With the merger between CB Richard Ellis and Insignia finalized, a new brokerage kingdom now rules New York City. In fact, many industry sources believe the merger was engineered as a fail-safe way for CBRE to subjugate this key market — a stronghold they failed to breach for years on end but hardly from lack of trying.

The numbers give weight to the above theory. Prior to the merger, Insignia managed 17.5 million sq. ft. of Manhattan office space, reports CoStar. Pre-merger CBRE only commanded 386,226 sq. ft. of Manhattan office assignments—far less than Insignia.

So who will run this new operation in New York City? A so-called "powerhouse triumvirate" of top leasing brokers will lead the firm’s Manhattan market. All three were once Insignia stock. Mary Anne Tighe left Insignia last summer in a much-hyped leap to CBRE while Bob Alexander and John Powers remained with the firm.

The latter two will work alongside Tighe as CBRE’s top leasing brokers. What’s interesting is that legendary Manhattan leasing broker Stephen Siegel isn’t part of that group: Siegel will serve as the chairman of global brokerage, a title that implies New York City is no longer his turf.

Ever since Tighe left Insignia last summer, rumors have swirled that her defection angered Siegel. Such rumors have fueled growing speculation that in order for the merger to work, Tighe and Siegel had to be isolated from one another in their lines of business.

Since CBRE bought Insignia, Tighe assumedly calls the shots — which may have left Siegel with a vaguely defined position. But the upside for Siegel is that CBRE offered him a multi-million contract to remain with the new firm. Industry sources report that the contract locks Siegel into the firm for at least five years, or through 2008.

Still, loyal brokers and executives in Manhattan say that Siegel remains a free agent who can — and will, if he feels compelled to do so — walk away from the firm. From CBRE’s perspective, the problem with such a scenario is if others choose to follow Siegel down that path.

Management Plums
Among Insignia’s plum Manhattan management assignments are the Metlife Building, 787 Seventh Avenue and 150 East 42nd Street. These three assignments alone account for over 6 million sq. ft. of the Insignia management portfolio here. How the consolidation will affect owners of these buildings is unclear.

"We had a great relationship with Insignia and CB Richard Ellis before the merger, and we expect that to continue now that they are combined," says Brian Fox, Metlife’s national marketing director for real estate.

Another Manhattan landlord with extensive holdings in midtown offered a less optimistic response to the question of how this new arrangement would work with owners. "I don’t think there will be any major changes with this merger. What’s bigger than the merger is the marketplace, but I don’t get the sense that many people here in Manhattan are that happy CB Richard Ellis bought Insignia," says the landlord.

Since real estate deal making is as much about relationships as it is bricks and mortar, it will be interesting to see how these vital relationships hold up under the weight of a new regime. It may also speak volumes that few landlords are comfortable discussing CBRE on the record.

On Top Already
With the merger, CB Richard Ellis will boast more than 700 million sq. ft. of global property and corporate facilities under management, according to the firm. That’s on the management side. When it comes to investment sales, CBRE already led the pack before the merger.

"CB Richard Ellis transacted $5.5 billion worth of investment sales business last year. They already have the top level investment sales brokers," says Robert White, president of Real Capital Analytics, a Manhattan based real estate research firm.

According to White, the investment sales market remains highly fragmented despite this merger. If the top ten players’ deals from 2002 are combined, the total is $15 billion — or a measly 25% of the entire investment sales market that traded last year. White doesn’t see this changing much, though he thinks that CBRE will clearly "become more dominant" based on the merger.

One big question is whether Woody Heller, one of Insignia’s best investment sales brokers, will stay. Heller is revered for his deal making acumen. According to a broker who once worked with Heller, "there’s no way that Woody will work for Darcy Stacom" [who CBRE hired away from Cushman & Wakefield last year]. The source also said that few of Insignia’s top investment sales brokers could be very happy now since — in the source’s words — "they can’t do anything without Darcy’s blessing."

Two other big-league sales brokers — Ron Cohen and Richard Baxter — will likely stay with CBRE, says the source. "But there will be a lot of dispersion out of the company, I believe."

Competitors Speak Out
For CBRE’s rivals, the merger means one less competitor. Besides a smaller roster of brokerages, it also means something else for CBRE. "Integrations are very time consuming and tiring. I know, because we’ve done them before," says Peter Roberts, executive vice president and CEO of Chicago-based Jones Lang LaSalle. He believes that the near term integration of the two companies will be a distraction for CBRE. Still, Roberts admits that the long-term future of this merger will create a force to be reckoned with.

In Manhattan, Cushman & Wakefield’s president of U.S operations Bruce Mosler also credited the merger for eliminating one competitor from the brokerage arena. Mosler also credited both companies for being "two great organizations" coming together as one. "As for us, the Cushman brand continues to strengthen," says Mosler. When asked if the integration issue has prompted Cushman to seek out top brokers at CBRE, he responded that his firm "is always looking to recruit people."