English titles are still worth marrying for

News

Peter Bill

01 October 2005

The formation of what is essentially a joint venture raises three issues worth examining: What went wrong with Grubb & Ellis? What may work better with Newmark? And will anyone jump into the vacated space and forge a new link with the 4,500-strong US broker?

If it’s not working, split…

Knight Frank may have been wiser to have broken with G&E in December 2001. Twenty-one months into the relationship, both sides admitted it “wasn’t going anywhere”. Instead of splitting, the pair committed to closer ties. But neither side’s heart was in the liaison, so little happened.

At the heart of the relationship lay an obvious incompatibility. To quote from this column on 18 March 2000: “Swanky Knight Frank will not get on with these eat-what-you-kill brokers: these loose alliances never produce much business anyway; this platonic relationship will fizzle out as each side becomes irritated with the other.” The conclusion was that “if the deal fails to work, either party can shrug regretfully and walk away undamaged” — which, happily, is exactly what has happened. Knight Frank is undamaged and ever more successful. The firm still has an extraordinarily distinctive brand with a truly global franchise and a lot of very good people.

KF’s peerless reputation is clearly what will have attracted Newmark. At first blush, this liaison looks more likely to work than the last. Newmark is smaller, not bigger, than Knight Frank. It has signalled submission by adopting the KF name. It has signalled commitment by promising to buy a stake in the Asia-Pacific bit of Knight Frank. Newmark has much stronger links with the New York business community than G&E: links that should bring Knight Frank a good deal more business than before. But, in the end, it will all be about whether this very English business can get on at a personal level with what is still another very American broker.

…and start looking for a new partner

This brings the tale back to Grubb & Ellis, which says it is now considering “new alliances, company-owned offices and other structures”, and hopes to make an announcement soon. The obvious marriage partner is, of course, DTZ. But, who knows? It is, of course, important for aspiring global agents to have a US link. DTZ could do with a more substantive partner. But is it vital? The fact is that tomorrow’s growth will come from the fertile fields of Asia, not the dog-eat-dog plains of America. In the Near and Far East, British real estate advisers are historically far stronger than the Americans. As the Newmark deal tends to demonstrate, they need us more than we need them.

The engagement between giant US broker Grubb & Ellis and Knight Frank was always an unlikely alliance. That five-year liaison is now over (p37). The oh-so-English agent announced on Thursday that it has a new friend in Manhattan called Newmark. This is an 800-strong privately owned real estate broker with 50 or so “partners” that has committed to change its name to Newmark Knight Frank: a commitment wisely not made by Knight Frank. The formation of what is essentially a joint venture raises three issues worth examining: What went wrong with Grubb & Ellis? What may work better with Newmark? And will anyone jump into the vacated space and forge a new link with the 4,500-strong US broker? If it’s not working, split… Knight Frank may have been wiser to have broken with G&E in December 2001. Twenty-one months into the relationship, both sides admitted it “wasn’t going anywhere”. Instead of splitting, the pair committed to closer ties. But neither side’s heart was in the liaison, so little happened. At the heart of the relationship lay an obvious incompatibility. To quote from this column on 18 March 2000: “Swanky Knight Frank will not get on with these eat-what-you-kill brokers: these loose alliances never produce much business anyway; this platonic relationship will fizzle out as each side becomes irritated with the other.” The conclusion was that “if the deal fails to work, either party can shrug regretfully and walk away undamaged” — which, happily, is exactly what has happened. Knight Frank is undamaged and ever more successful. The firm still has an extraordinarily distinctive brand with a truly global franchise and a lot of very good people. KF’s peerless reputation is clearly what will have attracted Newmark. At first blush, this liaison looks more likely to work than the last. Newmark is smaller, not bigger, than Knight Frank. It has signalled submission by adopting the KF name. It has signalled commitment by promising to buy a stake in the Asia-Pacific bit of Knight Frank. Newmark has much stronger links with the New York business community than G&E: links that should bring Knight Frank a good deal more business than before. But, in the end, it will all be about whether this very English business can get on at a personal level with what is still another very American broker. …and start looking for a new partner This brings the tale back to Grubb & Ellis, which says it is now considering “new alliances, company-owned offices and other structures”, and hopes to make an announcement soon. The obvious marriage partner is, of course, DTZ. But, who knows? It is, of course, important for aspiring global agents to have a US link. DTZ could do with a more substantive partner. But is it vital? The fact is that tomorrow’s growth will come from the fertile fields of Asia, not the dog-eat-dog plains of America. In the Near and Far East, British real estate advisers are historically far stronger than the Americans. As the Newmark deal tends to demonstrate, they need us more than we need them.