No one ever said New York wasn’t a tough nut to crack. Suburban brokerage Weichert Realtors is learning first-hand just how tough, telling agents it will shutter its Midtown rental office by next week.
The office, which opened last year with just 10 agents, had grown to 55 as the New Jersey-based firm absorbed a number of agents from beleaguered Bellmarc Realty. Weichert’s two New York City sales offices — at Rockefeller Center and in Soho — will remain open.
The brokerage cited the challenging rental market as a reason for closing the rental division’s office, located at L+L Holding Company’s 142 West 57th Street.
In a statement, the firm said it was “staying true” to its core sales platform, “especially in this contracting rental market.” Weichert recently renewed its lease at Rockefeller Center for another three years, it said, where it would focus on closing sales.
The space at 142 West 57th Street was one of two offices that Weichert opened in the last 18 months as it sought to gain a toehold in Manhattan, competing with not only the behemoths Douglas Elliman and the Corcoran Group, but legacy boutiques with deep neighborhood connections. Weichert launched a Soho sales office with 20 agents at 361 Broadway last February.
“It’s not like they’re not trying to make an impact,” a former employee said of the rental office. “That was the whole point. They’ve been growing a lot, going from one office to three in a year and a half.”
Weichert is hardly the first suburban brokerage to stumble shortly after making entry into Manhattan.
Connecticut-based William Raveis launched a Manhattan outpost two years ago, but the wheels quickly came off, forcing the firm to tweak its new development and recruiting strategy.
“These things are a slow roast,” founder Bill Raveis told The Real Deal last year.
Weichert, a family-owned company that started in 1969 in Chatham, N.J., began its regional expansion to New York, Connecticut and Delaware in the late 1980s. In 2002, the company started selling franchises along the East Coast. It opened its first New York City office a decade ago.
“Suburban brokers have a hard time coming into the city,” noted Jonathan Miller, president of real estate appraisal firm Miller Samuel, who also said brokerages are facing a slowdown in the velocity of activity. “It looks good on paper, but it’s difficult,” he said, citing higher costs of doing business. “Some brands, you could argue, like Coldwell Banker and maybe Weichert, are emblazoned as a suburban brand.”
The rental market is also facing headwinds. In March, the median rental price dropped for the first time in two years, according to Miller Samuel. Though prices rebounded later in the spring, landlord concessions rose 13 percent in April. New development median rental prices also dropped 2.5 percent year-over-year in April to $4,416.
Despite Weichert’s mixed results in Manhattan, the firm may be enjoying better traction in Brooklyn. The firm is one of the borough’s larger brokerages with 63 agents, according to a recent ranking of the Brooklyn’s residential brokerages by The Real Deal.