Merger vaults Pru-Rubloff in residential broker ranking

21 Jul
(Crain’s) — A merger has propelled Prudential Rubloff Properties into the ranks of the region’s biggest residential brokerages, while the downturn in the high-end housing market has punished firms like Koenig & Strey Real Living.

Prudential’s sales volume climbed 25% last year compared with the combined Prudential and Rubloff tallies of 2008, pushing the firm ahead of rival @properties, the once red-hot firm that has shown signs of cooling as closings and sales volume slid for the second consecutive year, according to data from REAL Trends Inc., a publication and consulting firm based in Castle Rock, Colo.

Koenig & Strey, which has been stung by broker defections, continued its steep decline as the firm’s sales volume fell by almost 40% from 2008 to $1.72 billion after dropping 27% the previous year, according to REAL Trends data.

Long-suffering brokerages could be in for more hard times if the economy doesn’t pick up and the housing market weakens.

“It’ll be interesting to see what happens in the next 12 months if the market doesn’t improve,” says David Hanna, managing director at Chicago-based brokerage Realty Executives Source One. “Someone is going to have to swallow hard, take a loss and go to Plan B.”

REAL Trends ranks Chicago-area brokerages by the firms’ self-reported transactions and sales volume — the value of homes sold. Typically, there isn’t much movement at the top of the list, but the housing market’s woes have shaken up the industry.

The 2009 rankings showed the continued dominance of Coldwell Banker NRT, part of Parsippany, N.J.-based corporate giant Realogy Corp. The top-ranking firm’s sales volume of $5.56 billion, down 18% from 2008, was nearly double the volume of No. 2 Baird & Warner Inc. of Chicago, which reported sales down 9% to $3.1 billion, according to REAL Trends.

Joliet-based Coldwell Banker Honig-Bell and Prudential were the only top-ranking firms for which both closings and sales volume increase last year. Both were acquirers: Coldwell Banker Honig-Bell bought Primus Realty Co., which had six offices in Aurora and other far western suburbs, while Prudential Preferred Properties in September snapped up Chicago-based Rubloff Residential.

In another acquisition last year, a unit of billionaire Warren Buffett’s investment firm Berkshire Hathaway Inc., Minneapolis-based HomeServices of America Inc., acquired Koenig & Strey GMAC Real Estate, ending months of speculation about who would buy the brokerage. It had been rumored that Koenig & Strey was in play ever since its previous parent company, GMAC Home Services LLC, was acquired in late 2008 by Canada-based Brookfield Residential Property Services.

Most area brokerages experienced modest declines last year, though none as sharp as Koenig’s. The company’s number of transactions plunged 27% from 2008 to 3,778 as sales volume declined 36% to $1.72 billion. The firm, which ranked No. 4 in transactions in 2008, fell to No. 6 last year, according to REAL Trends, which prefers to rank firms by closings vs. sales volume.

“We’re positioned at the high end of the market and the high-end market took a beating last year,” says a Koenig spokesman. “That hit us especially hard.”

He also adds that Koenig’s figures don’t include 176 previously undisclosed sales last year at Trump International Hotel & Tower, some $230 million worth of deals.

REAL Trends’ top-ranking Chicago-area brokerages by transactions in 2009 were:

• Coldwell Banker NRT — 17,442, relatively flat compared to 2008.
Baird & Warner Inc. — 12,763, up 11% compared to 2008.

• @properties — 5,205, down 6% compared to 2008.
• Prudential Rubloff — 4,267, up 25% compared to 2008.

• Coldwell Banker Honig-Bell — 3,866, up 30% compared to 2008.
• Koenig & Strey — 3,788, down 27% compared to 2008.

In REAL Trends’ sales volume rankings, Prudential leapfrogged @properties to take the No. 3 spot and Koenig tumbled to No. 5. But @properties co-founder Michael Golden disputes the new rankings, because he says the Multiple Listing Service shows Prudential deals totaled about $500 million less than REAL Trends reports.

Not every deal a firm completes appears on the MLS, especially if the transaction was negotiated between agents at the same firm, or if a brokerage completed deals as a sales representative for a new development. Still, Mr. Golden is skeptical the firm could have completed such a large volume of these off-market transactions.

“I don’t know where you would find that much of a discrepancy.” he says.

REAL Trends’ owner Steve Murray says he’s satisfied with the rankings, which he asked Prudential Rubloff to verify because of Mr. Golden’s concerns. Prudential CEO Chris Eigel didn’t return messages seeking comment about the matter.

According to MLS data, @properties ranked third in sales volume last year while Koenig was fourth and Prudential was fifth.

REAL Trends’ top-ranking area brokerages in 2009 by sales volume were:

• Coldwell Banker NRT — $5.56 billion, down 18% compared to 2008.
• Baird & Warner — $3.1 billion, down 9% compared to 2008.

• Prudential Rubloff — $1.996 billion, up 13% compared to 2008.
• @properties — $1.78 billion, down 5% compared to 2008.

• Koenig & Strey — $1.72 billion, down 36% compared to 2008.
• Coldwell Banker Honig-Bell — $612 million, up 10% compared to 2008.

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