Joseph Fallon – ‘Lies and innuendo’
This is not a leap year, and the leadership at Trammell Crow hopes to keep it that way.
As the real estate services firm nears the end of a three-year contract with the professional staff in its Boston office, the parent company is reportedly aiming to extend the pact to prevent an exodus of talent once the deal expires in May. Texas-based Trammell Crow solidified its presence regionally in 1998 when it paid an estimated $32 million to acquire Fallon Hines & O’Connor, which now serves as its Boston operation.
According to industry sources, the local team has been tendered a substantial financial offer from Trammell and is now negotiating on the terms. One source familiar with the situation acknowledged last week that “something is definitely happening,” while another expressed optimism that most or all of the key personnel will stay put in the end.
“I think that is probably the case,” the latter source said in predicting that an agreement will be reached. “Things change, but right now it is a deal that everyone seems to be happy with.”
FH&O co-founder Joseph P. Fallon declined to discuss the matter when contacted last week, but bristled at a reference to “Trammell Crow Freedom Day,” a term that has been kicked about the Hub’s commercial real estate grapevine almost since Trammell Crow made the initial acquisition. Referring to the end of the contract, the slogan implies that the firm’s leasing and investment brokers would be tempted to look elsewhere once the three years expire, but Fallon insists that such a notion has been overblown, perhaps to foment uneasiness among his firm’s clients.
“I’m sick and tired of the lies and innuendo,” Fallon said. “We are 100 percent committed to Trammell Crow and to working for a long time with them.”
While that may be the case, some members of Trammell’s own staff acknowledge that the matter has been a topic of discussion at the company, especially given the likelihood that competitors would aggressively pursue the firm’s professionals if availed the opportunity. Along with solid coverage of the downtown and suburban leasing markets, Trammell Crow’s Boston office has an investment services group considered among the strongest in the country, one that has brokered more than $1 billion in commercial property sales in each of the last three years. Leaders of the ISG includes veterans Robert E. Griffin Jr., Marci B. Griffith and Edward C. Maher Jr.
One Boston broker said the non-compete clause may have been too short. “It absolutely blows my mind that Trammell Crow would pay what they paid for a great company and not lock them up longer,” said the broker, who requested anonymity. “It’s amazing how fast [three years] can go.”
Big Change
FH&O was one of several established Boston real estate companies which attracted attention from national players in the late 1990s. The first of that group, Whittier Partners, formed a 50/50 partnership with CB Commercial in the fall of 1997, while Lynch Murphy Walsh & Partners was acquired by Insignia/ESG in March 1999. For the larger firms, it was a way to quickly bulk up in one of the country’s hottest areas, while officials at the targeted companies cited a need to broaden their research capabilities and geographic boundaries as reasons for welcoming the overtures.
“We were able to put together a deal that was the best of both worlds,” said Andrew W. Hoar, president of what is now CB Richard Ellis/Whittier Partners. With the 50/50 arrangement, the local office operates as a separate business unit from the parent group, providing a measure of autonomy on leadership decisions and other issues, but still allowing access to CB’s network of offices and market information.
Although it can be difficult to work in such a large operation, Hoar said he believes the arrangement has been a positive.
“We’ve been very pleased with the relationship,” he said, noting that the Boston office now has a major presence throughout Massachusetts and Connecticut. Whittier’s revenues and property management business have grown significantly, said Hoar, partly due to the strong economy, but also because of the expanded opportunities provided to the firm through CB’s capabilities.
The same has been true for the erstwhile Lynch Murphy Walsh & Partners, according to principal Timothy R. Halloran. Indeed, he said the affiliation with Insignia/ESG was critical to the firm winning a major assignment to lease and manage the 4.5 million-square-foot national office portfolio of Boston-based Leggat McCall Properties. Scheduled to close later this month, the deal encompasses 20 properties in five northeastern states and Washington, D.C., including LMP’s own holdings and those properties currently managed by LMP on a third-party basis.
“We initiated the converstation, and we couldn’t have done that with any credibility without the Insignia infrastructure behind us,” Halloran said. “It’s a conversation that would have lasted about eight seconds otherwise. In today’s world, you need the strength of numbers and the ability to service clients across all markets, or you will miss out.”
LMP Chairman J. Brad Griffith concurred with that outlook.
“We wanted somebody that didn’t have a platform just in Boston, somebody who could service our assets in multiple cities,” he said. “Lynch Murphy couldn’t have done that.”
As for turnover, neither CB/Whittier nor Insignia have seen substantial migration of brokers since the unions were consummated. Downtown leasing broker Ronald K. Perry did defect from CB/Whittier to Meredith & Grew, while industrial specialist Arthur “Trey” Agnew went to Insignia, but most of the 36 partners at Whittier have been there since the merger. The firm did recently add four new partners to the team in Jennifer Francis, Zeke Zawayer, Timothy Fagan and David Connolly. Meanwhile, Insignia has remained virtually intact, actually luring downtown broker James J. Adams away from Meredith & Grew.
“Becoming part of a major corporate entity is definitely a big change, but if that is a downside, it is far outweighed by the benefits of having added resources to do our business better,” Halloran said. “We’re all better off for it.”
