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?
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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.
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