entrepreneurial and Kendall-based,” Grady said. “Coldwell Banker is a nice solid base from which to work. I enjoyed my time there, but when presented with the opportunity for a more entrepreneurial environment, a more flexible and nimble company that is able to adapt to what clients need, I took it. Things are changing in Cambridge and we wanted to be able to change with them. The Robert Paul crew is a very experienced crew.”
A Focus On Tech
Heighton said that in addition to recruiting top talent, Compass’ other main advantage is its heavy investment in technology.
“It’s a big shift for real estate; it’s been such a slow business to adapt to new technologies,” he said. “A company like Coldwell Banker, they have this long, storied past in the marketplace. It has its own direction but it also has some priorities that are outside of the market,” like its commitment to its shareholders.
Compass’ technology frees up agents’ time so they can focus more on what they do best – interact with customers – and that’s the reason the company’s relatively young and small Manhattan office does more business per agent than any other office in the city, Heighton said. He plans to replicate that success in Cambridge.
John Petrowsky left Hammond for Compass after 27 years. He said he was conflicted about leaving, but was drawn to Compass’ heavy use of technology and commitment to the highest level of service across all price points.
“Compass is going to be interesting because it’s going to focus on online promotion and the ability to give more exposure to a Cambridge home, more than any of these properties are used to,” he said. “Compass doesn’t think that print media is the way of the future. However, in the print media we produce, we have better resolution and use professional photographs. Even with a condo at the lowest price point in Cambridge, we offer the same service as to someone who owns a $5 million home. That’s something I very much believe in.”
Consumer Loyalty
Of course, just how much new entries into the market will disrupt it depends largely on whether customers stay loyal to their agents, or the company they work for.
Grady said that many agents think clients will remain loyal to them personally, but it’s more complex than that.
“Some would argue it’s all about the agent. I think that’s a little naïve. In fact, having a strong marketing engine and platform and staffing is really important on the listing side,” Grady said. “Before I decided to leave, I wanted to make sure it was as strong or stronger at Robert Paul – and I think it’s stronger, because of their expertise on the high end of the market.”
The old guard believes its longstanding name recognition in the community will carry more weight with agents and customers than its flashy upstart peers.
“When we polled our agents, we asked them about what they liked about working for us and the number one response was, the community’s positive impression of the company,” said Merit McIntyre, president of Coldwell Banker New England.
Hammond’s Beaty agreed. “I’ve been doing business here for 35 years,” he said. Consumers “know what this company stands for. I’m very involved in the community. People want to hire local. I’ve lived here since 1979; I’m a known quantity. People want my company. They’re disappointed to hear that some agents left.”
His competition sees it differently.
“What we find is, working with the top agents, their clients are loyal to the agent,” Heighton said.
Larry Rideout said he agreed and added, “If consumers follow the company, we can compete on that level too. We’re an elite brand.”
Regardless of tech support, name recognition and fancy branding, McIntryre said he thinks competition is always healthy.
“We continue to be the dominating force in Cambridge with two incredible offices. Last year we brought in 30 agents in the Cambridge offices alone,” he said. “When you’re number one, you’re much more of a target than number two or number 20.”
