The combined firm will have 2,500 agents
Two of the biggest names in New York City residential brokerage are joining forces.
Sister companies Brown Harris Stevens and Halstead will merge under the BHS banner, owner Terra Holdings said Thursday. The combined firm will have 2,500 agents. Last year the brokerages’ sales totaled $9 billion, according to data from Real Trends.
The fusion of two mainstay brands — each with a distinctive company culture — comes amid consolidation in the industry and as residential firms look to dig themselves out of a hole deepend by coronavirus. Even before the pandemic, a slowdown in the luxury market squeezed already-thin brokerage margins.
In a statement, Terra COO Alan Kersner said the restructuring will expand Brown Harris Stevens’ footprint and resources as the housing market recovers.
According to Kersner, the transition will occur in phases, starting in New York. Brown Harris Stevens CEO Bess Freedman will be chief executive of the unified brokerage. Halstead CEO Diane Ramirez, who co-founded the firm in 1987, will stay on as a senior executive. So will BHS president Hall Willkie, Halstead president Richard Grossman and Terra Development Marketing president Stephen Kliegerman.
Kersner said BHS will keep its headquarters at 445 Park Avenue, but Terra didn’t disclose plans for Halstead’s flagship, a 17,000-square-foot space at 499 Park Avenue. The combined company will have 54 other offices in New York City and the Hamptons, Connecticut, New Jersey, Palm Beach and Miami.
Kersner, responding to questions via text message, said Terra’s goal is to retain as many employees as possible. The company also aims to keep legacy offices open, “as long as it makes sense financially.”
Although Terra will be able to shave off “procedural redundancies,” Kersner said the company will double down on technology and marketing.
“It’s no secret that the real estate industry has changed, especially with all of the aggregators and iBuyers now competing for business,” he said. “In order to stay competitive, brokerages have to adapt. This restructuring was not a spur of the moment decision, but the pandemic certainly forced us to act quickly.”
Arthur Zeckendorf, William Lie Zeckendorf, David Burris, Kent Swig, and Eric Hadar
Despite their common ownership, the firms have cornered different parts of the residential market. Established in 1873, BHS is a dominant player in the luxury market and has been for decades. The blue-blooded firm represented Jeff Bezos when the Amazon chief paid a record $80 million last year for a spread at 212 Fifth Avenue.
More than a century younger, Halstead has 32 offices, a strong rental division and is known for being more of a volume player on the sales side. By acquiring regional brokerages over the years, it has built a strong presence in the outer boroughs, Connecticut and New Jersey. Last year, Halstead closed $362.3 million sell-side deals in Brooklyn and $179.1 million in Queens, according to an analysis by The Real Deal.
Both BHS and Halstead — and their competitors — had to make strategic cuts during the pandemic. In April, Terra slashed executive pay and furloughed employees across the organization.
Executives say by joining forces, the combined organization will emerge stronger from an unprecedented few months in which brokerage was nearly shut down.
“As the real estate industry begins to reopen around the country, we are growing a company with a purposeful culture and incredible depth and breadth for the future,” Freedman said in a statement.
The deal gives the combined firm more muscle — more than 1,600 agents and $3.25 billion in sales — at the top of New York’s cutthroat brokerage business. Market-leader Douglas Elliman, with 2,460 agents, closed $7.96 billion sell-side deals in the metro area in 2019, according to TRD’s analysis. The Corcoran Group came next with $7.84 billion in sell-side sales, followed by Compass with $4.85 billion.
Pre-pandemic, the leaderboard saw a wave of consolidation. Last year, SoftBank-backed Compass acquired Stribling & Associates, one of the city’s last independent firms. And in January, Realogy’s Corcoran Group and Citi Habitats said they would formally merge after operating as “sister” companies for nearly two decades.
Smaller firms have also joined forces to retain profitability in a tight market, including Bond New York (which bought Caliber), Living New York (which merged with Mdrn. Residential) and Keller Williams Midtown (which was acquired and then merged with KW Tribeca).