Lepage returns to commercial mid-market

TORONTO • It’s the part of Canada Royal Lepage says the commercial real estate industry has forgotten about.

The residential real estate company, one of the largest in Canada, said Tuesday it is making a foray back into the commercial sector, but this time it will focus on what it calls the “mid-market” segment of the industry.

“We had to have a rationale to get back into the market. It is underserviced in a couple of ways, one because it costs money to have the infrastructure to where commercial and industrial clients are and the good news is we have that. That’s an advantage we have over the majors,” said Phil Soper, chief executive of Royal Lepage Real Estate Services Ltd.

Royal Lepage officially unveiled the new division and its website, royallepagecommercial.com, on Tuesday. The Financial Post broke the news of the new commercial unit Saturday.

Royal Lepage is part of publicly traded Brookfield Real Estate Services Inc. Brookfield Asset Management inc. is one of its largest shareholders. The new commercial unit will initially be a division of Brookfield Asset Management.

In 2005, parent company Brookfield Asset, then known as Brascan, sold its commercial division to New York-based Cushman & Wakefield for Us$55-million. The company carried on as Cushman & Wakefield Lepage before eventually dropping the Lepage name.

The new commercial division will have 600 locations across the country and already has about 160 agents, leveraging off its residential brand by taking advantage of infrastructure in place. “There is virtually no town of any size in the country that we don’t have

There is virtually no town … that we don’t have coverage in

coverage in,” said Mr. Soper.

Lepage had been thinking about getting back into the sector as early as two years ago with its non-compete clause from the Cushman & Wakefield deal expired. The company never gave up the rights to the Royal Lepage name.

Mr. Soper said the bigger firms have starting going upmarket to reduce costs and protect margins. He cited regions like Niagara in Ontario where there is commercial activity going on and plenty of deals in the $10-million range that make it worthwhile for Lepage to get involved.

At the same time, the new Lepage brand won’t end up tripping over one of its parent companies, Brookfield Financial Real Estate Group, which tends to go after larger deals.

“I am convinced that the positive turn in the economic cycle will be supportive of our re-emergence into the commercial market,” said Mr. Soper, who hopes to consolidate more brokers across the country under the Lepage brand.