Previously, Mr. Schmidt was the senior vice president for business development and operations for Coldwell Banker Commercial.
Interview conducted and condensed by
VIVIAN MARINO
Q. Coldwell Banker recently re-established a commercial office in Manhattan, about a year after the closing of Coldwell Banker Hunt Kennedy, which had a commercial operation.
A. When I took over as the president of the company last year, our New York office had just signed on the Realta Group; it’s a franchise and affiliation owned by Peter Sabesan and Richard Selig. They both have a long tenure in the business. In my prior role, I was part of the process of initiating that growth.
Q. How important is it to have a New York presence?
A. It’s a fulcrum for us, as it is in our industry, in terms of the gateway of companies coming in internationally.
Q. How active is that office?
A. It’s very active. Their property management has grown by 30 to 40 percent.
They’re managing throughout the New York metro area and actually throughout the United States. I don’t have total statistics. I think it’s more in that medium-sized square footage and marketplace.
They’re more of a tenant rep. Some of their tenants include the American Cancer Society, American Express, Bally’s Fitness, Bank of America, the Brooklyn Navy Yard.
Q. Why did Coldwell Banker Commercial decide to franchise that office instead of own it?
A. To grow it organically or to buy someone, frankly, was just not something that was in the cards. We try to find the best qualified companies to do that, and to grow from there.
We get the franchise fees, the growth of the network — New York is so mission critical to supporting business throughout the United States. When you’re looking at many of the businesses that are located here, they’re exporting business all around the U.S. and the globe. A lot of times they may have real estate needs elsewhere.
Right now we’re working with a major warehouse and distribution firm in the fashion industry that has a 200,000-square-foot requirement out in Los Angeles. The company is headquartered in New York, so that business is exported from Manhattan. I can’t tell you the name of the company; I have a nondisclosure. Q. What kind of fees does Coldwell Banker Commercial receive from its franchisees?
A. Typically it’s 6 percent of the gross commission income. And they get all the services: the resources of our global client solutions group, technology, the branding, the name, advertising and marketing.
About 30 percent of our offices are company owned, and the balance are franchises. We also have three offices in New Jersey, two in Connecticut and three on Long Island.
Q. How was business last year?
A. I can’t give specific numbers, because that’s within the overall organization, but we’re mirroring what’s going on with the rest of the industry: 2010 was an improvement over 2008 and 2009, and 2011 was an improvement over 2010.
The retail sector for us has actually been surprisingly active — even though retail has been at an all-time high in terms of vacancies. Multifamily has been as hot as a pistol. The office sector is employment driven, but we’re actually seeing pretty good activity around the country as a result of companies looking to upgrade from Class C to B or from B to A space. They can lower their costs over all because of the relatively high vacancies.
Q. What’s your outlook for 2012?
A. Slow to steady growth over all — given the macroeconomic factors that we’re all seeing over the last 90 days, the sovereign debt crisis and everything else.
Q. What are your plans for growing the company?
A. In the next 12 to 14 months, I’m looking to double or triple what we’re doing right now in the Northeast corridor, from Washington to Boston.
With a lot of market-driven change in the industry, there’s a tremendous amount of opportunities for mergers and acquisitions. We’ve been looking at other brokerages and bringing competitors on. A lot of folks operate their own businesses as entrepreneurs, but they’re seeing that to compete effectively in the market, the need to bolt onto a larger organization, yet still maintain their entrepreneurial spirit. Others have been running their businesses for many years and are looking at exit strategies.
This is where I spend most of my time, by the way. We have target markets, and an A, B and C list of individual companies.
Q. What kind of reaction have you received so far?
A. It’s actually been very positive — about 70 to 80 percent are still interested in talking to us on an ongoing basis. I would say we are talking in the hundreds in the whole United States, and in the Northeast corridor, 35 to 40. I can’t tell you the names.
Q. Were you always interested in real estate?
A. I started when I was 24 years old. My grandfather was a developer — he developed houses first and then garden apartments in New Jersey. Then I was in sales. Q. Do you invest in real estate personally?
A. I invest through REITs because they’re liquid. I use those investments to pay for my kids’ college.
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