In an unusual transaction, the New York City-based financial brokerage company BGC Partners Inc. is acquiring the U.S. operations of the commercial real estate brokerage company Newmark Knight Frank, which has an office in Greenwich.
Separately in another major commercial real estate acquisition, Washington, D.C.-based CoStar Group Inc. is acquiring San Francisco-based LoopNet Inc., with both companies providing varying online products for tracking commercial real estate transactions nationally, including in Fairfield County.
Worldwide BGC revenue totaled more than $1.3 billion in 2010, up 15 percent from the year before. In Newmark Knight Frank, it adds a major commercial real estate company with more than 400 brokers in 25 offices nationally.
In the past year, prominent Newmark Knight Frank-brokered deals locally have included furniture vendor Design Within Reach”™s relocation from Stamford to the Harbor Point development under way in Stamford as well as  New York City-based Guggenheim Partners”™ expansion into more than 30,000 square feet of space in Purchase, N.Y.
In April, Stamford Mayor Michael Pavia credited Newmark Knight Frank brokers for helping galvanize an economic development marketing campaign the city plans under the tagline “where companies thrive.”
If CoStar”™s marriage to LoopNet makes sense given their aligned product lines, BGC”™s bid for Newmark Knight Frank makes for strange bedfellows, with BGC having focused its business on providing electronic financial brokerage services since its 2004 spinout from Cantor Fitzgerald, which advised BGC on the Newmark Knight Frank transaction.
The deal came days before President Obama”™s dramatic announcement of the death of Osama bin Laden. Cantor Fitzgerald”™s U.S. brokerage business was devastated in the World Trade Center terrorist attack Sept. 11, 2001, and the company”™s efforts to rebuild were chronicled extensively in the following years.
BGC CEO Howard Lutnick said his company will be able to build on Newmark Knight Frank”™s operations through its technology and management expertise, in a press release announcing the deal, while saying BGC”™s success has come about in part by its ability to hire financial brokers ”“ or bringing them on via acquisitions.
“This is the beginning of a dramatic new footprint in commercial real estate by BGC and the definitive starting point of BGC”™s strategy to grow in this sector,” Lutnick said. “In financial services brokerage over the last five years, we have added more than 1,000 brokers, grown revenues to over $1.3 billion, massively invested in our world-class proprietary technology and increased our distributable earnings margin hundreds of basis points. We will use the same strategies to position Newmark for dramatic growth. We expect our model will prove to be just as profitable for Newmark”™s business as we build scale and generate the same kind of outstanding margins as in our financial brokerage business.”
Newmark Knight Frank will look for any edge it can get in Fairfield County, where it competes for business with some of the most sophisticated brokers in the country, including CB Richard Ellis, Cushman & Wakefield, Colliers International and Jones Lang LaSalle; as well as hungry local competitors like RHYS Commercial Real Estate, among a small multitude.
There may be enough business for all in the coming few years, if a late-April prediction by CB Richard Ellis CEO Brett White pans out amid the uncertain recovery in the U.S. markets.
“There is no question that we saw leasing recover first in the big markets ”“ New York City, Washington, D.C., Northern Virginia and some of the West Coast markets,” White said, in the company”™s first quarter conference call. “That improvement will move from a small number of large markets to virtually every market. ”¦ I think it is fair to say that all markets now are beginning to move towards recovery, just some more quickly than others.”
