If any company should be buoyed by the nationwide resurgence of the commercial real estate and recent industry trends, it is CB Commercial Real Estate Group Inc.
The nation's largest real estate firm, with 78 offices and revenues last year of $430 million, is benefiting from industry consolidation, its vast network of agents and a variety of services, technological investments and institutional relationships extending well beyond its home base of Los Angeles.
But in Baltimore, CB Commercial continues to suffer the residual effects of an identity crisis that dates to 1983, when the company established a local office and attempted to crack the city's tightly woven real estate community.
"When CB came to town, it had no local management and hired young, energetic but largely untrained people," said Richard P. Manekin, who in May became a CB senior vice president and managing partner of the 26-agent Baltimore office. "Needless to say, CB wasn't taken seriously."
With Mr. Manekin, 49, whose family has played a significant role in the Baltimore real estate community since World War II, CB Commercial hopes finally to gain the same respect locally that it has achieved nationally.
Mr. Manekin left Manekin Corp., the regional development and brokerage firm founded by his father and uncle, to join CB Commercial in January, citing the national company's ability to compete effectively in the fast-changing world of commercial real estate.
"Corporations and institutions that own or lease real estate are looking to limit the number of vendors they use on a national basis," said Mr. Manekin, the third local CB Commercial leader in the office's 13-year history. "As a result, local and even regional firms, particularly those not affiliated with a national network, are limited in their ability to obtain that type of business, and that's the future."
For the present, however, CB Commercial faces stiff competition in Baltimore from Colliers Pinkard, KLNB Inc. and Casey & Associates Inc., firms that have either better established themselves or carved out market niches. Even Mr. Manekin acknowledges that Pinkard is currently the market leader in terms of providing a full range of real estate services here.
CB Commercial intends to surpass the local competition by beefing up its property management, industrial, retail and other divisions, and by hiring experienced agents with both market knowledge and existing clients.
Since the start of the year, for instance, CB Commercial's hiring in Baltimore includes Mr. Manekin and veteran brokers John Wilhide, William M. Pellington and Guy Phelan, among others. The company also is attempting to better integrate top regional producers intoBaltimore.
"Dick Manekin is a leader with a great deal of maturity within a rapidly developing professional sales force," said Christopher R. Ludeman, a CB Commercial executivevice president and regional manager for Baltimore and Washington. "Dick personifies a person with both technical expertise and youthful drive."
More than respect or identity in Baltimore is at stake, however.
CB Commercial's local push coincides with a longer-term goal to take the privately held company public in order to retire debt and re-capitalize, sources said.
David A. Davidson, CB Commercial's chief financial officer, has saidthat while going public is an option, it is not one CB Commercial would immediately consider. But current and former agents say going public by the end of 1997 is an "openly stated goal" within CB Commercial, and that the current push is an effort to brighten its balance sheet and provide prospective investors with a financially successful history.
CB Commercial's large debt level -- estimated at roughly $160 million -- resulted from a 1989 leveraged buyout from Sears, Roebuck & Co., when company managers teamed upwith Japanese and domestic investors, including Westinghouse Financial Services and the Mellon Family Trust.
Although industry analysts have pointed to the debt level as a principal stumbling block to growth, the company noted earlier this year that it has recast and extended much of it. The debt had been set to mature in 1999 and 2000.
Regardless of its corporate structure, CB Commercial's goal remains the same: To become the "pre-eminent diversified commercial real estate services firm in the world," according to James J. Didion, the company's chairman.
To meet that goal, CB Commercial has been diversifying and expanding the service-oriented aspects of its business both nationally and locally, including appraisal work, research capabilities and institutional representation.
Most recently, CB Commercial bought Westmark Realty Advisors, apartner with Trust Co. of the West in TCW Realty Advisors, a Los Angeles pension fund consultant with $3.4 billion in assets under management. Although Westmark will be operated as a separate entity from CB Commercial, the investment is expected to provide both lucrative fees and opportunities to broaden work with cash-flush pension funds interested in real estate.
The diversification strategy, along with the nationwide rebound of commercial real estate, has worked thus far: In 1994, CB Commercial posted total transactional volume of nearly $42 billion, an impressive jump over its performance of just two years ago.
But at least in the short term, the Westmark acquisition won't help CB Commercial's local office. TCW has long-standing relationships with KLNB and Casey for the leasing and managing of its industrial properties in the Baltimore-Washington corridor, has no plans to shift alliances and in some cases is legally prevented from doing so, said Vincent F. Martin, TCW's chief executive officer.
But perhaps the single most important change at CB Commercial is its outlook on personnel.
