Fred Ezra On The Challenge Of Competing As A Midsized Brokerage

The decision that launched Fred Ezra's 39-year run of leading his own brokerage firm came in the spur of the moment. 

He was out at lunch in 1980 with his boss, Julien Studley, the New York real estate legend who led the brokerage firm where Ezra spent the first 12 years of his commercial real estate career. The two engaged in a heated disagreement about Ezra's role at the company that ended with the 40-year-old broker proclaiming he would go off on his own. 

"I quit to start my own company, but it was a surprise to me at the time," Ezra said. "It was in the heat of the moment in a discussion. Julien asked me, 'What would you like?' and I said, 'I'd like my name on the door.' Julien didn't like that, and I didn't want to continue at Studley, so I quit." 

The entrepreneurial attitude that led Ezra to start his own company exists in many brokers today, but the landscape for small and midsized brokerage shops is now much more challenging than it was four decades ago.

Ezra said it became difficult to compete as his company lost clients to the big brokerage firms, and earlier this month he shut down The Ezra Co., sold its remaining assets and retired. 

Ezra, speaking to Bisnow on the phone from his 82-foot Horizon Motor Yacht off the coast of Stonington, Connecticut, reflected on his 50-year career in commercial real estate and the dramatic changes the industry has undergone. 

The brokerage industry has experienced significant consolidation, and a handful of large players such as Cushman & Wakefield, CBRE and JLL have dominated in recent years. Ezra said corporate tenants today are less likely to bring their business to small brokerage shops and feel more comfortable working with the big firms. The Ezra Co. had roughly 50 employees when it closed this month. 

"It became harder for smaller companies to compete with the larger guys," Ezra said. "We lost a lot of deals to the large companies." 

One particular deal Ezra said he lost was a company, which he declined to name, that he had represented for many years and occupies a 250K SF headquarters in D.C. He said one of the firm's directors pushed it to switch from working with Ezra to a larger firm. 

"That was sad when something like that happens and you know you dealt honestly with them, you made fabulous deals for them and then they choose to go with someone else," Ezra said. "It's heartbreaking."

But Ezra said the competition isn't what led him to shutter the firm. The Ezra Co. had up and down years, but he said the $20M it brought in last year made it the most profitable year in the company's history. 

"There were years when we lost money, but we never went into debt because I always had enough money in the company to move forward, but for the most part we were profitable for many years," Ezra said. "Our last year was our most profitable year."

The factors that led to the company's end, Ezra said, were more personal. The 79-year-old has recently begun to take more time off to spend time at his Miami Beach condo and on his boat in New England. He said he decided he didn't want to work into his 80s, and he began planning his company's succession.

His son, Mark, had served as chief operating officer for the last 10 years and helped modernize the company's systems. But he was more interested in commercial real estate technology than brokerage, and he ultimately took a job with CoStar Group Inc. 

"It was time for Mark to move on," Ezra said. "He wanted to be in the technology end of real estate, and I was slowing down and I wasn't really putting my all into the company for the last couple of years and let Mark run it. But when he really wanted to do other things, that was one of the reasons that I wanted to divest myself from the ownership."

Ezra also looked into transferring the company's ownership to other brokers who worked for him. But he said that arrangement did not work out and the brokers decided to instead seek jobs with other companies. 

"With running a company comes responsibility and risk, and I was willing to take those risks and I think that others didn't have a taste for that," Ezra said. "So as it turned out, it worked out for us and for them by going elsewhere at the very end."

A team of nine brokers recently joined Avison Young. The Washington Business Journal reported that Ezra sold the company's remaining assets to Avison Young, but he declined to comment on the sale, citing confidentiality agreements. 

While Ezra said he is glad the brokers who worked for him landed on their feet, he said it was difficult to see the company he ran for nearly four decades come to an end. 

"It was a sad time for me and a sad time for a lot of people that our family was breaking up in the end," Ezra said."It was like a family, and I was the papa. It was bittersweet."

Ezra, during the phone interview with Bisnow, broke into tears as he read a series of letters he received after the company shut down from people who used to work for him. One of those people, IT Project Manager Sabin Bista, was part of the team that joined Avison Young. 

"You gave a kid with a funny haircut and a stupid accent an opportunity to have a life and a means to raise a family," Bista's letter said, according to Ezra. "You trusted me with your bank accounts, passwords and everything. I will forever be in your debt."

The Ezra Co. isn't the first midsized brokerage firm to shutter in recent years as large firms continue to pull business away from the smaller players. New York brokerage firm Eastern Consolidated went out of business last year, leaving its more than 100 brokers looking for new jobs. 

“It’s getting tougher for [boutique brokerages] to compete,” former Eastern Consolidated Executive Managing Director Ron Solarz told Bisnow last year. "I’m sure that there are other firms in the industry that are under pressure."

Ezra doesn't think all hope is lost for small, independent leasing brokerages. To succeed, he said they need to capture the market of 10K to 50K SF tenants with private ownership structures that are more likely to work with small brokerages. 

"There are some very good people in D.C. that broke off from their firms and started their own companies," Ezra said. "There's certainly room for growth with those young firms because their leaders have a lot of energy and it takes a lot of energy to do well."

He lamented the trend of large real estate firms poaching talented brokers from the small shops. But he said he thinks there are enough brokers to whom the structure of a large company isn't appealing. 

"The people that start their own companies shun being in the corporate environment," Ezra said. "I'm not saying that a corporate environment is bad, just that there are certain of us that don't fit within the corporate structure, and I think I'm one of them. There are entrepreneurs who just want to build a company on their own and not join the corporate world."