Newmark Grubb Knight Frank may lack headquarters in Orange County, but executives at the Newport Beach office of the commercial real estate brokerage say their company now has something much better: a strong financial base.
“The last few years were challenging,” said Greg May, executive vice president and managing director for the OC office of the brokerage, which also goes by NGKF these days. “Now, though, the economy is coming along, and we’re able to compete on solid footing.”
The company, which has about 50 brokers and 70 employees here, is in the midst of growing the local office and expanding its business lines to attract larger national clients.
“We hope to get (NGKF’s employee count) back to close to where it was before,” May said.
It’s been a few years since the brokerage, and its predecessor companies, had reasonable expectations of growth.
The company was formed last year through the acquisition of the assets of Santa Ana-based Grubb & Ellis Co. by New York-based BGC Partners Inc., which had bought fellow brokerage Newmark Knight Frank in 2011.
The combined companies, operating un-der the Newmark Grubb Knight Frank name, are now based in New York.
The acquisition end-ed a tumultuous few years for Grubb & Ellis as a locally based company. The brokerage—which moved its headquarters from Chicago to Santa Ana as part of an ill-fated 2007 reverse merger involving local real estate investor NNN Realty Advisors—felt the brunt of the commercial real estate downturn as much as any national brokerage.
Grubb & Ellis filed for bankruptcy early last year after seeing a steady stream of losses and struggling with debt related to NNN Realty’s legacy business. The company also saw heavy employee losses locally and nationally before and during its stay in bankruptcy.
The OC brokerage operations of Grubb & Ellis—long one of the company’s better-performing offices—saw its base of brokers nearly cut in half from an estimate of 90 as of 2008.
The involvement of BGC, which bought most of Grubb & Ellis’ remaining assets out of bankruptcy for about $50 million, brought some much-needed stability to the company, according to former Grubb brokers who remained with the company after its combination with Newmark Knight Frank.
“Our clients were excited—they wanted to have another option (in Orange County), rather than lose an option,” said Senior Managing Director Gary Allen, whose office and industrial listings include buildings in Irvine and Aliso Viejo.
BGC—which is partly owned by New York-based investment bank Cantor Fitzgerald LP and counts a market value of about $570 million—“has deep pockets,” May said.
Some of that money is going toward hiring in NGKF’s Newport Beach offices at MacArthur Court, where employees who came to the new operation from Grubb & Ellis and Newmark Knight Frank now work.
Expansion Plans
Areas eyed for expansion include the
local office’s capital markets team, apartment brokers, and both landlord and tenant
brokers.
A push also is under way to attract more big-name national companies with local offices as clients, according to Senior Managing Director Tim Helgeson, one of about 15 former local Newmark Knight executives who made the move to NGKF.
“We’re definitely pitching more large, national businesses,” Helgeson said.
The New York ties of both BGC and Newmark Knight are helping the combined NGKF get in front of more of those types of opportunities, he said.
An expansion of NGKF’s non-transactional business also is expected to boost to the company’s bottom line. The company offers a variety of account management, facilities management, project management and other services, under the Global Corporate Services banner.
Competitors
The mix of offerings is similar to what’s seen at some of the larger national brokerages that compete with NGKF for business, such as Los Angeles-based CBRE Group Inc., Chicago-based Jones Lang LaSalle and
New York-based Cushman & Wakefield Inc.
NGKF’s plans for growth come as signs point to an improving commercial real estate market in 2013, both in OC and nationally.
May said recent office trends are encouraging.
“There’s been two years of positive absorption. There’s a feeling that (rental) rates could start to go up,” he said.
“There’s definitely more certainty (about the state of the economy), which is help-
ing customers make decisions,” Helgeson
said.
