Grubb & Ellis Co. moved into Boston’s 200 State St. last week, consolidating its two previous offices at One International Place in Boston and Two Newton Executive Park in Newton into the new 8,500-square-foot space.
Grubb & Ellis Co. moved into a new neighborhood this month, hoping that its new State Street address on “Broker’s Row” in Boston’s Financial District will help strengthen its core market position and visibility.
A struggling commercial real estate market and consolidation in the industry – including the CB Richard Ellis merger with Insignia in late July – has fomented an atmosphere of uncertainty that has some local firms reassessing their strategies and searching for a stronger footing.
“You won’t change the balance of power in a move; this is a great town with a lot of competition,” said Hank Amabile, senior vice president of Grubb & Ellis. “But we will work hard at making this a stronger shop.”
The move, effective last week, consolidates Grubb & Ellis’ offices at One International Place in Boston and Two Newton Executive Park in Newton into 8,500 square feet on the 12th floor of 200 State St. Company administrators, after various planning sessions, decided that Grubb & Ellis brokers would work better under one roof in downtown Boston.
They also wanted to increase market share, and decided that goal could only be met if they moved into Boston’s financial hub.
“We knew we really needed to be in the Financial District,” said Stephen Brodsky, vice president and director of operations and management services.
Brodsky said that the move was made to increase efficiency and visibility, and is not part of a plan to downsize the firm. The company has already filled one new position for the State Street location and has plans to hire more brokers.
In addition to improving its market share and strengthening its operation overall, Grubb & Ellis officials said they believe the move will improve communication among its employees and departments. Combining the offices will promote the “water-cooler” environment of sharing information, they said.
“When you don’t run into the people you work with, things don’t always get mentioned, especially in real estate when clients, owners, investors and sellers don’t always operate in the same market.” Brodsky said.
Grubb & Ellis, a national company with an international presence based in Northbrook, Ill., provides transaction, management and consulting services to real estate users and investors worldwide through its national offices and global alliances with Knight Frank, a property consulting firm in Europe, Africa and Asia Pacific, and with Canada’s Avison Young.
Grubb & Ellis’ Boston advisory staff consists of 35 commercial leasing, sales consulting and management professionals. Grubb & Ellis Management Services, with 42 employees, will continue working out of its existing Billerica office.
‘Defensive Mode’
Industry watchers say that the move was likely motivated by three main goals: finding a better location, getting staff into one office and countering the increased muscle and visibility of its larger neighbor, CB Richard Ellis.
“I can see how they’re revamping; they’re in the defensive mode right now,” said Robert Cleary, executive vice president of The Codman Co. and a member of the Commercial Brokers Association in Boston, part of the Greater Boston Real Estate Board. “There’s a lot of retooling that has to do with competitors. In order to compete at the level [corporate management] wants them to, they need to retool.”
Cleary said that the move into the Hub’s Financial District also shows a desire on the part of Grubb & Ellis to solidify its client base in brokerage and management in the wake of the CB Richard Ellis and Insignia merger. Gaining more immediate proximity to clients based in the Financial District should help to achieve that, he said.
“I’m not so sure that this is necessarily a reaction to the CB Richard [Ellis] merger but more of a manner in which they’re trying to reposition themselves in Greater Boston,” he said. “There’s no question about it.”
One of the best ways for a real estate firm to do that is to get its staff under one roof – many of the major brokerage houses are doing it, Cleary said.
For real estate companies as well as their clients, it’s all about location. That’s why Trammell Crow Co. has its offices at 125 High St. in the Financial District. Peter Farnum, a principal at Trammell Crow and president-elect of the Commercial Brokers Association, said that the company wanted an office with parking and direct access to the major highways. Having one centrally located office also has other benefits.
“It’s difficult from a real estate company perspective to run two or more separate offices,” he said. “There’s definitely a synergy you get from being in one office”
But while the commercial real estate power grid shifts ever so slightly with these developments, some industry watchers say that even with the poor economy, things aren’t so bad in Boston.
“The Boston market is perceived as one of the strongest nationally, so firms want to be here,” said Michael Glazer, a senior partner with the Boston law firm Goodwin Proctor and a member of the Commercial Brokers Association. “Boston’s one of the top cities worldwide that investors want a piece of.”
Glazer attributes the interest to the fact that Boston properties have a solid, long-term appreciation over the past 20 to 30 years.
“The colleges and medical centers attract a lot of brains and talents and keep filling these buildings,” Glazer said. “We had a bubble in the late 1990s and we had it burst at the turn of the century, but Boston has a way of regenerating itself.”
