Real Estate Brokerages Adapt to Economy by Shifting, Adding Services

For Immediate Release
September 16, 2011

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Morgan Chilson, Contributing Writer
Kansas City Business Journal

Real estate brokerages adapt to economy by shifting, adding services

The prolonged commercial real estate downturn means more Kansas City brokerage houses are switching up and stepping up their games.

The new plays — into a wide range of corporate services, from helping banks with troubled assets to assisting with corporate relocation logistics — are aimed at helping firms stabilize business until the market recovers.

Copaken White & Blitt, a Kansas City commercial real estate firm, diversified in 2010 with its marriage to homegrown corporate services firm, First Scout. The team rebranded as Copaken Brooks, and the merger enabled the firm to boost its overall brokerage profile.

“(Our) platform is built to help commercial real estate managers with multiple facilities make a bigger impact on operating margin through reduced occupancy costs, faster and clearer communication, and uniform reporting across multiple markets,” said Bill Early, senior vice president of Copaken Brooks. “This business is far less volatile than a platform that relies on single unrelated transactions.”

Zimmer Real Estate Services LLC responded to the foreclosure crisis by expanding services to clients holding distressed properties. The new department, Lending Solutions, added definition to the firm’s services, Marketing Manager Nick Parker said.

“A lot of our clients are lenders and banks, and they have found themselves all of a sudden with properties they didn’t have before as notes go bad,” Parker said. “We help them, whether it’s just evaluation or disposition or acting as a receiver. They’re not property owners; it’s not their job.”

Although not a new line of service, it’s one that has picked up rapidly.

“Any industry trying to survive and even thrive is trying to find increased lines of revenue that weren’t there before,” said Sonny Rogers, Zimmer’s director of corporate real estate. “We’ve always had banking clients. It’s just that there is a more concentrated effort now with the market downturn.”

A markedly different market means Cassidy Turley also has focused on helping clients maximize returns on investments through corporate services, said Greg Smith, senior vice president and principal.

When Smith started in the business 17 years ago, owners were interested in different things, such as aesthetics and specific tenants. Now, the operations side of the business is king.

“As we’ve grown, we have tried to focus on more institutional clients, where there is a bigger bang for their buck for us to work with them across the country,” he said.

Diversification has been a key growth strategy at CB Richard Ellis, long before the economy made it essential, Managing Director Mike Klamm said.

The 2006 purchase of Trammell Crow Co. brought corporate services business into the fold, the acquisition of LJ Melody and Co. put CB Richard Ellis into mortgage banking, and other departments are strong in facilities management, project management and appraisal services, he said.

“Global corporate services is by far one of our strongest growth lines of business,” Klamm said. “That is a reaction to, I think, the economic times we’re in, where companies are looking wherever they can to shave and trim their operating costs. Sometimes because of our size and our depth, we can go in there and maybe save a little bit of money on their goods and services and negotiation of their service contracts. Worldwide, we manage about 2 billion square feet, and that allows a certain buying power with certain vendors.”

The challenging market is creating more of a consultative, advisory business role for commercial real estate businesses, said Walt Clements, director of the Lewis White Real Estate Center in the Bloch School of Management at the University of Missouri-Kansas City.

“I did a joint venture with one firm, an office broker that was a consulting fee-based assignment, to decide whether they should sell or lease their real estate,” Clements said.

Brokers specializing in office buildings, for instance, may sit down with clients and share an economic trend analysis to help them get a better handle on their future real estate needs, he said.

Zimmer’s Parker agreed that diversification can help weather tough markets.

“I think what we’ve done, and what companies who get through this do, is tailor the services we already offer to fit as needs change,” Parker said.