NATIONAL AMBITION: Sperry Van Ness Building Broker Network
By DANIEL D. WILLIAMS
Irvine-based Sperry Van Ness, the largest commercial real estate brokerage based in Orange County, says it grew during the industry’s downturn last year thanks to a national expansion strategy.
For the past year or so, Sperry Van Ness has been linking independent brokers across the country in a property-listing network in a bid to hold its own against bigger rivals.
Last year, Sperry Van Ness said it signed on 75 senior brokers in 40 markets, including Florida, Texas, New York, Utah and Washington, D.C.
The result, according to executives: a 35% rise in brokered deals last year to $1.4 billion.
Co-founder Mark Van Ness said the expansion plan came to him while reading in a hammock in Fiji. His source of inspiration, “Blown to Bits: How the New Economics of Information Transforms Strategy,” by two Boston Consulting Group executives.
“The book talks about using the tools (of technology) to break the rules,” Van Ness said.
In Sperry Van Ness’ case, the company’s tool is a Web-based system that ties together more than 200 independent brokers across the country.
The network is designed to help Sperry Van Ness compete with CB Richard Ellis Services Inc., Grubb & Ellis Co. and other big names, though the brokerage still is a fraction of the size of national counterparts.
For independent brokers, the Sperry Van Ness network gives them access to a national electronic market where they can list properties. In exchange, Sperry Van Ness gets 5% to 15% of the commission on deals brokered over the network.
To oversee the company’s expansion plans, Van Ness and co-founder Rand Sperry, who serve as co-chief executives, have tapped a real estate outsider. President David Frosh, who came aboard last year, hails from Fountain Valley-based CAM Commerce Solutions Inc., a provider of retail software and computer systems.
Frosh said his focus is on smaller markets.
“Most of the big firms have opened up in 20 or 30 markets,” he said. “They won’t go into the smaller markets.”
The challenge for Sperry Van Ness is getting brokers to buy into a system where they give up part of their commission for national exposure.
The company’s network also goes against the industry grain, where brokerages try to keep both sides of a deal in house to reap all the commission.
“We decided to operate under an open policy on all listings,” Van Ness said. “No one else does that.”
The open system can lead to higher selling prices because properties are exposed to more potential buyers, Frosh contends. Last year, the company handled the $31 million sale of the Siena Villa apartments in Hendersonville, Nev., a record for the market, he said.
What Sperry Van Ness hopes to create is national electronic auction system for properties, Frosh said. So far, the company counts 85 brokers outside of Southern California.
“We plan on having 700 senior brokers in three years,” Frosh said.
Consolidation is due in the commercial real estate industry, according to Frosh.
“They can’t continue to operate under poor profit models,” he said.
