A Firm That Has Kept Its Focus: Selling
A shakeout in the commercial real estate business has led many brokerages to rush into corporate marriages in a race to expand and offer every imaginable real estate service. But Marcus & Millichap, one of the largest commercial brokers headquartered in California, has pursued a different path.
The Palo Alto-based firm has shunned mergers and acquisitions in favor of entering new markets by starting offices from scratch. Instead of striving to establish a one-stop source of leasing, investment and property management services, Marcus & Millichap and its more than 500 brokers deal only with the sale of commercial property, primarily apartments.
“I think it’s really important that we keep our focus,” said Harvey E. Green, who was recently named president of Marcus & Millichap’s Encino-based real estate investment operation.
Since its founding nearly 30 years ago by co-chairmen George M. Marcus and William A. Millichap, the firm has developed a reputation for developing close personal relations with its clients and exceptional market research. The firm has expanded beyond its California base with a nationwide network of more than 30 offices. Last year, the firm sold an estimated $5.2 billion in real estate, about half of which was apartments.
Despite its sizable operation, Marcus & Millichap is dwarfed by the global real estate giants that have emerged in recent years. Los Angeles-based CB Richard Ellis--which was formed in 1998 by the merger of CB Commercial and Great Britain’s REI Ltd.--employs more than 10,000 people in 35 countries. It not only can buy and lease commercial space on behalf of a client, it can finance the deal and manage the property.
In addition to competing with much larger rivals, Marcus & Millichap must also deal with the growing threat posed by Internet firms that are promising to deliver valuable commercial real estate listings to customers at nominal or no cost. Many small and medium-sized investors are expected to use the Web to shop for smaller properties instead of using higher-priced, full-service brokers such as Marcus & Millichap.
But the firm is in a good position to weather the storm because of its focus and reputation for high levels of service, according to industry observers.
“I believe that there is going to continue to be a role for the high end, quality investment broker no matter how big of a role e-commerce plays in the way real estate is sold,” said Gary L. Lenz, director of Arthur Andersen Real Estate Services Group in Los Angeles.
Craig M. Silvers, a real estate industry analyst at the securities firm Sutro & Co., said Marcus & Millichap’s research expertise, particularly in the apartment industry, should keep them competitive. “Their research gives them the advantage,” he said.
The firm has been expanding beyond apartment sales to retail, industrial, senior housing and other forms of commercial real estate, said Green, who was the former chief operating officer of the investment brokerage operation. That diversification will continue as Marcus & Millichap seeks to capture more business from its existing clients, he said.
“One of the things you have to continue to do is to reinvent yourself,” said Green, 52.
He added that the firm, which opened a New York City office last year, plans to continue its geographic expansion. Unlike many firms that have grown by acquiring existing brokerages, Marcus & Millichap prefers to open new offices with its own staff to protect and maintain its corporate culture and standards nationwide, he said.
“We have spent extra time, energy and money to keep our culture consistent across the country,” said Marcus, whose firm has long stressed teamwork in an industry where employees from the same firm often compete for the same business. “You want to be associated with a firm where there is a high level of ethics and professionalism.”
