Brett White: CB Richard Ellis can't rest on its laurels amid consolidation wave
Brett White, the 47-year-old CEO of CB Richard Ellis, directs global activities for the world's largest commercial real estate services company, with 24,000 employees and $4 billion in revenue in 2006. Fifteen years ago, he was a sales manager in the firm's downtown San Diego office. In 2006, White engineered CBRE's biggestto date: its $2.2 billion acquisition of Trammell Crow Co. Following the merger, about 200 brokers, mostly from Trammell Crow, left for other opportunities. NREI recently talked with White about a range of issues facing real estate service providers, including the impact of M&A activity as well as green initiatives.
NREI: In the fourth quarter of 2006, CB Richard Ellis' revenue topped $1 billion for the first time with three-fourths of the gains stemming from organic growth. What's driving this?
White: In terms of absolute growth, most revenue last year came from the Americas. But our fastest-growing market right now is Europe, where we've been gaining an awful lot of market share, followed by Asia. Among business lines, we're seeing terrific growth in money management, CBRE Investors, as well as our outsourcing business and in commercial.
NREI: What's the biggest challenge for CBRE and all service providers for that matter?
White: Whether you are talking about large occupiers of space or owners, the marketplace is rapidly consolidating. These large owners and occupiers simply can't, or are unwilling, to work with a collection ofproviders. Every day the requirements of large clients are becoming more stringent and more complex. That's why the day of the “tweener” [mid-size] firm is over. You simply can't get there anymore by “kind of” having a global platform.
We're focused on taking these successful and profitable business models we have and reinvesting that capital and that cash back into the business to build platforms that can successfully service these very large customers. There is a lot of work left to do.
NREI: Several publicly traded real estate companies have been taken private. In fact, CBRE was private at one time. Do clients care whether companies are public or private?
White: What matters is the way in which a company comports itself and the way in which a company believes, or doesn't believe, in transparency. When we were a private company, we publishedresults in great detail.
We wanted our clients and our competitors to know exactly what our initiatives were and how each of our business components were performing. There are private companies in our business that report nothing. The more that a company tends to obfuscate the way in which it runs and operates its business, the more clients are uneasy about hiring that company. ???
NREI: CBRE, which manages 1.7 billion sq. ft. of commercial real estate space globally, announced plans to be carbon neutral by 2010. What's the significance?
White: Making the declaration that we're going to do what it takes to be carbon neutral is important because it says that the biggest [service provider] in the industry is taking a leadership position and is now asking the rest of the industry to come along. Second, we're going to help our stable of large clients convert from their current carbon footprint to something that is less intrusive on the environment. That's both an obligation and an opportunity.