Coldwell Banker Commercial, a full-service commercial real estatefirm, has built a national network in secondary markets by signing franchisees. It has more than 500 independently owned offices and 3,000 associates. In 2002, Coldwell Banker Commercial completed more than 22,000 transactions valued at just over $10 billion. George Slusser, who had been with parent Cendant Corp. for six years (most recently as the senior vice president of franchise sales for Coldwell Banker Commercial), was appointed president of Coldwell Banker Commercial in April. NREI recently spoke with Slusser about his plans to grow the company.
NREI: What are the advantages to the franchise model?
Slusser: Each of our offices is independently owned and operated and that affiliation is through a pure franchise contractual relationship. It is our responsibility to help them develop clients, better serve their brokers and improve the quality of their services and profitability of their operations.
NREI: In this environment of consolidation, what are your insights about the future of Coldwell Banker Commercial and other firms?
Slusser: In today's market, firms need to be either very large or very small to survive. Small companies will need to find a specialty niche that they can execute while providing adequate tools and services to their brokers and clients. A national platform is essential to providing a broad scope of services for today's demanding clients. Companies also will continue to assess their cost structures. As a result, they will look to outsource their real estate needs and this extends beyond transactions. Clients will seek firms to provide full-service solutions including property management,, market research, among others.
NREI: What will be the major challenges that Coldwell Banker Commercial specifically faces in the next few years?
Slusser: One of the major challenges lies in the acquisition and affiliation arena. In these market conditions it is tough to find profitable companies — firms that are on their way up. Many national platform models are broken: They've got extremely high fixed expenses, difficult relationships with their existing brokers and difficult relationships with their clients. So maybe the answer is to not buy a large existing broker, but rather a smaller or mid-size company that has a real desire to grow.