02 March 2010

Commercial Brokers Re-Think Strategy

Atlanta Journal-Constitution

Michael Bull, president and founder of Bull Realty stands with his partners (from left) Kyle Stonis, Daniel Latshaw, Paul B. Zeman, and Rob Whitmoire in their Atlanta office .

With commercial real estate transactions at a crawl, some brokers in what was once one of metro Atlanta's hottest businesses made no money last year.

Many left the field, just as residential real estate agents did when that market crumbled.

The Atlanta Commercial Board of Realtors -- the nation's largest commercial board -- saw its membership drop 10 percent between 2007 and 2009, said Alan Joel, 2010 board president.

“We anticipate we will drop another 8 percent this year,” said Joel. "By the time we’re all said and done, we are going to be around 2,700 members,” compared with about 3,300 three years ago, he said.

In an effort to recruit and retain top producers, at least one company is offering a piece of the business without any cash investment. Through a new Partners Plan, Michael Bull, president and founder of Bull Realty in Atlanta, has named four partners to participate in profit sharing,  among other incentives.

Bull said the plan sets his firm apart from global companies and one-man shops, where the possibility of ownership for brokers does not exist.

“In the last two years, we lost two agents during the downturn and added eight,” said Bull. “We hope the Partners Program will attract seasoned brokers looking for entrepreneurial opportunities. Most commercial brokers are commission only.”

Earnings for commercial brokers vary widely in good times, from around $100,000 to more than $1 million a year, industry experts said.

When the economy sank, some brokers saw their incomes sink too, said Bull. Commission income last year was down  80 percent nationwide, he said.

“Bull was down 35 percent. We started to see pick-up in the fourth quarter,” he added.

Joel, a principal in Joel & Granot Commercial Real Estate, said brokers "who produced well before can ride out the storm."

Paul Zeman, a Bull partner who is  senior vice president of health care real estate services,  formerly ran outpatient diagnostic imaging centers.

He said he joined Bull Realty in 2007, “before things got really ugly.”

He said he never considered bailing out but added, "the partnership is a big bonus. It is an enormous incentive to stay here and work hard.”

Georgia had 104,697 licensed agents and brokers in August 2008, including residential, commercial, individual and firm licenses, according to the Georgia Real Estate Commission. That number now stands at 98,667.

"That's a drop of nearly 6,000 over the past 18 months," said commissioner Jeff Ledford.

The number of people who had licenses but were not using them rose to about 24,000 at the end of 2009, he said, leaving close to 75,000 active licensed agents as of Feb. 1.

The real estate brokerage industry is more  important to metro Atlanta's business community than ever,  said Sam Holmes, vice chairman of CB Richard Ellis in Atlanta.

Companies  are very focused on reducing operating costs to improve revenue, Holmes said, "and that is what our business does. Through real estate negotiations and facility management services, we help save money. "

Indeed, not all commercial brokers had a rough 2009.

Greg Baxendale, vice president of tenant advisory services at Transwestern, said last year was one of his top two or three years. The commercial real estate veteran said when the market began collapsing he switched focus to companies that were growing, including medical, biomedical, engineering, and renewable energy firms.

"It is important to continue to change and refine your business plan quarterly and even monthly," he said.

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