Commercial Real Estate Giants Merge

After a long hiatus, I’m once again posting to my blog. This month, two of the most prominent commercial real estate companies, Jones Lang LaSalle and Staubach Company, merged. This merger itself is not unusual, as it seems to follow the trend in the commercial real estate industry of consolidation to take advantage of expanded customer bases, expanded services, not to mention the benefit that often accompanies such consolidations, lower operating overhead through the alignment of duplicate services. What I believe is most notable about the Staubach / Jones Lang LaSalle merger is the obvious differences in the operating models of these firms. Staubach operated primarily as a tenant-representation firm throughout North America. Jones Lang LaSalle offered an array of "full services" around the world.

Staubach was a tenant representation stalwart that held firm to the idea that the best way to service tenants was to do so without the conflicts caused by managing and listing property. The “Tenant Only” business model makes a very compelling case, which proved very successful for Staubach. I too have subscribed to the “Tenant Only” model since forming my firm in 1993, Carmen Commercial Real Estate Services. Now, as Staubach Company transitions into the larger “full-service” entity, I suspect that many of the clients represented by the firm, and there are many, must be considering what this merger will mean to them.

On one hand, many businesses engage a commercial real estate brokerage firm because of the firm’s principles and operating model. However, over time relationships are built upon confidence and trust that customers have in the individual commercial brokers that are actually providing the service. Nevertheless, the underlying principle remains: I’ve convinced businesses to utilize my services because I’m free from the conflicts of interest that accompany full-service brokerage firms. Subsequently, if I’m absorbed into an entity that provides a wide array of services, some of which conflict with the services that I have previously provided to customers, I have to believe that my clients might be justified in having concerns that my firm’s business model no longer reflects, in fact, may contradict the basis by which I was hired to represent them.