Compass acquires San Francisco resi brokerage that did $2.3B in sales

Facebooktwittergoogle_plusredditpinterestlinkedintumblrmailFacebooktwittergoogle_plusredditpinterestlinkedintumblrmail

Compass acquires San Francisco resi brokerage that did $2.3B in sales

Deal for Paragon’s 225 agents and 8 offices makes Compass top brokerage in SF

San Francisco skyline with Robert Reffkin and Bob Dadurka

Compass is forging ahead with its national expansion by acquiring Paragon, a 225-agent firm in San Francisco that closed $2.3 billion in sales last year.

The deal, announced Monday, will boost Compass’ ranks to 500 agents in the Bay Area, two years after it launched there, making it the top agency in San Francisco by sales volume and market share, Compass said. The purchase will better position the New York-based firm in a market where home prices, fueled by the Silicon Valley tech industry, continue to surge to record highs.

Combined, the companies had $4.5 billion in 2017 sales volume, Compass said. Terms of the deal were not disclosed.

Paragon, which currently has eight offices, was launched in 2004 by Bob Dadurka, Anita Head, George McNabb and Sally Stull.

Dadkura, who is Paragon’s CEO, said Compass reached out six to eight weeks ago to explore a possible deal. He said Paragon is having its best-ever year, with sales up 20 percent year-over-year during the first six months.

“Our market has always been competitive,” Dadurka said, of the Bay Area’s rising home prices. “It’s becoming more of an international and tech-centric market, so partnering with Compass and responding to the market in the proper way, together we’ll have a very dynamic company through which to do that.”

Last year, Compass set out to capture 20 percent market share in 20 U.S. cities by 2010. Since receiving a $450 million investment from SoftBank in December, the six-year-old company, now valued at $2.2 billion, has grown aggressively by hiring agents — and acquiring firms in new cities.

In the past several months alone, Compass has picked up eight brokerages, including Conlon Real Estate, a 300-agent firm in Chicago. “M&A is just one part of our core strategy,” said Rob Lehman, Compass’ chief growth officer, during a recent interview with The Real Deal. “There’s no question that there have been more acquisitions.”

The deal will give Compass a stronger foothold in San Francisco, where housing prices have been going through the roof.

The average sales price for a house in San Francisco rose $205,000 to $1.62 million during the first half of 2018 — a record increase, according to an analysis by Paragon. The average condo price rose $71,000 to $1.21 million.

The massive spike can be traced to SoftBank’s $100 billion Vision Fund, which has been pouring money into Silicon Valley startups, as well as to recent IPO activity and the steady growth of Facebook, Apple and Alphabet.

Source: TRD LA

Facebooktwittergoogle_pluslinkedinrssyoutubeinstagramfoursquareFacebooktwittergoogle_pluslinkedinrssyoutubeinstagramfoursquare