Christie’s upcoming NYC brokerage has generated virtually no buzz. Here’s why the auction house is just fine with that
Nada. That’s exactly how much New York City’s most in-the-know real estate brokers know about Christie’s forthcoming standalone brokerage. Since breaking its 22 year-long partnership with Brown Harris Stevens in June, mum’s the word on how the venerable brand is faring in its headfirst descent into the city’s real estate scene, according to brokers from Brown Harris Stevens, Douglas Elliman, Compass and Nest Seekers International.
But that’s exactly the way the auction house likes it.
“I don’t think anybody inside of Christie’s, myself included, feels that we need to beat the drum on our behalf,” Dan Conn, the CEO of Christie’s International Real Estate, said during a recent tour of their new facility. “Christie’s has a global client base of a million-and-a-half high-net-worth people. We are going to have the best physical space, I think, in the auction house to showcase properties. I don’t think we need to front-run the experience at all.”
That isn’t exactly chest puffing. The 251-year-old firm seems ideally situated within its universe of privilege and luxury for a successful gambit at the crowded and cosmopolitan Manhattan marketplace. Its new real estate showroom is slated to open in the front of the house at 20 Rockefeller Center, Christie’s sprawling auction and gallery space, by year’s end. Thousands of the world’s richest men and women already pass through Christie’s doors every year, but now, to bid on a Rockwell or a Picasso, they’ll have to give the real estate a gander first.
“Asia Week, for example, where you have Chinese buyers coming in through the auction house. They will come in here and see New York properties. That is a huge prospect,” said Alyson Barnes, Christie’s head of marketing and communications. Christie’s will sell across Manhattan and even in Brooklyn, she added.
“This isn’t a space just to promote the New York market,” Conn said. “It is a space to promote what we are doing globally through the affiliate network.”
But industry players wonder if foot traffic alone is enough to give Christie’s a fighting chance, after what BHS president Hall Willkie called its “broken promise” to not compete with his firm. Skeptics say that the art auction market and the business of selling homes don’t necessarily go hand-in-hand.
“To work in New York City, you need to have some knowledge, you need to know what you’re doing, and you need to understand brokerage,” Bess Freedman, Brown Harris Steven’s second-in-command, said in June. “They do not.”
The breakup between one of the world’s most esteemed auction houses and its old-money partner in New York didn’t produce hard feelings among many BHS agents. Christie’s 139-firm network boasted combined annual sales between $115 billion and $120 billion in 2016, and some at BHS felt like that the auction house frequently failed to deliver the resources it promised. Meanwhile, BHS and its brokers were paying millions of dollars each year to Christie’s.
“[BHS was] spending a fortune to be affiliated with Christie’s and Christie’s wasn’t really delivering,” a broker who was once affiliated with Christie’s said on the condition of anonymity. “You could end up paying them 25 to 50 percent of the commission. I know I paid them $250,000 on a sale on which they did nothing.”
“Real estate is hyper-localized and people really go to the experts of the area to find what they are looking for. As much as I think that a buyer from São Paulo is going to recognize the Christie’s or Sotheby’s brand names, ultimately they will come to the local agent,” said Compass’ Leonard Steinberg, who added that historic brands often have a lot of catching up to do on technology and infrastructure.
Christie’s appears well aware of those challenges. It’s spending the bulk of its startup efforts on getting the space ready and integrating technology across multiple platforms. Technology is a particular hurdle for Christie’s as all of its listing photography, file formats and virtual tours need to work harmoniously across all of its markets. Building its technological suite has proven a much greater challenge than the design of its physical, soon-to-be screen-covered sales office.
And given that Christie’s didn’t break from BHS until June, the company is essentially building a New York City residential brokerage from scratch, with a six-month deadline to flick the switch. Since June, it’s joined the Real Estate Board of New York, secured the physical space, and started the build-out, but still has yet to bring aboard any agents (Christie’s hopes to have about 25 to 30 brokers in the future, with company reps saying commission splits would be in line with market standards).
So while it may appear like slow going, Conn said it’s essential that the new space fit like a puzzle piece with the larger space and brand. Conn insists that the sword isn’t swinging overhead, that time and money are no objects.
“We said we would be up and running towards the end of the year, and we still expect to be the case. We are doing all the things we need to do to transform the business from a global affiliation model to that plus having a New York operation,” Conn said. “That entails technology, back-office functionality, building physical space for agents that we will ultimate onboard. That is where we are focusing now. It all takes time, but it was all anticipated.”
As to just how an international company like Christie’s will fare against the established local competition once it is operational is anyone’s guess. But Conn maintained that as a local brokerage, Christie’s edge is, ironically, its international reach.
“Where you get uneven experience with firms,” he said, “is in terms of their ability, and frankly, their desire to really run a global marketing effort for a top listing. One of the reasons clients come to us and say, ‘We want Christie’s,’ is because they know that if they do it through us, they will get maximum global exposure to a high-net-worth audience.”
Source: TRD LA