GVA Buy-In Boosts FirstService's US Platform

Both Frye and Jay Hennick, founder and CEO of FirstService, tell GlobeSt.com that the Williams firm purchase is mostly to gain a foothold in the hard-to-enter New York City market. "Most others that have gone into New York City without partnering with strong leaders have faltered, there's almost a 100% disaster rate," Hennick says. "It's just not possible to use a small firm and organically recruit, you can't make it there."

His company is already a $1.8-billion-a-year-revenue player, with three real estate companies including 60% of the Colliers-branded locations outside the states and 40% in the US. However, to be respected globally, the company needed a New York City presence, Hennick says. He says he considered buying into the Colliers ABR Inc. office in the city, one not owned directly by FirstService, but "we felt the ABR mindset was of asset management, as opposed to services driving property brokerage, property valuations, investment sales and more."

The ABR office had different plans of its own. Two days before FirstService's acquisition announcement, ABR announced that it would join a new holding company made up of a consolidation of the Midwest-based Colliers Turley Martin Tucker, the Mid-Atlantic Colliers Pinkard and the Washington, DC-based Cassidy & Pinkard Colliers, all also independently-owned. Officials with ABR could not be reached for comment for this article.

Hennick tells GlobeSt.com that Williams, the "number four player in New York," was a stronger choice for his firm. His company bought out the founding families for its new 65% stake in what will again be known as "Williams Real Estate." The other 35% of the firm will be owned by top partners in Williams, "one of the only top three global platforms using the partnership model," Frye says.

Frye agrees that organic growth in New York City is impossible, and the only way for entry is through the purchase of a strong player. The city is the only location where there will be direct competition, he tells GlobeSt.com. "There is no duplication anywhere else, so competition is not an issue," Frye says. "And if it becomes an issue down the road, if we buy a bunch of companies where there is competition, we may have to change our strategy then. But right now the only overlap is in New York City."For example, Hennick says, if there is a client out there that wants to do business in the Midwest, or Southeast, the idea is to drive the business to Colliers affiliates. "We're just going to drive all the New York City business to Williams," he says. There are GVA Williams offices in other cities, such as Chicago, but sources say FirstServices only has an equity stake in the New York office.

Frye says this new business model more reflects what the modern, global real estate firm will look like, instead of the one-family-owned firm or one-company model. "The lines are getting very blurred, and it's due to client's needs," he says. "They're requiring more and more services, and to fill their needs you have to assemble the best services, going out and getting what's needed to fit the goals of the client."