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DALLAS-Whether it’s office buildings or brokerage houses, the “M&A” aftermath has delivered some new leverage to boutique firms in the marketplace. It’s the same game rules, but a new set of owners who have elevated boutiques into the final cut of nearly every competition.

“As we compete for a significant assignment, by and large, we know our competition, more often than not, will be mid-size and boutique firms,” says Johnny Johnson, principal for Capstar Commercial Real Estate Services in Dallas. “Clients are more focused on who can execute on a local level than whether you have a national or international platform.”

Last year’s record-setting office building sales have brought a new owner profile to the city, mostly money from the East and West coasts with higher return expectations and aptly timed with the market’s uptick. “You are benchmarked to a higher standard in an improving market,” Johnson says.

The shrinking number of national players and rumors of more consolidations in the works have meant a boon for boutiques in a service-driven industry. “There’s no doubt the ripple effect is to our benefit,” Johnson says, “but you still can’t take it for granted. The expectation, in a good market and a poor market, is the same–you’re going to execute, push rates and minimize turnover.”

In many cases, today’s owners have been divvying assignments for their local portfolios rather than relying on one firm to do all the work. The street-savvy bet has opened doors of opportunities for boutiques as they joust with nationals that once had the upper hand due to “one-stop shop” philosophies and branding.

Jon Altschuler, president of the 11-year-old Stream Realty Partners LP, says boutiques have gained significant ground since 2001, more so in the past year. “Dallas is a boutique market on the landlord side,” he tells GlobeSt.com. “We are seeing less relationship-based selections and more capability-based selections, which bodes well for the boutiques.”

The powerhouse firms are still in control of their market share, but there have been a few recent face-offs in which all final contestants have been boutiques, according to Altschuler. “In the end, the property owner who comes to Dallas to interview five or six firms is concerned about his building in Dallas. They don’t care about the national platform or the international platform,” Altschuler stresses. “You can’t move the real estate to Moscow or Machu Pichu. They care about their building in Dallas.”

Altschuler points out that Stream’s motto isn’t about being the biggest player on the block. “We’re focused on being the best,” he asserts. “There have been a lot of consolidations, but that’s created a lot of volatility in the market. And, it has opened up more opportunities.”

To offset record-setting sale prices, new owners are stretching pro formas to reflect potential rather than actual. Yet the market is doing its share too, with absorption and activity reaching their best levels in several years. “We are seeing a fair amount of bullishness on the part of landlords,” Altschuler says. “If you have a credible next lease, you’re less likely to make the lease that’s in front of you.”

From a tenant rep’s perspective, Studley managing director Arthur Green says it doesn’t matter if his bargaining opponent is local or national, but it does matter with regard to the ownership line and asset manager. It’s all about the ability to expedite deals in a timely fashion, without down time from corporate headquarters sign-offs.

“It depends on the local representation and how well they’ve educated their owners and how well the communication levels are between the agent and the asset manager,” Green points out. “It’s the different philosophy, a different anticipation with respect to the rates of return.”

Green, like brokers on the other side of the fence, acknowledges that the deed-changing has changed expectations. “And, you’d expect that,” he says. “We’re still familiar with all the entities responsible for leasing the property. The faces and names haven’t changed although the shingle might have. But, tenants still have a lot of options. That’s the good thing about Dallas, particularly in the CBD, as long as you have options.”

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