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Residential Real Estate Brokers Gear Up for Best Sales Since the Crash

Crain's New York Business, February 10, 2013



Such a problem Jesse Rhinier has. Two years after opening the DSA Realty office on East 12th Street, he's running out of space. Business has picked up at the firm, where the focus had been solely on rentals. The revenue mix has shifted to apartment sales as that market rebounds downtown.

"Usually February is pretty slow, but we've been running around like crazy," Mr. Rhinier said. That comes on the heels of a January in which business was up 72% from a year earlier, he added. "I expect things to get even crazier come the spring."

To cope, he is hoping to take over the floor above his storefront and add 20 more agents in the coming months, for a total of 70. Meanwhile, he plans to open an office in Brooklyn within the next year, with room for 40 to 50 additional brokers.

All across the city, residential real estate brokerages are expanding in anticipation of what many pros expect to be the best year since the property bubble burst in 2008, forcing firms to ax employees, shutter offices and in some cases close outright.

"I think we're at the start of a great one," said Diane Ramirez, president of Halstead Property. "Last year was spectacular, and 2013 will be even more so."

Broker ranks rise

Industry staffing levels mirror that turnaround. After a run of abysmal years, the number of real estate brokers in the city rose 2.5% last year, to 12,384, according to state records. While that is still down from an all-time high of 12,885 brokers in 2008, many industry executives predict a new record will be set this year, with several hundred brokers entering the business.

As the real estate sector heats up again, it is also drawing a crowd. Last year, 17,943 people took the exam to get their broker's license, up 24% from 2011, though still far below the boom-time peak of 42,496 in 2005.

From the city's biggest brokerage, Douglas Elliman, with 1,500 brokers, to upstarts like Rubicon Property on Wall Street, with 15 brokers, growth is the order of the day. Rubicon, for example, is hoping to have 20 to 25 brokers by year's end.

Brokers' helper


Driving the expansion in the ranks of sales brokers are ultra-low mortgage rates as well as rents that have hit a series of record highs, forcing more people to look to owning, especially now that home prices have begun to stabilize. Some talk in terms of a market that has reached a tipping point, especially in hot spots like brownstone Brooklyn. Three open houses on a Sunday last month in Fort Greene and Bedford-Stuyvesant drew a total of 275 would-be homebuyers—50 of whom made bids, according to Frank Percesepe, Corcoran's senior vice president for Brooklyn.

For those who do buy, the good news is that they actually have a decent chance of making money. As of the fourth quarter, average prices for co-ops and condos were up 1.1% in Manhattan from the year-earlier period, to an average of $1.46 million, according to a report prepared by appraisal firm Miller Samuel for Douglas Elliman. Brooklyn and Queens fared even better, with fourth-quarter prices jumping 13% and14%, respectively, over the year-earlier period.

Among those gearing up for higher sales is Citi Habitats, one of New York's largest brokerages. It is poised to open two new offices this year, in SoHo and the Upper West Side, and hire as many as 100 brokers plus others, according to Citi Habitats President Gary Malin.

"It's not just brokers," Mr. Malin said. "We're hiring social-media people and marketing people and support staff, jobs we never would have had five or 10 years ago."

Similarly, Town Residential, which has expanded aggressively since its founding three years ago, is planning to grow its brokerage force by 50% this year, to more than 450. As part of that effort, Town will open three new Manhattan offices, bringing its total to nine.

"The strength of the market is definitely helping us get there," said Andrew Heiberger, Town's chief executive.

Another factor driving growth is new development. After years with little in the way of new construction, condo towers are once again rising. DSA Realty's Mr. Rhinier is hoping to be tapped to market a few, but he will have to compete against heavyweights.

Among those is Corcoran Group. President Pam Liebman said she plans to open two more offices for the division that specializes in such new developments, Corcoran Sunshine, adding several dozen employees.

One problem for Corcoran and its peers in the city, however, is that while more residential projects are starting up, many will take years to open. So the supply of existing units for the growing army of brokers to sell will remain at record lows, with available inventory half to a third (if not less in some neighborhoods) of what it was during the peak of the market.

The supply problem is not stopping many firms from expanding, however, or discouraging would-be brokers from a chance to catch a rising market. Among those eager to give it a try is Melyssa Ford, who recently signed on at Blu Realty in midtown.

 

Well-stocked Rolodex

"I've been in the entertainment industry about 12 years now, and I've accumulated an incredible Rolodex of entertainers, executives, athletes, actors, directors and producers," said Ms. Ford, who in her previous life was named Video Vixen of the Decade by Complex magazine for her work in various rap and R&B music videos. "People were asking me for real estate advice all the time, and I just decided that instead of sending them to someone else, I should get the commission.

In her first month on the job, she helped her boss Alon Chadad close on a $15 million apartment on Central Park South. "It's much better money than entertaining," she said.

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