Brokerage Revenues Important... "Percentage brokerage fee structures have remained relatively constant through both economic upswings and downturns." Wouldn't you agree with this statement from Trammell Crow's 2004 10-K (pp 7-8)?

And wouldn't you also agree that service fees are different? "The Company has faced increased competition in recent years, which has, in some cases, resulted in lower service fees, or compensation arrangements more closely aligned with the Company’s performance in rendering services to its clients" (pp 10-11).

Translation: Real estate commissions are less susceptible to downward pressure than real estate service fees. (Why is this?)

So naturally, hiring more brokers ("Expanding Brokerage Network") is one of Trammell's four Long-Term Growth Strategies. The other three are focusing on large markets and large clients, providing consistent quality service, and focusing on development opportunities (pp 3-4).

Last week I spoke with Trammell's Bob Shibuya, Global Director, Brokerage Services about the importance of brokerage. According to Shibuya, Trammell's roughly 620 brokers make up about 10% of the company's 6,000-employee workforce.

Yet brokerage generates about a third of the revenues of Global Services (which accounts for about 90% of total revenues). In 2004, brokerage services produced about $265 million in revenue with about half that from investment sales and project leasing and half from tenant representation (Corporate Advisory Services). Average production per broker was roughly $420,000.

Shibuya summarizes Trammell's recruiting advantages as follows: (1) The company provides a "complete solution," enabling brokers to offer more services. (2) Trammell's development roots give it first-hand knowledge of performing its own services. (3) The culture of the company is relentlessly focused on customer service, using innovative technology tools and frequently retaining outside firms, like Kingsley & Associates, to measure customer satisfaction.

As we finished the conversation, we agreed that attracting strong brokers is ALWAYS a challenge. (See Broker Wars
I & II, Nov 30 and Dec 7, 2004.) But the goal is to grow the number of Trammell Crow brokers 5-10% per year.

--Peter Pike