BGC Partners, a spin-off of the large investment banking firm Cantor Fitzgerald, has acquired the real estate services company Newmark Knight Frank for an undisclosed sum, the company announced this morning.
BGC, a company that brokers the trade of a range of financial products and securities, said that it is buying a majority interest in Newmark Knight Frank’s entire U.S. operations, including its New York office, which is one of the city’s major office leasing brokerages.
BGC stated that Newmark’s has 25 other locations around the country and also certain affiliates that were part of the deal. In total, the company said that it will be bringing on arout 425 Newmark brokers through the acquisition.
To enhance its global reach, Newmark arranged a partnership in recent years with the London-based real estate firm Knight Frank to help it handle transactions in Europe and overseas. Because the companies ar.e separately owned, it doesn’t appear that Knight Frank is part of the BGC deal.
Howard Lutnick, the chairman of Cantor Fitzgerald and BGC, said in a statement that buying Newmark is “the beginning of a dramatic new footprint in commercial real estate by BGC, and the definitive starting point of BGC’s strategy to grow in this sector.”
Lutnick said that BGC has strengthened its financial brokerage business in recent years, adding more than 1,000 brokers and enhancing its technology, investment that drove up revenues. He stated in the company’s release that he planned a similar strategy for Newmark.
“We expect our model will prove to be just as profitable for Newmark’s business as we build scale,” Lutnick stated. “Hiring and acquiring key experienced brokers, continuously investing in our proprietary technology, and expanding into new markets are the drivers for BGC’s growth, and we will apply those drivers to create new capabilities and opportunities in commercial real estate brokerage.”
In Manhattan, although Newmark is smaller than competitors like Jone Lang LaSalle and CB Richard Ellis, the company has a reputation for being scrappy and has won its share of large leasing assignments. Barry Gosin, Newmark’s chief executive, for instance, handles deals with large financial tenants including Morgan Stanley, who he is currently representing in a search for as much 1 million s/f of space in what is one of the city’s marquee leasing assignments.
In the statement, Lutnick appeared to see opportunities in Newmark’s work with financial tenants.
“Both BGC and Newmark count the world’s leading banks and investment banks as clients, and we see exciting opportunities for cross-marketing, given the outstanding suite of transactional and consultative services Newmark offers the corporate and institutional market,” Lutnick said.
Newmark has a roster of brokerage stars beyond Gosin, including David Falk, Newmark’s New York area president who handles a number of prominent agency assignments such as 1251 Avenue of the Americas and is representing large tenants in the market such as the French media firm Havas and the apparel company Liz Claiborne.
Other top deal-makers at the firm include Jimmy Kuhn, Newmark’s president, Mark Weiss, Moshe Sukenik, and Neil Goldmacher.
Newmark was the clear victor at the Real Estate Board of New York’s recent Ingenious Deal of the Year Awards held in early April, winning both first and second place, a prestigious and influential recognition in the industry. David Noonan, an executive at Newmark who specializes in investment sales deals, took top honors with colleague Jennifer Schwartzman, for handling the complex sale of 31 West 15th Street and Mark Weiss and Barry Gosin took second place for bringing the union Local SEIU-32BJ to 620 Avenue of the Americas in an over 200,000 s/f deal.
Speaking with Real Estate Weekly late last year, Barry Gosin expressed ambitions to grow the firm’s domestic business. But it has been tougher for mid-sized firms to compete as the Manhattan brokerage business has appeared to cede increasing market share to JLL and CBRE, which have become more dominant through their sheer size and the level of sophisticated services they offer. Although Newmark has managed to remain a top firm, it has felt the sting of this trend. In 2009, JLL poached a powerful brokerage team from Newmark led by the executive Scott Panzer, who has gone on to handle major deals – and generate significant revenue – at JLL.
In the statement from BGC, Gosin said that the acquisition would better connect Newmark to financial tenants and potentially feed the company’s deal pipeline.
“We expect that BGC’s deep and long-standing relationships with the world’s leading financial institutions can only enhance Newmark’s reach in the marketplace,” Gosin said.