"In the end, we realize that our most important asset goes down the elevator at the end of the day," said Mr. Ludeman. "If we haven't articulated our competitive advantages, then we deserve lose people."
As evidence of its regard for the Mid-Atlantic, Mr. Ludeman last year was transferred from CB Commercial's Phoenix office, to better coordinate regional operations involving Washington, Baltimore and Northern Virginia.
That philosophy represents a stark change from just two years ago, when CB Commercial discounted personal relationships and focused strictly on transaction aftertransaction. The philosophical shift may also have stemmed from a steady stream of defections, beginning in November 1992 with Steven H. Gassaway, a top downtown office broker, and industrial experts Matthew J. Ryan Jr. and Timothy J. Cahill to Casey.
"They don't offer the sense of roots in the community that some of the other local firms provide," said one ex-CB Commercial broker, who asked not to be identified. "And their main difficulty is they have no place in the organization for seasoned professionals."
To combat the criticism, CB Commercial has begun partially compensating some veterans on a salaried basis in an attempt to benefit from their experience.
Various local industry analysts point to the defections and the "revolving door phenomenon" as a critical reason for CB Commercial's lack of identity in Baltimore. (Mr. Gassaway, however, rejoined CB Commercial after 18 months to head the local office. He was recently named to lead the company's efforts in North Carolina.)
The so-called revolving door has affected its business as well. While Pinkard and KLNB regularly report double-digit increases in their annual transaction volumes -- an overall amount that relates the total value of a sale or lease, not the profit or commission obtained from it -- CB Commercial has for the past few years been stagnant.
In 1994, CB Commercial's local agents generated transactional volume of $134.3 million, down just slightly from its 1993 performance. By comparison, Pinkard, with three offices and 20 agents, reportedly produced $350 million, through sales, leasing activities, property management and consulting.
Still, CB Commercial has made impressive strides locally in hiring and garnering new business. Most notably, the Yarmouth Group Inc., a New York-based pension fund adviser, recently tapped CB Commercial to help lease and manage the 25-story 250 W. Pratt St. office tower after it acquired the debt on the skyscraper in December for an estimated $32 million.
"CB put before us an experienced and dedicated team, and that's the primary reason we chose them," said Ed Meyer, a Yarmouth spokesman.
The tap by Yarmouth comes on the heels of selections of the local CB Commercial office by institutional owners such as The RREEF Funds, MetLife Realty and the Ohio State Teachers Retirement System.
The local strategy dovetails with CB Commercial's national effort, the hallmark of which is that it can attract additional institutional business because of its nationwide scope, myriad services and the desire of large property owners to limit the number of real estate service providers they deal with.
"There's definite consolidation going on in the industry because there are economies of scale achieved," said James L. Kaplan, a MetLife senior investment analyst who selected CB Commercial to lease and sell the 23-story One Charles Center, which MetLife took over through foreclosure in August 1993.
"There's so much pressure to perform, and the reality is each dollar cut from expenses and fees theoretically goes to the bottom line," he added. "But the challenge for the CB Commercials of the world is not just to become vertically integrated but to be strong in individual service areas as well."
That fact is not lost on Mr. Manekin, who said his chief job is to motivate CB Commercial's local agents, hire new brokers, increase its property management portfolio and investment property sales, and demonstrate the company's renewed commitment to existing clients.
At the same time, he believes the company's momentum will eventually provide the identity so necessary to increasing business.
"In many regards, this is a vastly different CB today from the one five years ago, or especially 12 years ago," Mr. Manekin said. "CB has a track record now, and I'm excited about the prospects for this office."
CB Commercial at a glance
Chief executive: James J. Didion
Number of U.S. offices: 78
Number of U.S. agents: 2,954
1994 transactional volume: $42 billion
Revenues: $430 million
Businesses: Leasing, property management, consulting, appraisal, financing, pension fund advising
TOP AREA COMMERCIAL REAL ESTATE BROKERAGE FIRMS
Firm .. ... .. .. .. .. .. .. ..Agents .. Transactional volume*
Colliers Pinkard .. .. .. ... ..20 .. .. .$350 million
KLNB Inc.: .. ... ... ... ... ..30 .. ... $327 million
Casey & Associates Inc. .. ... .21 .. ... $285 million
Hicks & Rotner Inc. .. ... ... .21 .. ... $189 million
Miller Corporate Real Estate .. 16 .. ... $185 million
CB Commercial Real Estate Group 26 .. ... $134.3 million
Manekin Corp. .. ... ... ... ...12 .. ... $115 million
MacKenzie/O'Conor, Piper & Flynn 19 .. .. $74.5 million
* Total dollar amount of all transactions during 1994