Making Two Big Real Estate Players into One

The NJBIZ Interview – Ray SohmerAs the new senior managing director for the New Jersey offices of CB Richard Ellis (CBRE), the state’s largest commercial real estate brokerage firm, Ray Sohmer has a busy year ahead. Foremost on his agenda is overseeing the transition that CBRE is currently undergoing, following the completion of its acquisition of the former Trammel Crow Co. at the end of December 2006. Sohmer spoke with NJBIZ Staff Writer Evelyn Lee about the integration of the two companies, the changes and challenges involved and his outlook for the coming year.

NJBIZ: What are your goals for the firm’s New Jersey operations?

Sohmer: The thing that’s changed is that we acquired Trammel Crow Co., and my focus has been turned temporarily to the successful integration of our companies. That’s my short-term goal. My long-term goal is once we’ve integrated fully, then we will turn the service platform we’ve just created onto the business community.

NJBIZ: Can you elaborate?

Sohmer: The beauty of putting together these two companies is that we considered ourselves, and considered Trammel Crow Co., truly a best-in-class service provider. It did it more through facility-project management and it has long-term contractual relationships with mega-companies, Fortune 100 companies or with Fortune 500 companies. More than 100 people might be embedded in that organization, servicing their facility needs. For instance, Bank of America is a big former Trammel Crow Co. account. When it bought Fleet Bank, it needed somebody who had the ability to change thousands of signs and all the logo decals, all the way down to the envelopes. Trammel Crow has the ability to do that on a national basis. We never had that type of platform to provide those types of services. We’re truly more integrated now with our clients, together with their facility management, project management platform and their corporate outsourcing.

NJBIZ: Can you compare the different services that CB Richard Ellis and Trammel Crow had before this merger?

Sohmer: CB Richard Ellis brings a platform of transaction management, corporate services, a global reach and very strong asset services. Trammel Crow brings very strong project management, facility management and ultimately transaction management as well. It complements ours and there’s minimal overlap.

NJBIZ: When would full integration be?

Sohmer: I would say six to 12 months. The announcement was Oct. 31. By the end of 2006, the thing had been approved by the Securities and Exchange Commission (SEC) and ratified by both boards. Physical integration was Jan. 1. Signs went up, names got changed, e-mail, IT. Everything else started to fall in place right away. We were all physically in the offices, getting together, doing group presentations and orientations.

NJBIZ: Can you talk more about the integration process?

Sohmer: We’re integrating and exposing [former Trammel Crow brokers] and training them on our technology for accounting and reporting of transactions or revenue. Then, of course, there’s marketing and research. We do things a bit differently, so we’re exposing them to that as well. Then ultimately, the thing that usually lingers the longest is really just the cultural integration, where everybody understands the process: who does what and what the combined approach will be. We need to be able to articulate all of our services.

NJBIZ: What will New Jersey operations look like with the merger’s closing?

Sohmer: We’re about 120 brokers in New Jersey now. We have a significant research group. We have a significant marketing group that’s going to expand to service the new organization. Currently, we have offices in Saddle Brook—that’s the CB Richard Ellis headquarters in New Jersey; Trammel Crow Co.’s northern New Jersey office is in Florham Park. We have an East Brunswick office in Central New Jersey and we have an office in Princeton, so there are four locations currently.

NJBIZ: What kind of challenges do you think you may face with this process?

Sohmer: It’s finding and retaining the best service providers, the best employees, the best of everything. That’s always an ongoing challenge for anybody in any business, but clearly it will be a challenge for us going forward. The real challenge is to get the cultural integration complete quickly, so everybody understands the new organization. It’s kind of mind-boggling when you think about us, in terms of all the services that we provide. The biggest challenge is to understand who we are now.

NJBIZ: What’s your outlook for 2007?

Sohmer: There’s a consolidation happening. Companies are going to have to do what we’re doing. We did it first, so we’re probably not going to be in the big acquisition mode for a long time. But we will certainly continue to look for infill opportunities in markets where we need a bigger presence. I’m constantly looking for new lines of business, because that’s how you grow revenue. Last year, we started the private-client group, and it’s already up and running and very profitable. It’s part of a whole national CB Richard Ellis organization, but it didn’t exist in New Jersey, and now it does and it’s becoming very successful.