Consolidation is the New Normal in LA’s Uber-Competitive CRE Market

The force fueling consolidation in the commercial real estate industry has little to do with the current cycle. Now, something else is happening.

The ultra competitive environment, coupled with new technology and more available capital, has pushed companies to scale up fast. That can be seen in the level of consolidation industry-wide, which has surpassed the 2007 record by more than 25 percent.

Jeff Rinkov, CEO of Lee & Associates, said commercial real estate is now in an “environment where capital is chasing transactional volume.” That has been a catalyst for his firm to expand, he said. That expansion could now include Canada and “opportunities in Mexico,” he added.

The poster-child for rapid expansion in the commercial real estate industry may very well be Compass. The venture-capital behemoth has recently expanded into the commercial end through its acquisition of Paragon and most recently, Pacific Union International.

But as Compass digs deeper into commercial, traditional commercial brokerages are flirting with residential. Konrad Putzier, senior reporter at TRD and the panel moderator, posed that question, as a possible trend.

But it may not fit everywhere.

“We don’t have aspirations of becoming a crossover company,” said Rinkov, who recently launched a residential division in his firm’s New York office. But, he added, New York is a “unique case.” He doesn’t see the company becoming what he called, “resimertial.”

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