Weighing Your Options

Brokers Balance the Pros and Cons of Affiliating with a National Brand

By: John Salustri, editor in chief at Salustri Content Solutions Inc. and a founding editor at GlobeSt.
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© akinbostanci / E+ / Getty Images

For commercial real estate brokers looking to raise the profile of their company or cast a wider net, the brokerage landscape is populated by organizations that offer a range of benefits—large corporate players such as CBRE, Cushman & Wakefield, or JLL; franchisors; strategic partnerships; and professional associations.

No matter the structure you’re considering, the common thread is the upfront research necessary to root out the right organizational fit. Start with a little introspection: “What are the goals of your organization?” asks David Liebman, SIOR, an attorney and managing broker of Merit Partners LLC in Northbrook, Ill. What is your company set up to accomplish now, with its current staff? And what are you looking for in terms of culture? “It’s not just about qualifications and benefits,” Liebman says. “There has to be chemistry.”

Due Diligence

Before you take the leap, talk with industry peers for their insights on the connections you’re looking to make and the tradeoffs of giving up independence. Understand the costs (transaction and referral fees; one-time onboarding fees; annual dues) and benefits, from name recognition to proprietary technologies.

Jeffrey Rinkov, SIOR, CEO of Los Angeles–based Lee & Associates, says his firm has historically planted flags in markets where they can find “leaders and brokers that align with our culture of entrepreneurialism and ownership.” The company currently has 76 offices in the U.S. and Canada, as well a strategic alliance with the U.K.-based company Gerald Eve. “A cultural fit and an entrepreneurial spirit can coexist,” he says, “but that can be a constant struggle, which is why the goals and objectives have to be aligned.”

No matter the type of affiliation you choose, “you have to work it.”

The company grants exclusive market territories that are spelled out in the onboarding agreement. “We do that to limit the amount of competition within markets and enhance the value of our expansion capital,” Rinkov says.

The onboarding fee at Lee & Associates helps fund a variety of support items, but in addition, venture capital is raised downstream by the firm’s “650 or 700 local principals who are producing agents and have the opportunity to make an investment in our expansion.” Otherwise, Rinkov says, all locally generated revenue and profit remain in that shop.

Irvine, Calif.–based Sperry Commercial Global Affiliates offers franchisees access to an expanding global network of companies supported by marketing and communications tools, training, and technology, including a transaction management platform, SperryCentral. “No matter where clients are located or what property type they own or lease, our affiliates provide a full-service experience, as well as sources of equity and debt through Sperry RE Capital,” says President Mark Hinkins, CCIM, FRICS. The company align independent companies behind a brand with “thoughtful, cooperative, and ethical practices,” he says. As of Q4 2021, SperryCGA had 60 North American affiliated offices.

No matter the type of affiliation you choose, “you have to work it,” says William C. Hanson, SIOR, president of NAI James E. Hanson Inc. in northern New Jersey. “You don’t join an organization and think the business will just flow to you. It’s a commitment. Go in with that understanding.”

It was Hanson’s dad who signed up with NAI Global, a for-profit networking organization, back in 1981. In fact, he was the sixth member of the then-fledgling group. NAI was formed to give otherwise boutique brokerages the reach and resources to compete with the major corporate firms. NAI fees are the result of a formula based on the size of the member’s metropolitan statistical area. In return, members are provided with guidelines for best practices, tech tools, and collateral materials to help reinforce their branding.

If everyone in an affiliation adheres to the group's commitment and gives back, membership becomes a quality issue, “and it’s the quality of the membership that counts,” Hanson says. “It has to be more than just a name or letters we put on a card.”

Independent firms will be really challenged to obtain corporate and middle-market business today.”

ROI of Associations

Despite the perks of corporate relationships, some brokers prefer to remain independent. For those brokers, networking, training, some form of technical support, and branding that comes from professional designations are all they need to grow their business. For Liebman, a foray into a strategic partnership about a decade ago didn’t yield value. Now, except for his involvement with SIOR, he flies solo.

“My heart and soul were always with being an independent broker,” says Kevin McGowan, SIOR, CCIM, president of McGowan Corporate Real Estate Providers in Allentown, Penn. “We’re not the big marketing machine that some of the big companies are. We’re focused on tenant representation and sale-leaseback work. I’m not trying to compete for listings with the big institutional owners.” He says he can “flex up on staffing” as the project dictates and turn to his association networks to fill in the blanks.

At a Society of Industrial and Office REALTORS® meeting in Scottsdale, Ariz., in 2012, McGowan brought together a group of unaffiliated peers for a social event. The group became the SIOR Independent Broker Network, and it has been on a growth trajectory since, welcoming independent players from around the country. National brands with access to the broader SIOR network are not permitted to join.

Working in the industrial space since 2004, McGowan says the network has helped him build his book of business — and it didn’t hurt to be in the right place at the right time, when “most commercial firms were still focusing on office transactions,” he says. “Industrial was a sort of a bolt-on.”

Just as in corporate affiliations, giving back figures heavily in the association world. Liebman says it took him a few years of SIOR membership to pick up on that fact. “In the early years, I was going to the conferences and meeting people, but that isn’t enough,” he says. Between meetings, stay in touch, and get involved in leadership, “and become a presence,” he says. “You have to think of ways to help someone else, through such gestures as sharing resources and contacts.”

Signs of the Times

Given the difficulty of keeping up with market changes, technology advancements, and the market power of national and global competitors, it would seem to be a bold broker who opts to go it alone, rather like a tightrope walker without a safety net. “Independent firms will be really challenged to obtain corporate and middle-market business today,” says Rinkov. “I’m not sure why a boutique wouldn’t want to create a better presence with a larger brand, especially if that brand would allow them to retain their local culture and ownership.”

The tightrope walkers see the landscape differently. “The landscape is constantly changing,” says McGowan, “and if you’re tied to one corporate flag, you might eventually find yourself restructuring your business every few years as the corporate alliance goes through an M&A or there’s general turnover.”

“I know of several independent commercial brokerage firms that will likely remain successful because of their authenticity and focus, their dedication to their credos, and the superior capabilities they bring to the table,” Liebman says. No matter the allegiance you choose, he adds, it all comes down to “the individual professionals, their business philosophies, and how they conduct their business.”

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