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CBRE now one of the world’s largest property managers after acquiring competitor

CBRE Group Inc. substantially expanded its property management business Tuesday, completing a nearly $1.5-billion acquisition of competitor Global Workplace Solutions.

The deal makes the Los Angeles real estate services company one of the largest property managers in the world and reduces the public company’s reliance on commissions from brokering property sales and leases.

Global Workplace Solutions had 14,000 employees who managed 1.2 billion square feet of property for clients in 75 countries. CBRE had an existing business of 24,000 employees managing 3.8 billion square feet.

GWS was a division of Johnson Controls Inc., a Milwaukee technology company founded in 1885 with the invention of the thermostat to regulate indoor temperatures.


CBRE is best known as a broker of sales and leases of commercial real estate such as offices, warehouses and shopping centers. It has been expanding its property management services to grow revenue and provide reliable income that is not dependent on real estate cycles.

Last year, property management generated about $3.7 billion of the company’s roughly $9 billion in gross revenue; GWS will add $3 billion.

“This is consistent with our strategy to have a more contractual revenue stream,” said Bob Sulentic, chief executive of CBRE. “We are not de-emphasizing brokerage. We are growing this business so we have more balance.”

Management of large commercial properties is a growing business, said analyst Craig Silvers, president of Bricks & Mortar Capital. Many companies want to get rid of their in-house real estate operations and other functions unrelated to their core business.


“Everything is being outsourced these days,” Silvers said. “And a big company like CBRE can take advantage of economies of scale.”

Before the acquisition, CBRE focused on managing real estate for firms in telecommunications, healthcare and financial services, Sulentic said. GWS specialized in the fields of manufacturing, life sciences and oil and gas.

“We overlapped in technology, but we had depth in different areas,” Sulentic said, adding that growing categories for third-party property management include universities, government entities and hospitals.

Twitter: @rogervincent

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