EXCLUSIVE: IRR Fights Back Against JLL, NKF ‘Open Season’ Hunt For Talent
Deals in the last two years may make Integra Realty Resources seem like a CRE valuation sitting duck waiting to get poached by bigger corporations, but it is fighting back with new offices to regain lost market share.
“When JLL acquired a third one of our offices, it was labeled as open season,” IRR Chairman Anthony Graziano said. “At the time, my partners looked at it and said it was terrible. I said what this proves is our people and processes are valuable."
IRR is one of the largest independent commercial real estate valuation, research and consulting firms in North America. It has also been the target of several rounds of acquisitions. Newmark Knight Frank acquired the assets of six IRR offices in September, and JLL acquired the company’s Chicago, Houston and Dallas affiliates over the course of 2016. Despite industry expectations of further M&A activity, Graziano said his company is not going anywhere and is returning to its previously poached markets.
The company announced Tuesday the opening of offices in Washington, D.C., Philadelphia, northern New Jersey and Fort Worth, Texas.
“Everybody is concerned with what will happen to Integra,” Graziano said. “We are going to fight back and not stand by and be idle and bemoan how we don’t have a public company balance sheet to buy talent.”
The four new offices will have 33 employees combined, and Graziano said it is part of a broad expansion strategy. The company has added 12 offices nationwide in less than 18 months, and part of the growth has come from roughly 10% of the talent who previously left returning to work at IRR.
“One of the things Integra has is a good national platform,” he said. “We’re not flying people into other markets. People who left have left for smaller upstart valuation platforms like JLL, where they don’t always have coverage, so you have to fly to another market.”
IRR’s model enables affiliates to maintain ownership without a noncompete. While Graziano says IRR does have some protections to keep talent, the company is largely less restrictive than its corporate competitors. While this independence makes affiliates easier to acquire by the likes of JLL, Graziano maintains it is still the company’s competitive advantage.
“I’m looking at these guys, and they’re selling themselves into a platform for the remainder of their careers,” he said. “We want the best of the best. The only way to get that is to reward people and give them their freedom to other options. When Integra is not the best option, we’re not doing something right.”
Despite the optimism, Graziano recognizes the war for talent is only just heating up, a byproduct of limited hiring in the wake of the last economic downturn. As the industry regained its footing, he saw productive employees across CRE becoming more productive and reducing the pressure to hire.
“Getting someone with 15 years’ experience can’t happen organically,” Graziano said. “In the decision to buy vs. build, at this point in the cycle of 10 years of not being able to bring people in, guys are choosing to buy.”