Cushman & Wakefield chief executive Brett White is not content with fifth place. The New York-based advisory services firm shocked the real estate world when White brought over four Eastdil Secured brokers to form a new capital markets group, last month.
Doug Harmon and Adam Spies, now Cushman’s co-chairmen of the team, and Adam Doneger and Kevin Donner, now executive managing directors, will be charged with narrowing a gap in US transaction volumes. Currently, Eastdil tops the ranks, brokering $25.1 billion in deals for the first half of 2016, according to the firm, while Cushman, came in at number five with $7.4 billion, according to US trade publication Real Estate Alert.
Harmon, Spies and Doneger have executed more than 500 real estate deals totaling more than $200 billion over the course of their careers, according to a Cushman statement. Notably, Harmon was the exclusive advisor on Blackstone and Ivanhoé Cambridge’s joint venture to buy the residential complex Peter Cooper Village Stuyvesant Town in New York for $5.4 billion last year.
However, the four new Cushman hires accounted for less than 5 percent of the $521 billion of deals globally that Eastdil executed over the last 24 months, according to the firm.
“The impact of the departures has been greatly exaggerated,” Mike Van Konynenburg, Eastdil’s president, told PERE. “We have a deep pool of professionals with broad capabilities in New York and around the world, which has allowed us to be the largest real estate investment banking firm. Having a few people leave in New York does not impact this position.”
The impact for Cushman, though, could be more significant. Overall, the new team will give it broader access to deals than previously. One New York-based headhunter predicted a domino effect for the firm. “Other brokers in other markets are going to say, ‘Look at what Cushman’s doing; I should join them,’” he said.
White has pushed for Cushman’s growth in multiple areas, overseeing last year’s merger with fellow advisory firm DTZ. Prior to that, as chief executive of rival CBRE, he oversaw that firm’s $1 billion purchase of ING Real Estate Investment Management in 2011. Bringing Cushman closer to the world of institutional capital was an aim White shared with PERE shortly after the DTZ merger was announced. Investment management is a big part of White’s agenda for Cushman too, but now the firm is also seeking dominance in the advisory community as well.
When asked how the quadruple hires will affect the firm, Graham Beatty, a New York-based partner at executive recruiting firm Heidrick & Struggles, was clear: “It should impact sales pretty significantly, especially in the longer term.”
Cushman’s largest brokered deal to date was the September sale of 88 parking garages in the UK, according to data provider Real Capital Analytics. The firm advised buyer Davidson Kempner, a New York-based hedge fund, which bought the portfolio for £500 million from a joint venture comprising Blackstone and the Royal Bank of Scotland.
As for Eastdil, one top New York-based broker unaffiliated with the firm predicted clients that have had relationships with professionals other than the four recently departed executives will stay with the business.
Laurie Dotter, president of Dallas-based Transwestern Investment Group, said Eastdil’s deep bench is a compelling reason to remain with the firm. She began working with the brokerage in 1995 and, in August, closed an $825 million transaction with a Korean investor for which Eastdil arranged both debt and equity financing. With up to 10 Eastdil professionals working on that deal, the firm could handle different time zones and fill substantive information requests quickly, which would be less likely to happen with a smaller group, she said.
But some sources said many clients with closer ties to the Eastdil exiles than the Eastdil brand are likely follow them to Cushman. For them, Eastdil’s loss will be Cushman’s gain.