The Big Reshuffle: Midsized Firms Feel More Pressure Than Ever June 29, 2018

Commercial Observer | June 67, 2018

By Lauren Elkies Schram

…Unquestionably, the number of investment sales transactions is continuing to drop in New York City from 2016. There were 3,222 such deals in all of 2016, 2,756 in 2017 and 1,131 as of June 19 this year, according to data prepared by Ariel Property Advisors for Commercial Observer. For investment sales under $50 million—which represents the bulk of the city’s transactions—there were 3,067 deals in 2016, 2,652 in 2017 and 1,090 in 2018 as of mid-June. In terms of dollars, excluding June, the number of citywide investment sales totals $16.5 billion this year. For all of 2017, the number of trades totaled $31.2 billion.

“We are in a correction that began in 2016, following a record year. What we are seeing is major pricing resistance and little capitulation on behalf of sellers,” said Ronald Cohen, the chief sales officer at the mid-sized investment sales brokerage firm Besen & Associates. “This is the primary driver behind fewer transactions, made more acute now in a rising interest-rate environment.”

And with investment sales being depressed, some real estate pros said that mid-sized firms with a focus on New York City could face a similar fate as Eastern Consolidated.

…At the 26-person GFI Realty Services (22 on the sales team and four support staff), which does investment sales, commercial real estate financing and retail leasing in the New York metro area, the desk fee is about $75,000, said Michael Weiser, the president of the brokerage. Assuming a 50-50 split (which is not always the case) between the agent and the firm, each salesperson needs to bring in $150,000 in credited gross revenue just to break even, he noted.

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