By Roland Li
Joseph Swingle, executive managing director and head of Grubb & Ellis’ New York office, sees opportunities for the firm in the wake of an $18 million investment from Colony Capital.
“I’m very excited,” said Swingle, from the brokerage’s new office atop 1301 Sixth Avenue. “We’re full speed ahead, locally.”
Swingle sees the capital as an opportunity to expand – although the target of the investment has not been disclosed – and sees a market of opportunities for Grubb.
“It’s all about growth,” said Swingle. “Everyone wants to get bigger.”
Grubb & Ellis moved its New York headquarters last week to 1301 Sixth Avenue, subleasing the space from Commerzbank, a deal first reported by Real Estate Weekly. The new space was built for collaboration, said Swingle, featuring glass doors and cubical spaces with open tops. The capital markets group and appraisal group sit next to each other, and in total, 115 employees work in the office on the 42nd floor, which overlooks the heart of midtown.
In contrast, Grubb & Ellis’s old space at 1177 Sixth Avenue was spread amongst two floors, and the cubicle walls extended to the ceiling, blocking communication.
The move comes at an uncertain time for the firm, which is one of the largest U.S. commercial brokerages. In March, Grubb & Ellis hired JMP Securities, an investment bank, as an advisor for a possible merger or sale. In April, the company announced it had received a notice that it was not in compliance with New York Stock Exchange listing standards, which require a $1 per share closing price over 30 consecutive trading days. The company’s stock is currently 70 cents per share.
As with the entire real estate industry, Grubb & Ellis has weathered a challenging market in the past few years. The company has seen gains in its revenue, particularly for its brokerage business, but it has still reported losses in recent quarters.
Earlier this year, Grubb & Ellis announced a fourth quarter 2010 revenue of $163.5 million, an increase of 10% from $148.7 million in the fourth quarter of 2009. For the entire year of 2010, Grubb & Ellis had revenue of $575.5 million, up from $52.9 million in 2009. The company had a net loss in 2010 of $66.8 million, down from a net loss of $78.8 million in 2009.
In total, transaction services – including investment sales, leasing, valuation and consulting – had revenue of $236.2 million in 2010, up from $173.4 million in the previous year, an increase of 36%. Sales revenue was up 96% and leasing revenue was up 25%.
Swingle said the firm’s local business has outpaced the market in New York. “We’re seeing more than our share of deals,” he said. “The activity has been great.”
In December, a Grubb & Ellis capital markets team of Neil Helman, Charles Kingsley, Yoav Oelsner, Jason Meister and Andrew Phillips sold 432 West Street, a stalled development known as the Hudson Blue Condos, for $8.4 million.
Helman, Kingsley and Oelsner are currently marketing a 5,803 s/f retail condominium at 127 Seventh Avenue, currently leased by a People’s United Bank and Core Group NYC, the residential brokerage.
On the leasing side, Alan Weisman and Stuart Siegel are representing a 7,600 s/f office space at 525 West 25th Street, the Chelsea Arts Tower. Siegel, along with Wayne Van Aken, Robert Yaffa and David Cekolis, are representing a three-story and basement space at 410 West 14th Street, across the street from the Apple Store at the corner of Ninth Avenue. The space totals 12,693 s/f.
“The focus of our business is mid-market,” said Swingle.
Grubb & Ellis also manages around 255 million s/f of property nationwide, with clients that include major global corporations. Although Swingle was unable to disclose specific names, the brokerage announced last year it had been awarded management of a 10 million s/f North American portfolio for a Fortune 100 financial services company.
The firm is also looking to expand its staff in its Stamford, Conn. office, which reports to Manhattan, and strengthen its presence in Westchester, forming a bridge with New York. Swingle said he also works closely with his counterpart, Eric Stone, who heads Grubb’s three-office operation in New Jersey, a position that Swingle held earlier in his career.
Grubb & Ellis is also exploring opportunities in the outer boroughs, although there are no plans to open offices outside of Manhattan.
Harold Ellis, John Grubb and Don Grubb founded Grubb & Ellis in 1958 in San Francisco, and through it a series of mergers, became one of the largest U.S. commercial brokerages, with over 5,200 professionals in over 100 offices nationwide. (It is now based in Santa Ana, Calif.) In 1981, Grubb merged with Florida-based GMR Properties, a deal that “sparked an eastward expansion,” according to the company’s website. The new entity would become the first commercial brokerage publicly traded on the New York Stock Exchange.
In 1996, Grubb took full control of Axiom Real Estate Management Inc., which was previously a joint venture with IBM Corp., rebranding it as Grubb & Ellis Management Services, Inc. Another major merger would come in 2007, when Grubb joined with NNN Realty Advisors, Inc., a Chicago-based real estate investment sponsor.
In September, Grubb & Ellis launched Landauer Valuation Advisory Services, an appraisal service, which now has 25 offices nationwide, including a Manhattan office at the Lincoln Building at 60 East 42nd Street. There is also an appraisal team at 1301 Sixth Avenue.
Swingle joined Grubb & Ellis in 1988, after owning a restaurant in New Jersey and realizing that real estate was the most valuable part of his business. One lesson that he learned from his past career was the importance of clients, and he sees the New York office as a medium for bringing new businesses to the firm. He was named its head of day-to-day operations in January 2010.
“Everyone in the world is here,” said Swingle. “New York brokerage is a local business.”