Readers Offer (Unsolicited) Advice to CBRE

Now That You Mention It... Tuesday's Dispatch, Commissions vs. Contracts: Blending Risk and Reward (Nov 7), generated a wide range of free (and unsolicited!) advice to CB Richard Ellis (CBRE) regarding its acquisition of the Trammell Crow Company (TCC).

One reader suggested that the "stickiest integration" problem will be combining the "elite brokers from each firm" and wondered how they would divide up their "territory and client relationships." ... Hey, that's where my "culture whisperer" plays a role. Together they'll work it out just fine.

In his Oct 31 conference call, CEO Brett White addressed the related issue of CBRE's commission policy. "Commission payouts among the larger firms in the U.S. are virtually identical. There is no meaningful difference between the commission payouts at the Trammell Crow Company or CB Richard Ellis. Just to make sure everyone at Trammell Crow is very comfortable, as we always do, we’ll be grandfathering their exact program for some period of time..."

Another Dispatch reader worried about "one firm dictating property values and methodology of doing business such as the recent bent towards non-sharing of commissions on investment deals and offering properties for sale with no pricing, even if they aren’t really investment deals."

Possibly. But even after the acquisition, the combined CBRE/TCC entity would still represent only 10% of the total real estate services market. So it will continue to be highly decentralized.

Finally, a reader urges CBRE to focus on cross-selling. "With TCC's footprint on the service side and inside relationships with corporations, they should establish a group that can advise corporations on the restructuring of their balance sheets by either refinancing or sale/lease-back of their owned real estate and provide the womb-to-tomb services from the related CBRE companies to execute." ... Yep, brokers would love to hear that!

-- Peter Pike