Newmark has long been one of NYC’s top commercial real estate brokerages, and company leaders are angling to elbow even higher up the ladder. Despite being one of the leading industry brokerages, the firm is still much smaller than JLL and Cushman & Wakefield regarding the number of employees. Newmark’s total employee count is 6,300, while rival Cushman & Wakefield has 50,000. CBRE’s global headcount is more than 100,000.
The poach comes at a time when many of the largest brokerage firms are implementing cost-cutting measures amid a topsy-turvy market. JLL plans to cut costs to save $140 million annually, with about $125 million of that set to come this year. Last fall, CBRE leaders said they had formulated a $400 million cost-cutting strategy that is now underway. In the fourth quarter, the firm cut its spending by $80 million and will trim spending by another $300 million this year alone. Just recently, CBRE announced it was postponing the development of its new headquarters building in Dallas, saying it didn’t make sense at the moment, given the current market conditions. And over at Cushman & Wakefield, company leaders are looking to take permanent cost-cutting measures to save $90 million this year. While some firms have been tight-lipped on what exactly the cost-cutting measures will entail, many of the cuts to spending are expected to be made through layoffs.
Newmark’s latest earnings report showed that the company has not been immune to the impacts of a high-interest rate environment. In the fourth quarter of 2022, the company’s revenue dropped 38 percent from the same time last year to $607.3 million, while property sales decreased 62 percent. Across the industry, deal activity slowed significantly in the last months of 2022.
For Newmark, firm leaders are expecting even more growth in the coming year despite the tough market conditions. While they expect the macroeconomic environment to present short-term challenges (including a continued slump in sales and capital markets to last into the second half of this year), leaders are eyeing their market position now and how it will benefit them in the future when things get moving again. “When activity rebounds, we expect our market share revenues and earnings to materially outperform the industry,” Newmark CEO Barry Gosin said during the Q4 earnings call, adding that his focus right now is on continuing to grow the business through hiring more top talent and acquiring more companies. Newmark picked up a couple of companies in the UK last year, including the London-based real estate advisory firm BH2.
Newmark’s fourth quarter 2022 earnings call came one day after the firm announced the power duo of Doug Harmon and Adam Spies had joined its ranks from rival firm Cushman & Wakefield, and Newmark’s Gosin kicked off his opening remarks touching on the significance of the new hires, calling it a “major step” towards the company’s goal of having the best talent in the industry and reaching the number one spot in capital markets in the country. “We have an incredible combination of the top strategists and advisors together with extraordinary local expertise,” said Gosin. “This has led to over a decade of strong growth and becoming a top commercial real estate services platform in the US.”
Harmon and Spies will certainly be a huge asset for the firm. The team aren’t just stars in the New York City market, where they have reigned as top brokers for decades and closed hundreds of billions of dollars in deals; they are dominant at a national level. Among their accolades, Harmon and Spies have brokered some of the largest real estate deals in NYC history. When the pair was still at Eastdil, they represented Jamestown Properties when it sold its sprawling Chelsea property to Google in 2010 for $2.4 billion. The partners sold the Sony Building in Midtown Manhattan three years later for $1.1 billion. Newmark has a history of poaching rivals for talent on its road to the top. Bringing on Harmon and Spies was the next logical step in building a powerful firm that could finally be on par with its biggest competitors. Several years ago, Gosin picked up the high-ranking commercial real estate broker Rob Griffin and his team based out of Boston from Cushman & Wakefield, followed by another major hire of Kevin Shannon from CBRE. Those two hires are now co-heads of U.S. Capital Markets, along with Harmon and Spies.
In 2021, after seven years at the firm, Harmon and Spies’ contract at Cushman & Wakefield expired, making them free agents. After helping build Cushman’s investment sales division into a dominant player in the industry, the partners saw the chance to do it once again at Newmark, Harmon told The Real Deal last month. Gosin said in the company’s most recent earnings call last month that they did not offer more money than any other firm looking to bring on the pair, and they don’t believe money was the main factor leading the brokers to join the firm. Gosin also noted that Newmark gives brokers a combination of cash and equity, the latter of which is forfeitable at the end of their contract. “The way we do it, we think, is a little bit differentiated and a little bit better in the market, and it builds a brand over a long period of time,” he said.
One Wall Street analyst focused on real estate markets is certain that Gosin’s savvy approach had a lot to do with sealing the deal. “Barry knows every game and every trick out there,” Piper Sandler’s Alexander Goldfarb said. “He knows he’ll get those returns, and now the company has to show it to shareholders. That’s where the balance is in investing for growth and actually delivering it.”
Gosin has been CEO of Newmark since 1979, seeing the company through an IPO he spearheaded in 2017, a spin-off from parent company BGC Partners in 2018, and some major company acquisitions, including Berkeley Point Financial in 2017 and RKF in 2018. As a firm that typically comes in third or fourth to the big three of CBRE, JLL, and Cushman & Wakefield, Gosin has long eyed elbowing into the top of the heap when it comes to rankings. Last year, rumors swirled about a possible merger between Cushman & Wakefield and Newmark, which probably would have benefited Newmark the most. However, those rumors were later debunked.
Like many rival firms during the pandemic, Newmark tempered its hiring as the world waited to see how long and dire the global health crisis would be. The year before, in 2019, Newmark had gone on a spree of hiring and building up its multifamily division. When the pandemic began to ease, and workers began to return to the office, Newmark started where they had left off, Gosin said. “All those investments in ‘19 paid off in spades,” he said in the call. “We came out like a bat out of hell.” The experience made company leaders realize that growing their talent base not only is beneficial to their platform but helps them stay resilient no matter the market conditions.
With a history of bold moves, it seems pretty likely we can expect to see more talent poaching and business acquisitions in Newmark’s future as Newmark’s leader continues to push growth. There is still a significant divide in terms of brokerage size, namely in the number of employees and brokers at Newmark compared to larger brokerages like CBRE and Cushman & Wakefield. Still, the top talent Newmark is bringing over will undoubtedly make a significant impact on the company’s deal volume and market share–once the market rebounds.
