Have the large commercial real estate brokerage and consulting firms gotten too big for their own good?
That’s what veteran real estate pros Mike Goman and Tom York think. And they see the trend as a potential business opportunity.
Goman and York, two well-known names in Greater Hartford’s commercial real estate scene, recently teamed up to start their own firm Goman+York Property Advisors.
The pair say they are offering a soup-to-nuts service — strategic planning, consulting, research, marketing and leasing — that the big boys advertise, but don’t always deliver well on, mainly because their roster of clients is too deep.
“Over the last 10 years, many of the large brokerage firms have had the philosophy ‘the more properties we have the better,’” said Goman, who is the former CEO of Konover & Associates Inc. “So they end up having a lot of clients who they can give very little service too. But that doesn’t work if you are a medium-sized company or smaller high new worth investor.
“The big guys have to gotten too big,” he said.
Of course York and Goman’s much larger competitors don’t agree.
CB Richard Ellis Hartford managing director Jeff Livingston, for example, said his firm’s services are individualized for every client, and if CBRE didn’t operate in that manner it would lose its customer base. And, he said, providing a full service commercial real estate operation takes a lot of resources that makes it difficult for the smaller players to contend.
“The major firms have invested a lot of money in individualizing service for every client we take on,” Livingston said. “Customers get the most service, market intelligence and research in a manner that the small firms can’t compete with.”
Goman and York are betting that they can compete.
The sharply dressed duo, who have known each other for the past 12 years, originally met when York was a broker for CB Richard Ellis in Hartford and Goman was leading Konover.
York spent 15 years at CBRE before he decided to leave the firm in March.
Goman held the top spot at Konover & Associates for 12 years. He was charged with overseeing the company’s capital, development, and construction operations. Since he left Konover in 2008, he’s served on the board of several real estate companies and as president of Accubranch LLC, a start-up venture that provides real estate services to regional and community banks.
York and Goman say their full-service real estate boutique is catering to small-and-medium sized regional companies, private equity firms, family wealth funds, and high net worth investors. They will represent companies looking to expand or investors looking to buy or sell a property. They’ll also get involved with development services.
But they said they don’t want to be anchored down by a huge client list. Instead they want to serve as an advisor to a set of loyal customers who they can deliver more in-depth services too, similar to the way accountants and lawyers interact with their clients.
York has the sales and leasing background and says he brought with him many of his former CBRE clients. Goman brings the owners and investors perspective.
So far their property roster includes the 111 Founders’ Plaza complex in East Hartford and the office component of Blue Back Square in West Hartford.
They just arranged a lease at Blue Back Square with Jade Marketing Group for about 12,000 square feet, which will bring the property’s original 92,000 square feet of professional office space, not including medical, to 100 percent occupied, York said. And because of the strong demand for office space at Blue Back, York said, the building at 62 Memorial Rd., which was initially slated to have 7,000 square feet of retail on the second floor, is now being offered as office space as well.
And they recently picked up the 8 Two-Mile Rd. Class A office tower in Farmington, which will also house their new office.
Goman said they will likely have six to eight staffers on board by Labor Day and they are leveraging a team of consultants and data research firms.
They said they are seeing a lot of activity right now from banks and medical providers. And they are both big believers in research and data driving real estate decisions.
Goman said all companies should think like retailers when they are considering expansion. Retailers often use tons of geographic information data to pinpoint the exact location of their next store opening so they can reliably forecast sales.
All companies, ranging from professional services to banks, should do the same, Goman said. They also should consider various psychographic factors before making location decisions including population demographics and income, as well as things like how people in a particular area spend their money or spare time, the kinds of cars they drive, and even their favorite hobbies.
“Before you make long-term decisions and commit the resources, you have to do the research and planning,” Goman said. “The difference between 100 yards in the right or wrong direction can be sizable.”
Goman+York Property Advisors will face stiff competition. Besides CBRE, their larger competitors include Cushman & Wakefield, Jones Lang LaSalle, and Colliers International. There are also a range of medium-to-small sized players in the market including Sentry Commercial and Bartram & Cochran.
As far as the argument of small firm versus big firm, the pros and cons of choosing one over the other depends on who you ask.
Peter Holland, of Hartford-based Bartram & Cochran, a real estate consulting firm, said one of the advantages of smaller boutiques is that they are not as transaction-driven as larger firms, which carry a lot more overhead.
“Clearly large firms do excellent work,” Holland said. “But they have a different world view. They have enormous pressure to deliver transactions because that’s how they make their revenue.”
Because larger firms have seen transactions fall off in recent years, however, Holland said they are increasingly pitching themselves from a consultant approach.
At the same time, larger firms have a much deeper resource pool.
Christopher J. Ostop, the executive vice president of Jones Lang LaSalle in Hartford, said JLL has always had a strong history of successfully working with clients of all sizes.
“We pride ourselves on providing individualized solutions and personal service,” Ostop said. “Jones Lang LaSalle, along with CBRE and Cushman & Wakefield, spends millions of dollars annually to ensure every client has access to the best possible resources.”
For York, one of the biggest challenges remains the economy. He said Connecticut’s high unemployment rate means companies aren’t adding jobs or new office space.
“Many firms are still uneasy about signing leases,” York said. “Everyone is still in a wait-and-see mode.”
