Eastern Consolidated to Close in July

NEW YORK CITY—Eastern Consolidated which was founded in 1981, and has a team of approximately 100 brokers and 40 full-time employees, is shutting down in July. The husband and wife team, Eastern’s CEO and Chairman Peter Hauspurg and president Daun Paris, issued the following excerpted statement: “Earlier this year we were approached by a third party, who inquired about a possible strategic partnership with Eastern Consolidated. During the course of our careers we have had a number of inquiries of this nature. We engaged an investment bank to evaluate the opportunity and gauge the market. During this process, other opportunities arose, but they all came with terms and conditions with which we were not comfortable. After thorough and thoughtful consideration, we determined that the best path forward is to wind down the operations of Eastern Consolidated.”

They ended the message thanking brokers and staff and stated, “We are confident that our talented team will be in high demand at other firms and we will do all that we can to make this an easy transition.”

The Commercial Observer had reported the co-founders Hauspurg and Paris held a meeting on Friday morning to inform staff about the decision. The publication noted the retail and capital markets division had been earning revenue at their 2017 numbers. It stated the investment sales were down with the rest of the market, reporting that Paris said, “there’s no clear indication of when conditions will improve.”

The paper quoted Hauspurg stating the climate for midrange firms focused on the middle market like Eastern is not getting any better.

A broker from a competing firm tells Globest.com that 2014 through 2016 was “incredibly active with a ton of deals. And brokers need volume and deals.” He says with the incredible slowdown in 2017, competitors in the market going after the “bread and butter” of Eastern’s business would have created competition, eating into Eastern’s market. He cites niche players, such as Rosewood Realty Group that has expertise in the multifamily sector, and Westwood Realty Associates with several multifamily listings in the outer boroughs as well as Manhattan.

The source also points to the difficulties of the smaller or mid-sized players competing with the real estate giants, noting Doug Harmon and Adam Spies’ move from Eastdil Secured to Cushman & Wakefield in late 2016.

He emphasizes, “There is not as much product in the market [for sales] as there was two or three years ago, making it tougher to compete for smaller guys. You really need volume.”

A source from another firm says it’s no secret that overhead was an issue, with rising costs and competition and that Eastern’s deal volume was down. The Real Deal reported that in 2017 Eastern’s dollar volume had dropped by 60% to $622.4 million, placing it 10th on the publication’s annual investment sales deal list.

However, all sources say Eastern’s closure will create opportunities for brokers who produce. It’s unclear what will happen with the property listings currently on Eastern Consolidated’s current website. But Ron Solarz, a principal and one of the top two producers at Eastern last year, says that his sellers have been loyal and with exclusive properties, and he’ll continue to represent his clients. He points out what firms are looking for with Eastern’s brokers now on the market: “If you can bring in capital, make money for the firm, make deals, generate income.”

Highlights of transactions Solarz has worked on include the $165 million, nine-building, 413-unit mixed-use portfolio in Washington Heights; the $100 million, 46-story, 123-unit residential condominium development site at 30 E. 29th St. in Nomad; and the $115 million, 151-unit, assisted-living development site at 139 E. 56th St. in Midtown.

He adds, “I’ve been a broker for 34 years and at Eastern for over 23. My goals will be in the coming weeks to meet with various groups and make a decision and to bring my A-team with me over to the new group.”