Brookfield Outsourcing All U.S. Office Property Management To CBRE
The world's largest commercial real estate services firm is launching a new business line by taking over the property management operations of one of the world's biggest commercial property owners.
CBRE Group is launching a new third-party management platform aimed at institutional owners, and its first client is Brookfield Properties and the entirety of its 65M SF U.S. office portfolio, the companies announced Wednesday.
CBRE will take over the day-to-day management of some 85 office buildings owned by Brookfield, including building operations, property accounting, building technology and management, as of April 2.
Brookfield will maintain its focus on managing the portfolio's cash flow, sustainability, leasing, marketing, events and media relations, a spokesperson for the Canadian investment giant told Bisnow.
"There is no headcount shrinkage," Brookfield spokesperson Andrew Brent said in an email. "With limited exception, Brookfield Properties U.S. office property operations and property accounting personnel will transition to CBRE (a few operations and accounting leaders will remain at Brookfield Properties and work with the transitioning teams)."
Brookfield is the debut client for CBRE’s new Investor Portfolio Management division, which looks to serve giant owners of vast amounts of commercial real estate, CBRE said in a press release. The firm also plans to leverage its relationships with coworking giant Industrious, of which it owns more than a 35% stake, sustainability platform Deepki and tenant experience platform VTS with portfolio management clients, according to CBRE.
Brookfield Properties’ decision to farm out its office property management arm comes as its nontraded REIT — a separate entity named Brookfield Real Estate Income Trust — reported its first annual loss since its inception after back-to-back monthly losses in November and December due mainly to interest rate hikes decreasing the value of its various properties, Bloomberg recently reported.
Brookfield's office portfolio has come under scrutiny as it has handed over the keys to lenders on several buildings, including high-profile towers in Los Angeles and the Brill Building in Manhattan.
While Brookfield says it will continue to oversee leasing of its U.S. office portfolio, it had previously cut its in-house office leasing team in Washington, D.C., Bisnow reported in 2021.
Brookfield selected a new partner to lease four of its D.C. buildings this week. It tapped Stream Realty Partners to market the space at 2000 and 2001 M St. NW, 1220 19th St. NW and 1140 Connecticut Ave., according to a release. It is the first-ever partnership between Brookfield and the Dallas-based CRE firm, Stream Executive Managing Director Kyle Luby told Bisnow in an email.
Jon Banister contributed reporting for this article.
CLARIFICATION, JAN. 19, 10 P.M. ET: Brookfield Real Estate Income Trust is a separate entity from Brookfield Properties, both under the management of Brookfield Asset Management. A previous version of this story didn't fully delineate between the two. The story has been updated.
