Knight Frank has dropped Grubb & Ellis as its US partner and linked up with Newmark, an 800-strong Manhattan-based broker.
The deal, announced in the US on Wednesday, will bring to an end KF’s sterile five-year relationship with the 4,500-strong G&E, one of the largest broking firms in the US (see right).
Run by CEO Barry Gosin, Newmark is a privately owned agency with 50 “partners” and 16 offices in the US. It will change its name to Newmark Knight Frank on 1 January 2006 when the joint venture agreement, based on referrals and fee sharing, will begin.
KF senior partner Nick Thomlinson said: “We are committed to making this a true partnership.”
Gosin said he was “very excited” about the deal. The two firms have revenues totalling $545m with 4,500 staff in 240 offices across 30 countries.
Knight Frank will not change its name. But the occupier services business will be tagged Knight Frank Newmark. Newmark has pledged to take a minority stake in Knight Frank’s Asia Pacific business. Both have pledged to share their proprietary databases and set up global practice groups.
KF partner John Snow will manage the Newmark relationship from London. Richard Sexton, who has managed the G&E link for three years from New York, will switch to liaising with Newmark.
Thomlinson indicated that the deal would help to implement the new Knight Frank business model of a deals-driven firm. “What we want to do is move away from ‘account managing’ and to be a transaction-driven business.” He said that that this was exactly what Newmark, with its strong presence in New York, would bring. “We’re more likely to get a steadier flow of work from the new arrangement,” he said.
KF’s senior partner added: “Like us, Newmark sees India and China as a great market. So we will sell some equity to them in our business out there.”
Commenting on the deal, DTZ chairman Robert Peto said: “If KF wants to go down the transactional management route and G&E is into full service, then the split is fully understandable.”
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Grubb & Ellis CEO Mark Rose said the reason it had ended the relationship was because “our vision is to be a full-service real estate provider. It was quite clear that Knight Frank wanted the transaction-only model. That is absolutely the reason for the break-up. We had two strategies moving in different directions.” The former Jones Lang LaSalle director, who joined Grubb & Ellis only in March, said the firm had spent six months working out a new strategy. “Alliances to us are not relationships,” said Rose. “We have two paths to follow. We can partner. But if we do, there needs to be a real connection. “If we partner, the question is do we need one in Europe and one in Asia? Or can we open our own offices around the globe? At this stage, we haven’t decided, but whatever we do I am not interested in Band-Aid fixes. We want to grow rapidly and become a much larger global organisation. I need a sustainable solution,” he said. ● Knight Frank announced its link-up with Grubb & Ellis at MIPIM in March 2000. In December 2001, then-Grubb & Ellis chief executive Barry Barovick admitted that “the relationship wasn’t going anywhere”. |
