As the city’s biggest residential brokerages gobble up market share, two leading mid-sized players — City Connections Realty and DSA Realty —are merging, The Real Deal has learned.
The newly combined company, which will do business as City Connections Realty, will operate out of CCR’s office at 71 West 23rd Street, the firms said Tuesday. DSA’s office at 113 East 12th Street will close at the end of the month.
Terms of the deal were not disclosed, but CCR [TRDataCustom] founder David Schlamm will run the firm’s day-to-day operations as president and CEO of the combined company. DSA co-founder and chair Arik Lifshitz will become a minority equity partner in CCR and will run DSA Property Group, his firm’s investment platform, out of an office at 60 Madison Avenue. DSA president Jesse Rhinier will join CCR and work on key accounts.
The deal will beef up CCR’s head count and rental building exclusives. DSA is bringing 128 exclusive rental buildings to CCR, which already represents more than 130 buildings. Roughly 35 of DSA’s agents — or 80 percent of the firm — will join CCR’s 95 agents, bringing the total to 130.
Schlamm, who said he’s never had a partner in 28 years, noted DSA’s track record in the multifamily market influenced the deal.
“It’s a way for me to have significantly more rental building exclusives,” Schlamm said. “The merging of our two firms will [also] expand our commercial division.”
For his part, Lifshitz touted greater “economies of scale” that the companies hope to realize. “I feel I have reached the limits of where I can take the firm on my own,” Lifshitz said in a statement. “With this deal, we are skipping 10 years of organic growth overnight.”
The merger will also free up Lifshitz to focus on DSA’s investment sales. The nine-year-old firm has been an active player in the multifamily market over the past few years. In 2015, DSA sold six Brooklyn rental buildings to Akelius Real Estate Management for $124.5 million. In September, DSA entered into contract to buy a 15-story dorm in the Financial District from Pace University for $51 million.
Founded in 1988, City Connections ranked No. 10 on The Real Deal’s ranking of mid-sized firms in May 2016, with $24.3 million in sales listings as of March 27, up from $14.6 million a year earlier.
The deal comes amid a wave of mergers and acquisitions among New York brokerages. This past May, Citi Habitats scooped up Miron Properties, several months after buying Brooklyn-based Aptsandlofts.com. In 2015, Engel & Völkers NYC merged with boutique firm Mercedes/Berk. The following month, Sotheby’s International Realty acquired Fenwick Keats.
“If you increase volume, you get scale [and] you make more money,” Steve Murray, founder of consulting firm Real Trends, recently told TRD.