Back in the day, an operation could count on “the talent” to remain throughout their career, with no talk of signing bonuses or free agents or jumping ship to pitch for the hated competition. Forming a new team was unheard of, challenging the century old hierarchy considered tantamount to treason. Indeed, one might even say commercial real estate brokerage is going the way of professional baseball.
Dominated, for most of the region’s rebirth, by a handful of closely held firms, Boston’s commercial real estate industry has undergone a dramatic evolution in recent years, and the brokerage arena is scrambling to keep up in the whirlwind environment. Technology and life sciences are creating new opportunities, markets and broker specialization. Globalization is luring new players into the region to compete for a sophisticated array of services, from leasing and selling facilities to providing indepth research and soup-to-nuts property management expertise. And as the national firms have advanced inward, Boston’s brokerage community – considered among the best in the country – is exporting its knowledge to serve clients throughout the four corners of the world.
Recent History
The changes occurred slowly at first, with Cushman & Wakefield becoming one of the first interlopers to test the Hub market in the early 1980s and local leaders such as William F. McCall Jr. and David Almy instilling novel ways for brokers to learn, interact and be compensated. Team efforts increasingly replaced the long-held practice of working alone, and the advent of women as a true force also began to alter the landscape.
With those elements in place, and fueled by the industry’s deep-seated bent towards entrepreneurship, the late 1980s and early 1990s saw brokers begin breaking their binds in search of a better offer. That pursuit even led to the formation of new companies such as McCall & Almy and what is now GVA Thompson Doyle Hennessey & Stevens, an independent company founded in 1990 by veteran brokers Catherine H. Thompson and Kathleen C. Doyle.
The biggest shot across the bow had occurred two years prior, when professionals from three Boston firms defected to create Fallon Hines & O’Connor. “It was a big risk at the time,” acknowledged co-founder Joseph P. Fallon, who left Spaulding & Slye with colleague Michael T. Brown. “But we thought we had a great concept and a great group of people, and we felt we could compete at the high-end of the marketplace.”
Launching the operation in February 1988, Fallon was united with Holy Cross classmates Charles S. O’Connor and Brian T. Hines, who launched the group along with three other veterans, Richard A. Graham, Kathleen O’Connor and Robert M. DeLaney.
FH&O’s formation preceded the prolonged market downturn that worsened until 1993, but despite the deteriorating conditions, the company quickly emerged as a leading competitor. The firm was in the black within six months, said Fallon, and has remained so ever since. While 1990 to 1993 was a particularly painful stretch for real estate, Fallon said those years “were fantastic for us.”
Along with top talent, Fallon cited FH&O’s teamwork approach and a compensation system fashioned on the one crafted by McCall and Almy while at Leggat McCall in the 1980s as key reasons for the firm’s success. “In hindsight, our timing was great,” said Fallon, as was the company’s instincts of where the industry was headed. FH&O was an early leader in corporate service work, for example, and also became adept at pursuing new opportunities such as biotechnology and servicing high-tech firms along Routes 128 and 495.
FH&O became so valued that Trammell Crow Co. swept into town in 1988 and paid more than $32 million for the company in order to gain a foothold in the Boston market. That deal was followed up three years later when Insignia/ESG acquired Lynch Murphy Walsh & Partners, itself an offshoot of the venerable Codman Co. Even more ironic was the departure of several brokers from Trammell Crow who left to found their own company in June 2001, Richards Barry Joyce & Partners. As with FH&O in the late 1980s, RBJ&P became a force to be reckoned with almost immediately upon its inception.
Trammell Crow subsequently lost its entire investment sales group to Cushman & Wakefield in late 2001, but did manage to regroup with the hiring of James F. McCaffrey from Meredith & Grew and Peter Joseph from Cushman & Wakefield. Meanwhile, Fallon noted that despite all the departures, the founding members “are still all together.”
Elsewhere, the status quo no longer exists, with a number of significant changes in recent months. Hoping to reinvigorate itself, the Codman Co. added four new principals just months after top broker and principal Ted Wheatley left for the Staubach Co. Along with appointing Stephen Prozinski as president, Codman lured downtown ace Robert B. Cleary Jr. away from Meredith & Grew, Cambridge broker Darryl C. Morse from Insignia/ESG, and investment broker James M. Belli and suburban specialist Thomas M. Powers from C&W.
Perhaps the greatest shakeup occurred last month, however, when CB Richard Ellis scooped up Insignia/ESG in a blockbuster national union that cost an estimated $400 million. As Banker & Tradesman reported in an earlier story regarding the agreement, the impetus of the deal appeared to be CB Richard Ellis’ desire to dominate the New York City market, but the deal has significant implications for Boston’s brokerage sector as well. CB Richard Ellis/Whittier Partners and Insignia/ESG are both top players in the Hub, and the integration of the two long-time rivals is expected to create even more upheaval in the coming months.
