When it comes to investment sales, they are strictly middle of the road, but the six members of Trammell Crow’s Middle Markets Group wouldn’t want it any other way.
A division of the real estate firm’s Investment Services Group, the middle markets operation focuses on commercial sales in the $5 million to $30 million range. The entity was founded in 1997 to concentrate specifically on that sector, explained Senior Vice President Richard F. Herlihy.
“We didn’t slide into it,” said Herlihy. “It was a conscious decision that this was what we wanted to focus on.”
The reason, according to Trammell Crow principal Robert E. Griffin Jr., was a desire to keep the company active in the middle market after his firm’s success in that arena led to larger and larger investment assignments. During recent years, the company has become one of the top investment brokerage houses in the state, handling such high-profile sales as the Waltham Woods Corporate Center, the $168 million sale of 99 High St. in Boston and the $108 million sale of the Museum Towers apartment complex in Cambridge. Even as the company has grown, however, Griffin said the firm sees the middle market as the core of the business, especially long-term.
“That’s what we grew up on,” said Griffin, who has been involved in such deals for 20 years. “Because of our success there, we were able to do the larger deals … It’s really the backbone of the industry.”
By having that concentration, both sides of a medium-sized sale have the comfort of knowing that they will get full service from the brokers, said Herlihy. “We’re not a group that wishes we could do trophy sales, but for now we’re settling on middle deals,” he said. “This is what we enjoy doing, and this is what we are going to be doing 10 years from now.”
Senior Vice President Christopher T. Griffin, Robert Griffin’s brother, noted that the Middle Markets Group bucks another trend in that the team members are paid via salary and bonus rather than straight commission. All too often, he said, investment divisions that operate on commission become polarized, with brokers unwilling to share information with each other for fear they will be squeezed out of the deal.
“It lends itself to competition and not cooperation,” he said. Under the Trammell Crow formula, “We don’t even think about that. It’s a completely different approach that we think is better for the client, and that’s what it’s all about.”
Christopher Griffin arrived at Trammell Crow in 1996, followed by Herlihy a year later. Along with Rob Griffin, who serves as “player/coach” of the team, are marketing specialist Michelle Sinclair and financial analysts Tyler Brown and Iain McGill. Each one provides a specific expertise, said Christopher Griffin. Sinclair, whom he calls “the chief of staff of the Middle Markets Group” helps coordinate each deal, and also designs the sales materials used to market a property.
McGill and Brown, meanwhile, take the raw numbers in a deal and refine them to determine how much a property can fetch and what potential physical issues a given building might have. Both hold the equivalent of a master’s degree, with McGill listed as a “chartered surveyor” by his home country of Scotland.
Besides the lack of internal turmoil, the team setup allows for a full-fledged approach to each assignment, as well as a crossover of knowledge if one member is not available, said Herlihy. When the occasional crisis hits, usually as a deal approaches the closing, he noted that there will always be someone available to quickly address the situation.
‘New Tool’
Whatever the reason, the Middle Markets Group has certainly been active of late, with the firm preparing to close this week on a diverse range of properties. In one instance, the team is selling an 88,000-square-foot warehouse for just over $5 million, while a stand-alone office building will fetch $23 million. Yet another deal involving a three-building office park is slated to close for approximately $30 million. In a deal completed this month, the group brokered the sale of the Point West Office Center in Framingham for $23.7 million.
With a database of more than 900 potential investors, one chore is to identify the likely buyers of a given property and to get the word out that it is available. That can be a more complicated endeavor at the medium-sized level, given that there are more players who might pursue such a deal, said Herlihy. These days, he said, value-added properties are among the most popular, attracting a variety of opportunity funds and even some foreign buyers
To better serve its client base, the Middle Markets Group has recently developed a Web site that allows potential investors to access property information via the Internet. Designed and maintained by McGill, the site provides passwords so that qualified investors can access the site without sellers fearing their information will be trumpeted to the world at large.
“It’s a new tool to facilitate the sale,” said Herlihy, adding it is particularly useful to investors who are overseas or in different time zones.
Keeping up on such trends is another goal of the team, both on the technology front and in terms of investment trends. Although it might at times seem to be a stagnant process, investment sales often turn with the economic tide or other variables that require industry professionals to maintain a constant vigilance on where the market might be headed.
A presentation recently prepared by the group outlines the changes in investor attitude between last winter and the current situation. Whereas the seller was previously in charge, the overview shows that buyers today are not as willing to bid up a property as before, are increasingly concerned about where the real estate cycle is, and are much more focused on due diligence of a given property.
“There’s still a good deal of volume, but the deals are clearly taking longer,” Christopher Griffin said. Such knowledge is important, he said, because it might affect how the group advises its client on whether to accept a deal or wait for a better offer. Being in the trenches and the willingness to share information keeps the middle markets staff and the larger Investment Services Group able to identify trends early on, he added.
“We’re all so active in the market, we just have real-time information that we can use,” he said. “That’s very important for our clients.”
