Why Fierce Rivalry Is Brewing in Brooklyn Real EstateThe arrival of Manhattan firms and sharp-elbowed tactics have put the squeeze on the old ways of doing business
When Jim Cornell got into the Brooklyn real estate business in 1992, working for a four-person firm in Brooklyn Heights, the game was a sleepy one. “It wasn’t particularly skillful work,” he admitted. “My company might have ten listings. If you came to me looking to buy a one-bedroom apartment for $60,000, which you could do in ’92, I could show you, maybe, three. I’d show you those three, and with the combination of suitability of the apartment and my winning personality, maybe you’d buy one of them.”
Much has changed, first slowly and now at a rapid clip. Once dominated by mom-and-pop firms, the Brooklyn real estate industry has been transformed by the arrival of large Manhattan-based companies like Corcoran, Halstead and Douglas Elliman. Their growing prominence, alongside the small firms that have stuck it out, has resulted in a cut-throat competitive atmosphere. Max Dobens, executive manager of sales in Brooklyn for Douglas Elliman, describes as “three times more intense than it is in Manhattan.”
The competition among agencies is not only for buyers and sellers but for brokers who know their way around the borough. “Brooklyn is sexy,” Dobens said. “Companies want to grow here, but there are a finite amount of good agents.” Brokerage firms have had to up their game, which includes luring agents with choice amenities. Douglas Elliman offers brokers an in-office massage twice a week as well as regular training sessions; Halstead modernized its technology, marketing and training.
The financial rewards have increased as well. To get the best agents, recruiting firms offer signing bonuses or higher commissions. Morgan Munsey, a Halstead broker who made a name for himself selling Bed-Stuy townhouses, said, “I get a poaching call about once a week.” Dobens, who left the Manhattan market for Brooklyn last May, said he was “shocked at the amount of attempted poaching.”
Dave Maundrell started the Williamsburg-based firm Aptsandlofts.com in 2002 at a time the real estate industry felt like “the wild, wild west,” he said. After establishing his firm in the neighborhood, “there was a constant onslaught of people calling my brokers” to poach them. He remembers a time about three years ago when the CEO of a competing firm “called every single person in my company in a single day.” Regarding the battle of the big names, said Maundrell, “You need to have a strong brand to be successful in Brooklyn real estate today.” In 2015, he became part of another trend–consolidation–when he sold his company to Citi Habitats, a Manhattan-based firm that came to him with a takeover offer rather than poaching his agents.
The Rise of Co-Broking
While the Manhattan firms disrupted the established order, their techniques helped heat up the borough’s real-estate prices. Brooklyn’s smaller firms traditionally kept their listings in house, meaning buyers could shop only for apartments listed by the firm. In the early 2000s, Corcoran arrived in the borough and introduced co-broking—already a common practice in Manhattan—in which agents share listings. An office with a listing will “co-broke” with another office, which may have a buyer, thus fostering a more efficient market.
“The business started to change dramatically,” said Cornell. He left a local firm 12 years ago to join Corcoran, where’s he’s now a top seller. “When Corcoran came to Brooklyn and started sharing their listings, they made it better for buyers and sellers to get exposure to everything that was on the market.” And the market was good: brownstones, spacious co-ops and warehouse lofts for less money than Manhattan. Buyers showed a willingness to venture into neighborhoods deeper in the borough to get a bargain, while cell phones and internet listings made it easier to browse for listings.
And then, new development began to boom in neighborhoods like Williamsburg. “We could expose those projects to a Manhattan buyer pool,” said Steve Kliegerman, president of Halstead Property Development Marketing. “We realized that by attracting buyers out of Manhattan, they were accustomed to a different price point,” he said. “So the sticker shock was much less than selling to a local.”
New Player in Town
While Brooklyn is no longer the bargain that it once was, the invasion has grown only more sophisticated. Compass, a Manhattan-based firm founded in 2012, has two offices in the borough and is opening a third one in Cobble Hill on Court Street, which is now a kind of broker’s row. Compass offers tech-heavy resources designed to bring further disruption to the market. (One of its founders, Ori Allon, has a PhD in computer science and was director of engineering at Twitter’s NYC office.) The arrival of this new player “definitely creates tension,” says Patrick Brennan, Compass’ senior managing director of sales in Brooklyn. Brennan left Corcoran for Compass alongside several other agents, which prompted Corcoran to sue the new brokerage for “brazenly and intentionally” raiding key Corcoran offices. The suit was later settled.
“A big part of the competition is who can maintain the best roster,” Brennan added. He’s bullish about the firm’s potential in Brooklyn. “Brooklyn has long-term growth ahead of it,” he said. “People want to be there. The money’s arrived.”