‘It’s A Cluster’: Eastern Consolidated Fallout Leaves Dozens Of Brokers Scrambling
Want to get a jump start on upcoming deals? Meet the major New York City players at one of our upcoming events!
New York City brokerage Eastern Consolidated is just days from its official closing date, and dozens of its brokers are still hunting for jobs in an uncertain market.
The closure of the 37-year-old firm will put more than 100 brokers and staffers out of a job, so the founders said they would remain open until the end of July to allow time for employees and brokers to find a new home. But its broker licenses have already been canceled, the office cleared out of furniture and the website largely dismantled.
With just a few days left in the month, there have been few announcements and no clear indication of where scores of free agent brokers — including most of the firm’s top producers — are landing. Founders Daun Paris and Peter Hauspurg, vice chairmen Brian Ezratty and Robin Abrams, principals Adam Hakim, Adelaide Polsinelli and Peter Carillo and top producers like Ron Solarz, Andrew Sasson and James Murad are all still waiting to make their next move.
“It’s a frenzy,” a high-level brokerage executive told Bisnow. "Given the number of people with their backs against the wall to make a decision before the firm closes, it’s a cluster."
Complicating matters is New York’s slumping investment sales market and the shifting brokerage landscape in the city, leading to a time of uncommon churn. After all, it’s not just Eastern’s demise that has shaken up the city’s brokerage world lately.
Over the last six months, the top rainmakers that went to Cushman & Wakefield as part of the $100M Massey Knakal acquisition have all left the firm. James Nelson is now heading up Avison Young’s investment sales team, building out the platform there. Bob Knakal was terminated from C&W days before his contract was due to expire and has yet to make an announcement about his next gig. And Paul Massey, who left Cushman in May, is aiming to hire 50 brokers for his new firm, called B6 Real Estate Advisors.
The city’s investment sales market — the most profitable line of business for a brokerage firm — has shown some signs of life, but is nowhere near what it was at its apex. The year is on pace to finish with fewer than 250 deals, according to Colliers International, which is 50% down from the peak of the market in 2015 and 2016. While there have been some large sales, middle-market brokerages have been especially hurt; Eastern Consolidated dropped by 60% from 2016 to 2017, according to The Real Deal.
“It’s summer vacation, but the other part of it is the investment sales side of the business is really slow. It’s a combination of a lot of things,” said James Famularo, a former Eastern principal who took a team of eight people from the firm over to Meridian Capital Group to launch a retail leasing division. Meridian announced the hire 10 days after Eastern made its closing public. The days between, Famularo said, were extremely uncomfortable.
“It’s a shame because there are some very talented brokers at Eastern,” he said. “My heart breaks for them.”
Paris and Hauspurg did not return a request for comment.
Bisnow spoke to a number of brokers and executives in the marketplace — many of whom requested anonymity to discuss sensitive personnel moves — about the state of affairs for Eastern brokers searching for their next career move.
There are now vast numbers of those brokers negotiating with firms, including some of Eastern’s top producers, who are offering themselves as package deals because they believe they could be worth more as a group. The same brokers, however, have taken solo meetings.
“[The former Eastern brokers] are going out in so many different ways — people going out as a team, while simultaneously negotiating as individuals, sometimes in different ways with the same firm,” an executive with knowledge of negotiations said.
A senior investment sales broker said the groups were not previously formal teams, but are trying to be flexible in order to get traction. Still, the broker said, it can be a confusing and inconsistent message to send to the marketplace.
“They are all looking individually,” the source said. “You are almost sort of in the position to be a double agent … they are not being disingenuous with each other. I think it’s just everybody is trying to pursue it with flexibility.”
Aside from Famularo and his team, the only other Eastern brokers to have publicly landed elsewhere have been Brad Cohen, Jacob Tzfanya and Jon Kamali, who joined CBRE.
In the days following Eastern’s closing, Murad, a debt broker, told Bisnow that he and his group were considering all options — including joining with a team at another brokerage. Executive Managing Director Ron Solarz told Bisnow that he is still negotiating, has nothing to announce yet. Polsinelli declined to comment, and Ezratty and Abrams didn’t return requests seeking comment.
Savills Studley Vice Chairman Woody Heller said Eastern has produced a lot of “talented people who will be aggressively sought after in the marketplace.”
“There are a lot of firms. I wouldn’t be worried,” Massey told Bisnow, adding that he has met with former Eastern brokers but as yet has no new hires to announce from the firm. “We’ve spoken to people — I think there’s some valuable teams currently in the market from Eastern. I’m optimistic about this business for young people.”
Adding to the hiring uncertainty is the aftermath of Newmark Knight Frank’s May acquisition of retail brokerage RKF. The firm’s founder, Robert Futterman, told Bisnow at the time of the sale that he is on the hunt for talent but “also being hunted." Retail was one of Eastern's main business lines.
Also complicating matters was Eastern’s 2013 decision to hire a slew of wet-behind-the-ears prospectors, with the sole job of drumming up business for heavyweights at the firm, The Real Deal reported. The brokerage was also rumored to pay its top brokers higher-than-usual commission splits, which few other shops would be willing to meet. A small number of top producers were reportedly carrying the firm, and some sources said its unusual structure is why the owners couldn’t find a buyer.
All those factors were linked to the company’s demise and have led to a bevy of inexperienced brokers on the market, muddying the waters.
“It’s a total shit show,” said a salesperson actively involved in negotiations. “People are changing their team structure. The interactions are changing as they go through their options … the market is in the toilet … There’s a lot of competition for not a lot of seats at the table.”
Some brokers may not be worth as much as they thought they were, a source said. And in the current market, few brokerages are able to splash around with cash to score brokers.
The sluggish investment sales market, after all, was one of the reasons Eastern said it was closing up in the first place.
“Volume is down … It’s not like brokerages can say, ‘we’ll give you $1M to come to us because we must have you’” said another senior investment sales broker, likening the climate to 1991, 2000 and 2009. “This is the type of market when people chose to do other things, and there’s not enough volume to support so many brokers.”