Grubb Closes in San Diego, ‘Healthy’ in OC
By DANIEL D. WILLIAMS
The recent closing of Grubb & Ellis Co.’s San Diego office comes after years of steady decline for the brokerage there, though it isn’t likely to impact its Orange County operations, sources say.
“The rest of our Western region, including Orange County, Phoenix, Los Angeles and the Inland Empire are doing very well considering the economic uncertainty we’re in,” said Bob Osbrink, Grubb’s Western regional manager.
Newport Beach is Grubb’s No. 2 office behind Phoenix, Osbrink said.
Grubb, which at one point had 70 brokers in San Diego, counted some 20 workers when it shut down two weeks ago.
An industry source said San Diego’s problems could be linked to Barry Barovick, the company’s controversial chief executive.
According to the source, Barovick has tried to shift the company from a brokerage to more of a consultant.
“The word’s been on the street for a year now,” the source said. “And I don’t believe the troops on the street are buying into that philosophy. They think of themselves as dealmakers, not consultants.”
A report in the San Diego Daily Transcript quoted an ex-Grubb vice president saying the office failed because of poor management.
Publicly traded Grubb has had a tough time of late. The company posted a March quarter operating loss of $10.8 million on a 27% decline in revenue vs. a year earlier.
“There’s just more pressure right now on some of the publicly held vs. privately held brokerage firms,” a source said.
Los Angeles-based CB Richard Ellis Services Inc. and Grubb recently called off talks on a deal in which Grubb would have been acquired by privately held CB Richard Ellis.
Meanwhile, three clerical workers and an office manager are all that remain of the 12,000-square-foot operation in San Diego’s Eastgate Mall area.
While many of those contacted were reluctant to speak publicly about the San Diego closure, they agreed that Grubb’s OC operations are healthy.
“I think it’s more of an anomaly,” said Brian Childs, executive vice president of the Newport Beach office of Encino-based NAI Capital Commercial Real Estate Services. “Grubb remains very strong in OC.”
Grubb said it isn’t through with the San Diego market.
“We are researching opportunities to affiliate with an existing firm,” Grubb’s Osbrink said.
In the San Diego shakeout, Grubb brokers quickly jumped to rival firms.
Eight brokers and two in-house couriers headed to a BRE Commercial/NAI affiliated operation. Four brokers and two couriers moved to Colliers Iliff Thorn, while five brokers went to Voit Commercial Brokerage LP.
Developer Dougall Agan, a vice president with Foothill Ranch Co., said brokerages that don’t change with the times face extinction.
“For the brokerage industry to survive, firms will require a major step-up in their capabilities, to differentiate what they provide to a company, so that a company looking for space, won’t go out and hire other financial advisors,” Agan said.
More companies are using consultants such as Deloitte Touche, cutting brokerage firms out of the research process.
Also, according to Agan, San Diego,like OC,is a maturing market.
“What we have is fewer large companies looking for space, causing fewer brokerage opportunities out there,” he said. “In short, you see too large a supply of brokers with not enough supply out there.”
