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What the DTZ / C&W Acquisition Deal Means to You

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We all knew it was in the works; but this morning, the official announcement was made that TPG, owner of the recently expanded DTZ (Cassidy Turley anyone?) is acquiring commercial real estate behemoth C&W for a reported $2,000,000,000. First, that’s a lot of initials, and even more zeros! So what if you are affiliated with either of these two companies, or more likely if you are not? What does this pending transaction mean to you?

[Tweet “It’s official that TPG, owner of the recently expanded DTZ, is acquiring C&W for a reported $2B!”]

It is important to note that we have consulting and coaching clients at both DTZ and Cushman & Wakefield. We have clients at every major commercial real estate brokerage organization and many regional and independent firms. Thus, this perspective is for the market as a whole, regardless of where you may hang your license.

Let’s take a look at some likely, and perhaps, maybe not so likely outcomes. I will give you 9 possibilities, one for every zero in the $2 billion purchase price:

[Tweet “Here are 9 possible outcomes to the DTZ / C&W acquisition, one for each zero in the $2B purchase price…”]

1) Absolutely nothing

If you are not in a market where these two organizations co-exist, the impact on you, the individual broker, will have little bearing….or will it?

2) No need for average performers.

In a market where both firms co-exist, there will be redundancies. The strong will survive; those producers that are simply average better get more focused quickly, or start focusing on other opportunities outside of C&W and DTZ.

3) New competition will evolve.

Especially in markets which they co-exist, there will be redundancies, even at the top. Some top producers will leave – either to other firms or to start their own firms.

4) There will be some great administrative talent that will become available.

Attrition will happen. Great people will be invited to leave, others asked and some simply not wait for the deal to close. If you are thinking about growing your team, this is the time to approach great talent. If you are affiliated with these two firms, identify who you want on your team now.

5) Cushman & Wakefield will become a more formidable competitor.

By nature they will have greater resources, a stronger international lever and simply be “bigger”. Is bigger better? In most cases no, but in beauty contests, it can be a key variable.

6) The end is near for independent and regional brokerage companies.

Crazy to even type that sentence! However if you focus on national clients, institutional deals, or multi-locational opportunities, the playing field just got smaller.

7) If you are an independent firm, your value has just gone up.

Wait a minute, your demise is not as quickly as #6 may suggest. There is a place for independents to continue to thrive in the market. Today’s clients demand more responsiveness and those that can say “how high” when asked to jump have an advantage. This is simply not as easy with large bureaucratic organizations.

8) This is the next step to the “Big Three”.

The thought is the commercial real estate will eventually be comprised of the “Big Three” and everyone else. Today we have CBRE, JLL, C&W and Colliers. Before these 4 become three, you can be sure one or all of these four will continue acquiring more CRE assets (companies) before the next mega consolidation. Remember CushWake recently completed a handful of transactions, setting itself up for the DTZ acquisition. What does this mean to you – change is constant and the acquisition craze is far from over.

9) Commercial real estate brokerage is a worthy profession.

The DTZ/C&W deal is only the latest to provide proof that CRE is back and more valuable today than ever before. The “assets” everyone is acquiring is people. Talented people are the lifeblood of commercial real estate. We can all create new technology and social media platforms, but what we can’t replace are talented, dedicated commercial real estate professionals. Continue to grow individually, and regardless of where you are, you will always benefit from the next corporate transaction.

[Tweet “Commercial real estate brokerage is a worthy profession”]

I would love to hear your thoughts on this latest acquisition news and/or what you expect the future CRE brokerage tier to look like.

6 Responses

  1. It is my job to fine tune our research and marketing resources; Massimo provides direction to refine and distribute our rides signal message for knowledge-based, market-driven highly-specialized service group to allow us to compete. Thank you.

  2. Just as banks were allowed to stray outside of their traditional roles as lenders and become investment banks which created the most fragile economy we have experienced in our lifetimes, we can expect the CRE giants to continue to move into more and more related businesses thereby creating a similar house of cards. Imagine the brokerages controlling the major REITS and thereby dictating higher and higher prices/lower caps to artificially influence the market. Competition has always been the ultimate governor on the capitalistic engine and when it is largely removed, we face major problems of a magnitude we can recognize by the phrase, “too big to fail” and that is not a good thing.

  3. Dear Rod,
    I always appreciate your take on our profession! As a small niche firm in a third tier market,your comments are accurate in my opinion. I have a very hard time finding competent folks to join me both as agents and admins. My hair is graying and transitioning to “More $$ with less work” is an ongoing challenge. Luckily Business is good again, but keeping the motivation to do the work necessary in each transaction is the key. Oh well, I guess I will take a break from complaining , and take a pedal bike ride floowed by a run, and start again later!
    Thanks again for sharing your prognostications !
    Tom Hill III, CCIM & SIOR
    http://www.tomhillradio.com & http://www.tomhill.com

  4. DTZ gets a brand name for the Americas. Cushman & Wakefield, as you noted, gets more resources and a bigger platform. While the big get bigger, the idea that they will take over or try to take over the REIT market, who knows? Certainly they could. Where they are going is corporate America. Corporate entities are outsourcing facilities management, planning and procurement and CBRE, JLL and now the DTZ/Cushman giants are gobbling that business up. With it comes fees. Mangement fees, asset management fees, brokerage fees and more. The commission part will likely be a winner as they can continue to charge brokerage fees but use less costly personnel to oversee the transactions. Not front line brokers, necessarily. What does this mean for the rest of us? Not too much as the corporate business, particularly the national and international part has been moving away from small brokerage operations for a while. The number of brokers hitting the streets isn’t changing, so the competition for local brokerage work remains largely the same save for some rolling out from the giants and moving to smaller operations which likely make them stronger. So, it will be interesting to watch, but business goes on as it always does.

  5. I see this merger benefiting the smaller firms like mine. Brokers are independent people. These big hug organizations are hard to work in unless you are at the top of the food chain. We hope to pick up some new people who don’t want to work in the mega corporations during this transition .

  6. Consolidation of the larger full service commercial real estate firms will have a net positive impact on transaction market share for smaller, independent brokerage firms. These global giants have great platforms to service large institutions, but their diverse service lines do not enhance their ability to compete transactionally, nor does providing a diverse array of services increase the firm’s commission revenue per capita on each staffed account. To the contrary, the competition at that level puts tremendous negative pressure on commission rates, which fees are already heavily distributed vertically within the firm.

    Aside from the revenue model, the global giants actually compete for a small fraction of the overall transaction market (again, we’re talking about selling buildings, not other service lines). There is a lot of real estate out there and the vast majority of it is still locally/regionally owned, locally operated. A small town veteran broker with sales experience and proprietary market knowledge runs circles around the junior market analysts and senior VPs alike.

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