Douglas Elliman brokerage expands here
Well-known N.Y. firm forms joint venture with Sudhoff Cos.
Douglas Elliman, the New York real estate brokerage known for its multimillion-dollar listings and celebrity agents, is expanding into Houston, joining a crowded field of residential brokerages as technology and new business models are reshaping the industry.
Elliman, whose East Coast roots date to 1911, yesterday announced it had formed a joint venture with Houston-based Sudhoff Cos., which specializes in selling new condominiums in some of Houston’s most affluent neighborhoods.
Sudhoff Cos., formed in Houston in 2010, will operate under the Elliman umbrella. Jacob Sudhoff, the firm’s 38-year-old founder and chief executive, will serve as CEO of Douglas Elliman, Texas. His business partner Catherine Lee will also have a role in the newly formed firm.
“We try to be where our existing customers are,” Howard Lorber, executive chairman of Douglas Elliman Realty, said. “We always look to have feeder markets. We know Aspen and Houston go together, California and Houston. That’s what made Houston really fit in.”
Under the deal, Elliman in Houston will represent some $500 million in current development projects Sudhoff has listed, along with $1.4 billion expected to come to the local market over the next 12 months. Current projects include new condominium buildings in the River Oaks, Upper Kirby and Tanglewood areas.
Elliman has more than 7,000 sales agents and 120 offices throughout the United States, including the Hamptons, Beverly Hills, Calif., and Aspen, Colo. — a favorite second-home market for wealthy Houstonians
Sudhoff, a Corpus Christi native who took up real estate at 18, has always focused on new construction and has grown his company to
include design and development services. The business, which reported sales of more than $493 million last year, also invests alongside some of the developers it represents. It has a staff of 50.
Elliman had been approached by other Texas agencies looking to combine with the venerable brand, but the company never struck a deal until Sudhoff requested a meeting and Elliman officials identified similarities in the companies’ business models and cultures.
“He has a similar DNA as we do,” Scott Durkin, Elliman’s president and chief operating officer, said of Sudhoff. “His culture and how he built his company really mirrored our company. When we met him, we came away with the feeling that he would fit right in.”
In addition to its long-established
resale brokerage operation, Elliman has a growing marketing division specializing in new construction. Douglas Elliman Development Marketing has $24 billion of projects on the market in New York, Boston, Florida and California. Another $10 billion of new projects are in the pipeline.
Lorber, who has visited Houston many times, in part because of his close friendship with former Houston Rockets owner Leslie Alexander, said he was impressed with how the city has grown and how its economy has diversified beyond the energy sector.
“It’s not a one-trick pony,” he said.
Houston is also becoming more of a “vertical living” city, Lorber said, referring to a burgeoning high-rise market.
Lorber, a high-flying investor and head of Miami-based holding company Vector Group, which controls Elliman, declined to comment on the deal’s terms or how
the joint venture has been structured.
Vector, a publicly traded company that also has investments in the tobacco industry, has invested $156 million in a broad portfolio of real estate, according to company data.
Brand introduction
The new Houston operation will operate out of about 8,000 square feet in the River Oaks Bank building at the corner of San Felipe and Kirby. The Sudhoff team will move next month from its current Galleria-area space.
Sudhoff will be tasked with introducing a brand to Houstonians who aren’t familiar with Elliman. The deal will also likely elevate Houston’s profile on a global scale.
“I’m so excited to be part of that and to be able to educate the rest of the world on what Houston really is. We have a lot of education to do and this will give us a better platform to do that,” Sudhoff said.
Eventually, the company plans to expand to other parts of Texas. Austin and Dallas are in the mix, but the timing is not yet known.
The local office will be hiring for marketing, design and leasing services, as well as adding a roster of agents to focus on the resale market. In addition to condo sales the firm markets newly constructed single-family homes.
Over the past 12 months, Elliman reported property sales of more than $29 billion. In the second quarter, the company posted $243 million in revenue, compared with $206 million for the same period a year earlier. Net income was $15.1 million, up from $5.9 million for the second quarter of 2018.
Changing market
The Sudhoff/Elliman deal comes at a time of disruption in the real estate industry. Start-ups are bringing new services and technologies to the market. Socalled iBuyers that allow homeowners to sell with the click of a mouse are making inroads in Houston and markets across the country.
Real estate agents, too, are being lured away from their longtime firms by new companies touting better service and technology.
Elliman launched a service last year to give its agents additional tools, including customer relationship management applications, research materials, real estate documents, as well as a digital marketing platform for new developments.
Though technology is increasingly important, Durkin said, so is having a physical presence alongside a buyer or seller.
“Technology can service them better. But it won’t take the place of us,” he said. “It’s not just transactional.”